Transportation Trends and Industry Insights
Shipper Symposium may be over, but one of the sessions we’re still thinking about was the interactive discussion among Tom Sanderson, Transplace CEO, Annette Sandberg, CEO of TransSafe Consulting and Thomas Albrecht, President of Sea and Sword Transport. These three transportation industry experts engaged with the audience and each other while sharing real-time data and explaining how the transportation world is shifting and what that means for today’s businesses and their go-to-market strategy.
Thom reminded us of last year’s conversation that focused on the burst of the commodity bubble and increased capacity. “The good news for this year is we’re rebounding as drilling rig counts are rising,” he said. He explained how more stability in copper and wheat prices, similar to over a dozen commodities, means more stability for truck capacity. “If you take a look at capacity; as of a year ago, the market had 4-5% excess capacity and it was at 1-2% as of early May. Equilibrium should be attained in Q3, if not before, depending upon industrial production,” said Thom.
Thom also spent a good deal of time talking about Amazon and how the company is completely shaking up the traditional brand values we’ve come to know. He noted that, “Over the next 3-4 years, Amazon will conquer the food category and this will drive additional density to the rest of their network, which will also change the ‘prime’ definition from 2-to 3-day delivery to next-day delivery nationwide, and ultimately, same-day delivery.”
He anticipates food distribution to change thanks to more shoppers trying online grocery shopping. About one-third of online shoppers will shop online at least once this year for groceries, and online grocery shopping could exceed 5% of total grocery sales in 2018, up from 2% in 2016. Thom’s warning to the industry was: “Traditional grocers who don’t adapt will be like today’s department stores.”
Annette Sandberg steered the conversation to regulation and gave an update on current industry standards and in-process legislation. “To no surprise to anyone, not much is going on in Washington D.C. right now when it comes to the regulatory landscape,” she said. She went on to note that the Department of Transportation had yet to publish anything, as they are still evaluating the impact of current regulations. This lack of activity will have a significant impact as transportation technology providers are going to states such as Colorado, Michigan and Ohio to test and evaluate exciting tech advancements such as autonomous vehicles.
“Technology is advancing much faster than we anticipated. Pushing this on to states since the federal government is going to take too long. States are willing to take risks and look to technology, and won’t wait for the feds to catch up,” said Annette. Adding to the Amazon discussion, Annette questioned how big of a threat the company is as a private label, but conceded that it still remains to be seen.
Tom Sanderson then shared the impact that Electronic Logging Devices (ELDs) will have on capacity – citing about 3-5% decrease in capacity. Tom referenced some additional data points and a survey that Transplace conducted last fall which revealed that while 52% of carriers had implemented ELDs into their fleet, 48% had not. “Of that 48% many were the 1 – 10 truck owners; so, the smaller guys. They’re waiting because there’s uncertainty around the issues with the rule,” said Tom.
He also encouraged carriers to use data to their advantage, adding, “Go back to your shippers to show dock waiting time. That’s a powerful thing to show ‘here’s what is costing my driver.’ That will impact driver pay – and driver pay is going up.”
When it comes to forecasting the truckload market 5-10 years down the road, Tom noted that the challenge is with dedicated fleets. “There will still be an inbound supply chain, but you’ll have to get the goods from the distribution center to the home, not to the store” he added. He foresees the proliferation of DCs getting closer to customers, and said, “I think we’ll see a lot less demand for dedicated fleets in store-delivery operations and more LTL inbound to DCs.”
He also commented on Amazon, stating that with the company growing 25% year-over-year in 2016, fear and optimism both come to mind. On one hand, there is fear that if we don’t do something, we don’t know what the future will look like and we don’t want to miss that – but this is paired with optimism about aligning with a company that is truly growing.
Want to know more? Catch the full conversation from Shipper Symposium here.
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