newsworthy

“It is probable that capacity shortages will last for several years, not just for one,” Perry told an audience at this year’s CSCMP conference in Philadelphia. “We could easily see sporadic supply chain failures based on capacity shortages. That’s something we are not used to.”

STICKER SHOCK

Shippers could also be in for sticker shock where freight rates are concerned. Perry said rates will need to rise 15 percent just to offset the higher costs that truckers will incur to attract and retain good drivers, whose ranks are expected to thin as a result of federal regulations like CSA 2010, an initiative designed to winnow out drivers with marginal safety records.

Making matters worse is the level of driver turnover, which is hitting uncharted territory. Thom S. Albrecht, transportation analyst for BB&T Capital Markets, said driver turnover—or “churn”—hit a stunning 90 percent in the third quarter, more than double the turnover rate for the same period in 2010. Maintaining a stable workforce will cost truckers plenty, and it will be an expense that will likely get passed on down the chain.

At the same time, trucking executives said they would not be adding new capacity for the foreseeable future. The skyrocketing cost of replacing new rigs, combined with freight rates that aren’t fully compensatory for the investment,

accolades

YRC Worldwide Inc. has received the Corporate Distinguished Service Award from the National Defense Transportation Association. … Hyster Co. has been named Supplier of the Year by ZF Group North American Operations, a manufacturer of drivelines and chassis. Hyster was honored as a supplier of indirect material and services. … Florida East Coast Railway LLC has received the Jacksonville Electric Authority Environmental Stewardship Award for its outstanding performance in industrial wastewater pretreatment during 2010. … Memphis-based Mallory Alexander International Logistics received the Governor’s Award for Trade Excellence from Tennessee Governor Bill Haslam in recognition of the company’s global trade leadership. … For the second straight year, Penske Logistics has received Whirlpool Corp.’s Supplier of the Year Award for Warehousing and Third-Party Logistics Services. … Pitt Ohio has received the DuPont Sourcing & Logistics 2010 Outstanding Service Award in the less-than-truckload (LTL) category. … Larry Radons of YRC Reimer, a subsidiary of YRC Worldwide Inc., placed fourth in the Straight Truck Category at the Canadian National Professional Truck Driving Championships.

go figure …

80%

The approximate percentage of online orders this holiday season that will include free shipping.

SOURCE: EQUASHIP

makes it economically infeasible to add to fleets, according to carrier executives. The best shippers can hope for is a straight swap of power units, a move that will put newer rigs on the road but won’t have any net effect on capacity, truckers said.

INCREASED LIABILITY EXPOSURE

As truckers grapple with driver shortages and fleet reductions, shippers are being warned not to expect the service quality or reliability they have grown accustomed to. Donald A. Osterberg, senior vice president of safety and security for truckload and logistics giant Schneider National Inc., said truckers face a plethora of government mandates ranging from CSA 2010, to proposed changes in driver hours of service (HOS) regulations, to the 2010 rule that would require virtually all truckers to install electronic on-board recorders (EOBRs) to ensure their drivers are complying with HOS regulations.

Osterberg said the cumulative effect of these mandates would be to force the supply chain to permanently rationalize service expectations. “I don’t believe the current levels of service are sustainable going forward,” Osterberg said at CSCMP.

Osterberg advised shippers to take their legal exposure under CSA 2010 very seriously, saying the plaintiffs’ bar is chomping at the bit to pursue deep-pocketed shippers for monetary damages in the event of a fatal truck-related accident on grounds the shipper should have known under the CSA guidelines it was engaging a sub-standard driver and carrier. In addition, shippers that were shielded from liability through indemnification clauses written into carrier contracts will see that protection erode, Osterberg said, noting that 30 states already have non-indemnity laws on the books.

Shippers speaking at the conference said they were becoming increasingly proactive in tracking their drivers’ performance. “We monitor [CSA] scores on a monthly and quarterly basis,” said Michael F. Heckart, manager, North American logistics strategic sourcing for Deere & Co.

The difficulty in managing a customer’s demanding requirements with fewer rigs and drivers at their disposal could compel some shippers to “roll the dice” and continue to use carriers that might be available but whom they know would be on the CSA bubble, according to Carpenter of IP. “Some [shippers] are probably doing it,” he said. “But they are playing with fire and they’re going to get burned.” ;