Executive Briefings

How to Prepare Your Supply Chain for Capacity Challenges

Truck capacity constraints are having a significant impact on shippers' transportation and logistics programs. George Abernathy, president and chief commercial officer of Transplace, offers advice about what they can do to address the challenge on a long-term basis.

The capacity shortage in the motor carrier marketplace has been less critical in 2015 than last year, says Abernathy, in large part because of differing weather patterns. "As we look toward Q2 and beyond," he says, "there appears to be a lower expectation of such dramatic capacity tightening."

Having felt the sting of the polar vortex in 2014, shippers and carriers were better prepared this year. Last year's severe conditions provided “a wakeup call” that resulted in improved contingency plans. Shippers are now exploring such options as the use of alternative modes, expanded carrier bases, and a shift in the balance of asset- versus non-asset-based operations.

At the same time, Abernathy notes, capacity remains an issue for shippers. “We’re sitting on a tipping point right now,” he says. Any single element - such as a significant dip in the housing market or retail sector - could trigger another severe imbalance between supply and demand.

On the regulation side, delays in the application of tougher hours-of-service regulations have helped to ease the crunch. Abernathy says the stricter rules could result in a curtailing of truck capacity by 2 to 5 percent.

The capacity situation won’t truly be resolved in the coming year, he says. “There’s nothing in the marketplace, at either the macro or micro level, that gives cause to believe there’s going to be a major shift to add capacity.”

Shippers need to “go beyond the old bag of tricks,” Abernathy says, urging a fresh look at procurement strategies for multiple industries and modes. Shippers need to work across networks to find new opportunities for obtaining capacity and controlling costs, he says.

To view the video in its entirety, click here

The capacity shortage in the motor carrier marketplace has been less critical in 2015 than last year, says Abernathy, in large part because of differing weather patterns. "As we look toward Q2 and beyond," he says, "there appears to be a lower expectation of such dramatic capacity tightening."

Having felt the sting of the polar vortex in 2014, shippers and carriers were better prepared this year. Last year's severe conditions provided “a wakeup call” that resulted in improved contingency plans. Shippers are now exploring such options as the use of alternative modes, expanded carrier bases, and a shift in the balance of asset- versus non-asset-based operations.

At the same time, Abernathy notes, capacity remains an issue for shippers. “We’re sitting on a tipping point right now,” he says. Any single element - such as a significant dip in the housing market or retail sector - could trigger another severe imbalance between supply and demand.

On the regulation side, delays in the application of tougher hours-of-service regulations have helped to ease the crunch. Abernathy says the stricter rules could result in a curtailing of truck capacity by 2 to 5 percent.

The capacity situation won’t truly be resolved in the coming year, he says. “There’s nothing in the marketplace, at either the macro or micro level, that gives cause to believe there’s going to be a major shift to add capacity.”

Shippers need to “go beyond the old bag of tricks,” Abernathy says, urging a fresh look at procurement strategies for multiple industries and modes. Shippers need to work across networks to find new opportunities for obtaining capacity and controlling costs, he says.

To view the video in its entirety, click here