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Over the next three years, logistics professionals should see significant shifts in transportation modes, with intermodal rail and boxcar rail experiencing major increases in usage, according to the Supply Chain Consortium's recent Domestic Transportation Capacity Hot Topic Survey Report.
Parcel shippers should also notice more business coming their way, and companies will begin to increase inbound consolidation to cut transportation costs. On the other hand, the survey reveals that airfreight will trend downward, and truck transportation is expected to stabilize, with little movement either way.
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Rail capacity constraints still exist, particularly in the Midwest, the report finds. To combat rail capacity limitations, investments have been made in locomotives and intermodal rolling stock, and select rail corridors have received physical improvements. Furthermore, the Midwest is not only known for its capacity constraints -- survey respondents also view it as the area of the U.S. with the greatest price increases.
Many regions in the U.S are also struggling with truck capacity constraints. Truck rates are escalating, independent of fuel pricing, and the market is becoming more aggressive with respect to truck capacity. A majority of survey respondents are making some level of changes in truck usage, either from LTL to TL, and some report that they are converting to rail. Truck usage is restricted by several factors. The main variables impacting truck capacity are:
• Limitations for certain destinations and the backhaul and empties returns opportunities
• Driver availability in some regions
• Equipment availability
Domestic transportation capacity issues are not expected to end any time soon. As the need for transportation across the nation increases, so do the problems and limitations with transportation modes. In the future, the cost and availability of fuel will be important factors in determining where capacity constraints will occur as well as which modes will be most economical.
Evaluation of transportation capacity constraints will continue to be dynamic and ongoing and differ from region to region over time as the variables affecting capacity fluctuate. Additionally, with limited people resources and capital spending, it will be increasingly difficult to optimize supply networks to avoid capacity issues, according to the report.
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