Thursday, October 17, 2013

Winter is Coming:

Capacity crunch in trucking will lead to need for changes in supply chain strategy.

“Winter is coming,” the catchphrase from HBO’s ‘Game of Thrones’ series, sums up the state of the domestic over the road freight market. According to speakers at the Journal of Commerce’s Inland Distribution Conference, shippers who have become complacent in a time of plentiful capacity, minimal rate increases and truckers eager for their business are facing a wakeup call.

“If we return to normal growth in the short term, it will make 2003 and 2004, when we had the tightest capacity we ever saw, look like a walk in the park,” said Christopher Lofgren, CEO of Schneider National. His company is the second largest U.S. truckload carrier, and the largest privately owned one. A capacity crunch is coming, he and other speakers warned, and carriers that “never really recovered” from the 2007-2009 recession are not reinvesting in their businesses at sufficient rates.

Lofgren’s answer? Railroads, and intermodal shipping. Truckers aren’t fighting intermodal growth, they’re fueling it, he said. “Back in 1980, no one thought trucking companies and railroads would be close strategic partners, but today we are. The railroads are making investments to improve service and capacity, and it’s the best way to move long-haul heavy freight.”

Domestic intermodal volume, said Lofgren, will grow twice as fast as over-the-road volume in coming years, fueled by fuel price increases and driver shortages. Schneider National has expanded its use of intermodal rail and put more of its trucks into shorter haul, and typically more profitable, regional service.

Are you prepared for winter? As the princes in ‘Game of Thrones’ learn, shortage leads to conflict, and only the strong survive. Take a good look at your supply chain, and make sure it’s ready for prime time.

Kirk Shearer
1-800-989-0054 x103

No comments: