Our outlook for transportation and logistics as we enter a new year
As we enter 2022, we explore some topics of interest that will inevitably take center stage. It is important to reflect on not only how far we have come as a company, but also how important road transport has proven to be in the global supply chain. There are numerous issues to address in the year ahead.
According to the American Trucking Association (ATA), more than 70% of US freight tonnage is moved by truck transport, and trucks will be tasked with moving 2.4 billion tons of freight over the next decade. During testimony to the US Congress in mid-2021, Chris Spear, ATA’s president and chief executive officer, stated the following: “Trucks will continue to be the dominant freight transportation mode for the foreseeable future.”
Here are ten areas of interest that are likely to be at the forefront of activity and discussions within the supply chain as we enter the year ahead:
1. Digitization is well upon us.
Truthfully, digitization isn’t “upon us”—it arrived awhile back. Now, there’s an expectation that supply chain partners go digital, get digital, and connect digitally via the cloud.
When Deloitte surveyed 182 supply chain leaders operating across trucking, ocean, rail, manufacturing, and retail in early 2020, they found that 58% used data-sharing platforms and 51% engaged in partner connectivity via the cloud.
In their survey report, Deloitte stated the following: “An era of greater integration among transportation organizations is unfolding in the marketplace today. For example, smart port platforms in Rotterdam and Hamburg have recently expanded to the Port of Los Angeles, plugging railroads, truckers, chassis providers, warehouse operators, and other stakeholders into a digital feed of incoming cargo. Such planning tools help stakeholders become nimbler and more efficient, especially when managing e-commerce-driven surges that congest US ports.”
Enhanced by real-time telemetry and accelerated by metrics and information, truck transport joins many other modes of transportation in providing shippers insight about their loads, delivery dates, and where in the world loads are at any given time.
The same Deloitte survey indicated a strong propensity to continue investing in all facets of digitization, including Internet of Things, blockchain, and other technologies, that will be a prerequisite to competing in the lean supply chain of the future.
2. Driver shortages continue to be top of mind for fleets and operators.
There’s no foreseeable end in sight to driver shortages for truck transport. In North America, the problem of driver shortages is alive and well. The New York Times called driver shortages the “biggest kink in our supply chain”. According to the ATA’s chief economist, the current driver shortage has risen to 80,000—an all-time high for the industry—and could surpass 160,000 by 2030. The ATA estimates that over the next decade, the industry will have to recruit nearly 1 million new drivers to the industry to replace those who will exit.
This shortage also presents an international crisis: a survey of 800 road transport companies from more than 20 countries and regions published by the Geneva-based International Road Transport Union found that driver shortages were most prevalent in Eurasia, where 20% of open driver positions were not filled last year.
According to the ATA, it’s not only the pay that’s the problem: the industry is experiencing an aging workforce. In addition, the population remains largely male, and women drivers are vastly underrepresented. The ATA notes that the “solution to the driver shortage will most certainly require increased pay, regulatory changes and modifications to shippers’, receivers’ and carriers’ business practices to improve conditions for drivers”.
3. Attention to sustainability is shifting into high gear.
Any trucking firm not aware of and engaged in their customers’ concerns for sustainability must shift their sustainability efforts into high gear.
According to McKinsey, “Two-thirds of the average company’s environmental, social, and governance footprint lies with suppliers. Procurement leaders who take bold action can make a decisive difference in sustainability.”
MIT’s Climate Portal notes that billions of tons of cargo are transported around the world by all modes of transport; road vehicles like trucks and vans make up the majority (62%) of freight emissions.
The trucking industry is already working on fuel efficiency, emissions control, and better technology that affords favorable gas mileage and other measures. However, the fight will continue in full force.
In fact, many firms—including financial lenders—check with partnering firms about their sustainability programs, ensuring they have plans in place to not only stay compliant with regulatory standards but also implement aggressive programs that breed sustainability.
4. Telemetry continues to lead the visibility and control of truck transport.
Within digitization is a point that deserves its own attention: telematics. Telematics have advanced greatly within the trucking industry. It’s not uncommon for truck fleets to transmit a regular flow of data back to a home base where everything from tire pressure to driver braking is observed.
Expect telematics to continue to grow as the system becomes more useful. Truck fleets and their drivers are part of a network of dispersed assets and workers. Therefore, telemetry is one of the only lines of communication by which to share and exchange useful information.
In addition to those elements commonly found in truck telemetry—fuel consumption and mechanical metrics—personnel information, training certifications and scheduling, and physicals may become part of data arsenals. Information that is subject to change as drivers are out hauling cargo will be transmitted and managed back at the office site.
As telemetry improves and there is a discernible return on investment for the information and business intelligence it provides, trucking fleet operators will likely continue to invest in it. The truck of tomorrow will be a well-wired moving asset that generates rich data to benefit drivers, fleet operations, and customers alike.
5. Truck transport will continue to encounter Industry 4.0.
In supply chain discussions, Industry 4.0 refers to the digitization of the different parts of a business operation, including the use of connected devices that provide useful, often real-time data, that helps facilitate informed decision-making in the supply chain. Industry 4.0 innovations will expand into areas it hasn’t reached in the past such as warehouses, where connected devices will gather, scan, track, and check data. Truckers can expect to encounter devices in warehouses, distribution centers, and other loading areas that will connect them with others in the supply chain. We can expect that Industry 4.0 will be present in most areas of the end-to-end supply chain.
6. Infrastructure improvements are a welcomed change.
According to Chris Spear in the ATA’s testimony to Congress in mid-2021, infrastructure currently plays an obtrusive role in many of the trends and problems facing the trucking industry. If properly funded and implemented, however, it could make a huge difference in the future of trucking. Infrastructure serves to make roads safer and more passable while also expanding transportation tributaries to alleviate congestion and parking. Improvements can positively influence fuel consumption and sustainability goals, helping trucking firms operate more efficiently and take less of a toll on the environment.
According to Spear, “A well-maintained, reliable, and efficient network of highways is crucial to the timely delivery of the nation’s freight—both international and domestic—and is vital to our country’s economic and social wellbeing. Underfunded roads and bridges are increasingly choking the economy’s supply lines, making it costlier and more time-consuming to get goods to market. Decrepit roads and bridges cost motorists $1,600 annually in wasted gas, lost wages, and vehicle damage. The typical motorist loses 42 hours of their life every year sitting in traffic, and the trucking industry loses 1.2 billion hours of productivity to road congestion, which is equivalent to more than 425,000 drivers sitting idly for a year. Highway congestion also adds nearly $75 billion to the cost of freight transportation each year. This caused the trucking industry to consume an additional 6.87 billion gallons of unnecessary fuel in 2016, representing approximately 13% of the industry’s fuel consumption, and resulting in 67.3 million metric tons of excess carbon dioxide (CO2) emissions.”
7. Fuel conservation is more important than ever.
Rising fuel prices have pushed the spot rate for truck transport higher than ever, and trucking firms have started building these fuel surcharges into their haul rates.
However, truck transport firms continuously seek ways to conserve fuel. This may include selecting fuel-efficient equipment and assets designed to squeeze out an incremental bump in fuel consumption or putting telematics to work to monitor drivers’ speed, idle time, and other factors that affect fuel savings.
By all measures, fuel conservation is a primary concern as we move into the year ahead. Smart trucking firms will seek areas in which to conserve fuel while also looking outside the organization to monitor new products, technologies, and other assets available that are attractive to these pursuits of fuel conservation and efficiency.
8. Women will continue to play an increasing role in driver recruitment.
According to the ATA, women make up only 7% of all drivers, well below their representation in the workforce overall. Thus, this may well be a focus area for recruitment.
Women drivers are underrepresented in the landscape of drivers within the trucking industry. More attention should be directed to their recruitment to help fill the existing and anticipated vacancies of drivers.
9. Vaccinations will continue to present challenges.
Mandatory vaccinations, contested by some and welcomed by others, continue to pose issues to the trucking industry. In most cases, this is one more area of compliance within the industry that must be adhered to. Newly emerging variants of the COVID-19 virus have further complicated the issue, raising questions about the efficacy of existing vaccines. The topic of vaccine mandates is sensitive and fraught with uncertainties that will continue to challenge the trucking industry—which is essential to supply chain activity—into the future.
10. New and innovative training technology will continue to emerge.
Truck fleets continuously seek ways to train new drivers, so we can expect the increased use of new innovations and technologies to do so, including virtual reality (VR), augmented reality (AR), and headsets that allow drivers to virtually experience a specific driving environment once they attain the necessary certifications. According to a report in Transport Topics, companies such as DHL, UPS, and XPO Logistics are currently using VR and AR. In some cases, driver trainees use headsets equipped with imagery that familiarizes them with specific drop-off and pick-up warehouse sites. In other cases, drivers can attend a school that has this technology available, allowing them to experience a range of scenarios they’re likely to encounter on the job. This new technology can help bring potential drivers into the workforce more quickly and prepared with skills that will make their driving safer. It will also help simulate an array of potential future job scenarios, allowing for a significant amount of training to be completed without physically going on the road.