You have a professional stake in the transportation and logistics space. No matter where you are on your journey—neophyte, a few years in the trenches, reaching the halfway mark in your career or seeing retirement fast approaching—staying in the game means keeping up-to-date on key activity in the industry.
This post is the first of three which feature movers, shakers and experts, each of whom will weigh in on what’s trending and what is waiting in the wings for us. These conversations are all centered around a single question:
In transportation, what will have the most impact in 2020 & beyond?
Chief Executive Officer, Bell Creek Partners
In 2020, transportation will continue adapting to E-COMMERCE in all its forms. We still believe that inventory is the tail that wags the logistics dog.
That means transportation must accommodate ongoing 15–20% annual e-commerce growth to allow for micro-inventory increasingly closer to purchasers. This means more shift to parcel and less than truckload (LTL) than 53′ full truckload (FTL). More warehouse-as-a-service concepts will become endpoints for transportation. As the pace of play increases, carriers will demand faster payment driven by digital document capture and automated payments which reduce DSOs. Transportation will continue to be the ‘killer app’ for Internet of Things (IoT) as cellular connectivity dominates machine-to-machine communication in 2020.
Beyond 2020, expect more pressure on the federal and state government to allow for more on-road autonomous vehicle tests in the US as we close the gap with China. This will give trucking a shot of closing the roughly five-year gap with consumer automotive as US companies become increasingly capable of architecting well-behaved distributed systems capable of driving millions of safe road miles. The best and first use cases for autonomous will be ‘train-like’, i.e., low population density, flat elevation, distribution center-to-distribution center, ideally inside 12:00 am to 5:00 am where humans perform least well. Separately, we see no meaningful blockchain use cases near term without more standards and innovation to solve unsolved customer pain today.
We’re passionate about the opportunity transportation presents for the hard-working people in and around the industry.
President and CEO, American Trucking Associations
As an industry that moves more than 70% of the nation’s goods, trucking sees several issues that will have a serious impact on FREIGHT TRANSPORTATION.
It is paramount we resolve ongoing trade negotiations, starting with Congress ratifying the USMCA. We believe Speaker (Nancy) Pelosi has the votes today to ratify this agreement, which would restore certainty throughout markets and ensure the free and fair flow of commerce across North America. It would also strengthen our hand with China and help to secure new agreements across Asia and Europe and bolster our competitiveness in the global economy.
A surge in qualified truck drivers is needed to ensure long-term growth, as the trucking industry faces a mounting driver shortage. Failure to act will place enormous strain on our supply chain, raising transportation costs and consumer prices. Congress has a role to play here: The DRIVE-Safe Act would dramatically expand the labor pool by empowering 18–21 year-olds—who are already legally permitted to operate Class 8 trucks in 49 states—to cross state lines, while simultaneously strengthening safety and training standards well above current levels.
Federal investment in our deteriorating infrastructure would have an enormous impact—not just for freight transportation, but for the safety, well-being and quality of life of all Americans. The Highway Trust Fund is rapidly approaching insolvency and will go bust in 2020. Modest increases in the fuel user fee—as little as a nickel a year—would generate hundreds of billions of dollars available immediately for investment in roads and bridges.
Executive Director, North American Council for Freight Efficiency (NACFE)
For the North American trucking industry, driven by a combination of outside influences, and challenges and opportunities, SHORTER REGIONAL HAULS will increasingly be the norm in 2020 and beyond.
The expansion of e-commerce is already changing freight delivery dynamics by requiring the distribution of inventory to a wider set of locations. Meeting that need with regional operations can maximize fleet productivity by hauling more freight with an existing pool of drivers and equipment. It can also eliminate costly empty backhauls by ensuring that trucks and trailers moving to and from strategically located domiciles are loaded.
It is well known that the shortage of drivers is causing carriers to look for ways to attract and retain operators. While pay structures and benefits, premium equipment and driver comfort items have all been beneficial, regional operations can help reduce the impact of the driver shortage. By enabling drivers to be home on a more regular basis, those operations make truck driving more attractive to a wider pool of people, and improve retention among current drivers.
Regional operations are ideal for deploying fuel-saving vehicles by making it easier to install alternative fueling infrastructures. Electric trucks coming on the market from manufacturers, for example, are well suited to regional operations because their duty cycle—usually less than 300 miles daily from a central base of operation—enables charging infrastructures to be located more readily.
Expanding regional hauls is an opportunity to overcome some of the challenges that trucking companies face today, and to take advantage of new opportunities.
David H. Bradley
President, DHB Consulting Inc., Toronto; Former CEO of the Canadian Trucking Alliance & Ontario Trucking Association
I believe the ultimate issue impacting a derived demand industry like freight transportation over the next few years, will be the ECONOMY. The current expansion is long in the tooth and there are any number of headwinds and wildcards (i.e., trade tensions, political uncertainty, international conflict) that weigh on the outlook. I’m not going to use the “R word”, but a slowdown is inevitable; it’s a question of how deep and long it will be. Of course—and regardless of economic activity—the freight transportation sector in North America will continue to grapple with a host of challenges including a shortage of qualified workers, persistent and increasing public pressure for tougher safety and environmental regulation, infrastructure deficits, etc.—no matter which governments are in power.
The ability of vendors to provide affordable and reliable technological solutions to these challenges will play a major role. The ability of individual companies to strategically embrace and adapt to these advancements will be key to their survival. The freight transportation industry is composed of many of the most dynamic and innovative people and companies (of all sizes) you will find in any sector. While some of the players may come and go, I remain entirely optimistic about the prospects for the industry overall. These are challenging times, certainly. But they are also exciting times with plenty of opportunities for those who prevail to prosper and create an even better industry that is poised for the future.
Vice President, Trucking, FTR Transportation Intelligence
Looking specifically at 2020, one of the big things is pressure on the OWNER- OPERATOR MODEL. Insurance costs are going up, but we also are seeing pressure on the leased owner-operator to move into a more independent role.
A longer-term issue is that carriers, brokers and shippers are starting to adopt digital freight matching. This will allow small carriers to participate on an equal footing with large carriers because their capacity will be more visible to brokers and shippers than it has been the case in the past.
The enabling event for this was the government’s ELD mandate. It forced a degree of connectivity that many would not have embraced for many years.
We also are seeing increased visibility and transparency that is being provided via web interfaces and smartphone apps. This will democratize things because the small player won’t need sophisticated systems that are employed by larger fleets; they’ll just need to have access to the internet. This will lead to everybody operating more efficiently because they can see the impact of various options more quickly. We are starting to see this in digital freight matching where the loads and the trucks are being matched in a much more predictive and dynamic way. A carrier can get a load that is the best possible option for its needs.
A few years ago, technology was a real divider between large and small carriers. The trend going forward is that technology will be a unifier and will allow players of all sizes to prosper.
Interested in learning more about what is on the horizon?
Look for additional insights in the coming weeks as more industry experts weigh in on what to expect in 2020 and beyond.