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The Transportation Capacity Challenge of 2018: Structural or Cyclical?

By: Pat Walsh, Vice President, Supply Chain & Business Development, Food Marketing Institute Supply Chain

We are all familiar with the forces that have led to significant changes in food retail over the last few years: e-commerce, shifting consumer trends and new digital tools, among others.

There is one disruptor, however, that might not seem so obvious. A severe capacity shortage in the trucking industry is affecting the flow of food to retail businesses and having a negative impact on the consumer experience.

There simply aren’t enough trucks and truck drivers to get products from the manufacturer and distributor to the store.

According to DAT benchmarks, in the first six months of 2018, line haul rates increased by 10 percent to just over $2.30 per mile and still fewer and fewer trucks seem to be available to ship more and more volume. The heart of the problem is a dearth of qualified truck drivers.

According to the U.S. Bureau of Labor Statistics, the median salary for drivers jumped 15 percent over the last four years, compared to an average 10 percent for all private-sector workers. But that still hasn’t been enough to solve the problem.

The Trading Partner Alliance’s supply chain executive committee and its member companies in 2018 have been working on pilot programs with a three-pronged approach to meet the industry-wide trucking capacity shortage, including efforts to:

Increase asset utilization - Coming up with ways to improve efficiencies throughout the supply chain, often by employing enhanced technologies;

Increase driver supply - Creating more opportunities for more people to enter the truck driving field, perhaps by lowering age limits, attracting drivers from other countries and encouraging military veterans who have the required skills; and

Reduce demand volatility - Finding ways to smooth out demand and reducing the time that trucks are not on the road.

Longer-term solutions include greater investment in research on autonomous vehicles, adjusting load capacities and making improvements to the highway system.

The challenge to the trucking capacity shortage that is impacting the consumer experience is formidable, but there will be solutions and members of the Trading Partner Alliance are working together to find them.

If you have an interest in joining TPA Task Group and our work in 2019, please contact Pat Walsh.