With the economy on the road to gradual improvement, transportation capacity becomes a major issue, says Menner. It could easily become scarce if growth picks up, especially in the area of motor-carrier services.
A large number of trucking companies went out of business during the recession. Now, the rate of bankruptcies has slowed to its lowest level of the last year. “We’re actually seeing signs of life,” says Menner. “Carriers are bringing capacity back on.”
Trucks are being added, but the lead time for the introduction of new equipment can be long, creating service gaps in the meantime. Yet another constraint is the availability of drivers – “a conversation that has loomed large for more than 20 years,” Menner says. “You can buy all the trucks you want, but you need somebody to drive them.”
It’s not just about drivers. Companies are undertaking numerous efforts to boost the pool of potential supply-chain leaders. Some 40 universities have supply-chain programs today, versus half a dozen 25 years ago. The need for supply-chain and logistics talent has become a board-level issue, says Menner.
Shifts in sourcing are also having an impact on the transportation landscape. Shippers are finding a need to open up new carriers and lanes, while boosting their reliance on long-term relationships with favored carriers. Those that have proved their ability to perform get right of first refusal on any new tenders.
“The conversation is no longer solely about rates,” says Menner. “It’s much more about what type of fit can I develop with my freight and your trucks – what is a fair and reasonable return.” Carriers, meanwhile, are looking to implement best practices in driver behavior as well as the quality of their facilities.
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