DC Velocity - July 2018

BY MARK B. SOLOMON, EXECUTIVE EDITOR – NEWS

CSCMP’S STATE OF LOGISTICS REPORT
Transportation

THERE IS NO SHORTAGE OF UNSETTLING TRENDS CONFRONTING U.S. truckers. Qualified drivers are in short supply, and those being seated are getting paid much more than before. The electronic logging device (ELD) mandate has curbed fleet productivity as runs that in the past could be completed in one workday can now take two days. As of mid-June, nationwide on-highway diesel fuel prices were up 75 cents a gallon from the same period in 2017, according to government reports. Road congestion, and the delays that accompany it, is worsening. The costs of everything from trucks to tires continue to escalate. Insurance premiums rise as insurers terrified by so-called “nuclear verdicts” in the many millions of dollars ratchet up rates or leave the business. Then there is the ever-present and formidable competition from railroads, with their more economical and fuel-efficient services.

Thus, it might seem odd to think trucking firms would be in a commanding competitive position as the decade winds down. But that is what the authors of the 29th annual “State of Logistics Report,” released June 19 in Washington, D.C., have predicted. The report, prepared by consultancy A.T. Kearney Inc. for the Council of Supply Chain Management Professionals (CSCMP) and presented by third-party logistics service provider (3PL) Penske Logistics, found that favorable supply-demand dynamics combined with information technology adoption will enable truckers to generate solid profits and take market share from a railroad industry struggling to keep pace with innovation.

Advanced technologies ranging from autonomous vehicles and truck platooning— which could be widely available to shippers over the next three to seven years—to enhanced route optimization tools will narrow the cost differential between the two modes and put railroads under increasing pressure, according to the report. That’s