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The Transportation Capacity Crunch: How Can Shippers Cope?

Tom Sanderson, chief executive officer of Transplace, offers a picture of the current transportation landscape – one that's marked by tightening capacity and fewer options for shippers. He offers some advice on how to cope with the situation.

The Transportation Capacity Crunch: How Can Shippers Cope?

Beginning in late 2013 and moving into early 2014, the transportation market saw a tightening of over-the-road capacity. At the same time, harsh weather conditions made it difficult to get product to market.

In the second half of the year, the supply-demand balance began returning to normal. While Sanderson doesn’t expect the industry to repeat the dire conditions of 10 years ago, he does see continuing difficulties in attracting truck drivers to long-haul service, and a shortage of capacity.

For the most part, he says, there’s enough capacity to handle current demand. But housing starts haven’t yet returned to historically high levels, and if they did, “we would see a very severe trucking capacity shortage.”

Recovery in the housing market generates new demand for building materials, including appliances, carpeting and flooring products. “That drives a lot of trucking demand,” explains Sanderson.

Meanwhile, the intermodal option has a lot working in its factor. The CSX and Norfolk Southern railroads have invested heavily in stack-train infrastructure along their routes. In addition, there’s a big opportunity to convert long-haul truck traffic moving across the U.S.-Mexico border to rail.

The savings on fuel surcharges alone can make the conversion to intermodal compelling, Sanderson says. At the same time, railroads have gone a long way toward improving their service reliability. For those reasons, as well as new carrier investments, intermodal is becoming more attractive for shorter distances.

Shippers can adapt to the coming truck capacity shortage by taking a high-level view of their supply-chain design, says Sanderson. They should determine how many distribution centers they need, where they should be located, and how they should connect up with major customers. In addition, shippers need to examine the availability of intermodal as well as regional and dedicated fleets. Bottom line, says Sanderson: they need to reduce their reliance on long-haul, over-the-road trucking.

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