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Home » The Capacity Crunch: What's Ahead

The Capacity Crunch: What's Ahead

August 12, 2011
SupplyChainBrain

Ocean and land carriers that pared down their fleets during the 2008-2009 recession are being very cautious about adding back capacity, says Dave Howland, vice president of land transportation services, APL Logistics. Couple that with new truck safety regulations expected to further shrink the driver pool and it becomes clear that capacity shortages will be a fact of life for several years to come, he says.

Jeffrey Brashares, senior vice president of TTS, an intermodal marketing company, agrees with that assessment. The growing truck-driver shortage, rising fuel prices and continuing interest in "going green," are increasing demand for intermodal, but intermodal containers also are in short supply, he says. "It seems there are not a lot of imports coming into the Midwest these days, particularly to the Ohio Valley region," he says. Intermodal hubs like Chicago, St. Louis, Kansas City and Columbus are very tight on boxes, he says. "I expect that boxes will remain tight as all the pending contracts get signed with their mutual commitment programs. Retailers that are big users of intermodal need to decide now on their plans for the fall, he says. "Unless they go ahead and nail down some commitments, the capacity will be gone."

"The capacity situation in the U.S. is heavily impacted by the import/export market," says Howland. "We are seeing a softening in the import market from the Far East, especially China, as more of its products are consumed domestically. As a result, shipping patterns are shifting for head-haul and back-haul markets, and everyone is struggling a little bit in terms of how to price against that. This creates a lot of flux in the marketplace.

One interesting development this year is that some railroads have boxes stacked in California, because of the slowdown in imports, says Brashares. "In the old days, the rails would have cut the price or moved the boxes somewhere else, but this year they are just sitting."

Both Howland and Brashares expressed concern about the impact on capacity of the Federal Motor Carrier Safety Administration's driver fitness rules, known as CSA 2010.

"One of the concerns is the responsibility it puts on drivers for the equipment they are trailing, says Howland. "If there is an issue with that equipment, it will now cause a hit on the driver's record. So drivers are having to be much more cognizant about the equipment they are pulling, even if that equipment belongs to someone else. If they are not careful and prudent about reporting issues, they will get more points on their license, which will ultimately shrink the driver pool even more."

To view video in its entirety, click here

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KEYWORDS Business Strategy Alignment Global Logistics Global Supply Chain Management Global Trade Management HR & Labor Management Logistics Logistics Outsourcing LTL/Truckload Services Regulation & Compliance Supply Chain Analysis & Consulting Transportation & Distribution
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