A Q&A with Santa, and Fleet Manager Mrs Claus, of North Pole Inc
Consultancy A.T. Kearney released its annual State of Logistics Report at the end of June, and findings point to a prolonged period of uncertainty for the transportation industry. Volatility in freight demand, mixed economic signals, political risk, and emerging technologies and business models are some of the factors predicted to disrupt the logistics ecosystem.
But not all news in the report was negative. It uncovered positive signs for the health of carriers – orders for new tractors picked up in late 2016, rates continue to rise and publicly traded carriers did well in Q1 earnings reports.
Though the report says “many motor carriers believe the worst is over,” it’s clear running a lean and efficient fleet has never been more important, or more challenging.
In the short-term, fleet owners and executives need to make crucial decisions on operations, pricing, technology deployment and overall strategy. Here are four trends and industry shifts from the report that carriers must know for improved fleet management.
Though the report says “many motor carriers believe the worst is over,” it’s clear running a lean and efficient fleet has never been more important, or more challenging.
In the short-term, fleet owners and executives need to make crucial decisions on operations, pricing, technology deployment and overall strategy. Here are four trends and industry shifts from the report that carriers must know for improved fleet management.
#1: The “Uberization” of trucking
The report predicts the uberization of trucking, or on-demand freight matching between shippers and carriers, will have the biggest short-term impact. Many carriers have been reluctant to adapt to the new model, as it’s logistically demanding – they must be ready at any given minute to accept a job, assign it, decide upon their route and manage other logistics of executing on the job. This is an opportunity GPS fleet tracking can help carriers capitalize on, with real-time insight into truck locations and driver status, for more efficient job assignments.
#2: Nearing ELD mandate
The report brings good news on the ELD front, stating “initial predictions that ELDs would reduce available capacity by 3% to 10% appear to have overstated the amount of “cheating” going on under the old manual hours-of-service tracking regime. The capacity impact is probably in the 2% to 3% range.” And ELDs have plenty of upside, like reducing driver administration and paperwork. Carriers shouldn’t wait to implement them. Getting ahead of the ELD mandate, training drivers, seeing its impact and using the data for operational efficiency is a competitive advantage.
#3: More shippers embracing DCC arrangements
More shippers are leaning on Dedicated Contract Carriers (DCCs) to improve efficiency, consistency and reliability. DCCs are a fleet of branded trucks and dedicated drivers from a third-party provider – a sort of outsourced fleet that brings shippers the advantages of a private fleet without having to actually operate one. DCC contracts give transportation companies an opportunity for steady revenue, but a lot of these agreements lock in capacity, rates and service levels. Operational efficiency and constant monitoring of KPIs is the name of the game, which requires fleet tracking technology.
#4: E-commerce demand & redesigned distribution networks
E-commerce growth has put new pressures on profit margins, as retailers promise fast and free delivery, then look to carriers to help them reduce shipping costs. The report warns that regional distribution center strategies and redesigned distribution networks “require new trucking routes, with motor carriers shifting line-haul routes to transport merchandise from national distribution centers and rebalance volumes between local and regional centers.” Carriers need to anticipate disruptions to distribution flows and rethink route optimization tactics.
Technology – more specifically GPS fleet tracking – is pivotal to finding the efficiency and agility required to manage the fast pace of chance and uncertainty facing the transportation industry.
Click here to learn more about how fleet tracking can help your fleet outperform others and stay ahead of these trends.