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Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All
 

From SCDigest's On-Target E-Magazine

- Oct. 21, 2014 -

 

Supply Chain News: Fascinating Panel Discussion at CSCMP on Transportation was Long on Insight - with a Bit of Controversy

 

Shippers Expect Sharp Rate Hikes over Next Year, While One Panelist Says Driver Shortage is Overblown


SCDigest Editorial Staff

 

On the final day of the CSCMP 2014 annual conference in San Antonio, one of the three "mega-sessions" available in the morning slot was titled "What's Happening in the Real World of Freight and Transportation." Moderated by 2014 CSCMP distinguished service award winner Mike Regan of TranzAct Technologies, the panel discussion turned out to be one of the best events of the conference - even if several of the panelists were not exactly household names.

SCDigest Says:

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Regan said he serves on the board of a publicly traded carrier, and that driver retention is clearly one of the most important issues the company faces.
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The four panelists were: Jeff Tucker of Tucker & Associates, Geoff Turner, CEO of Choptank, Steve Robinson, VP of Logistics at Starbucks, and Bob Volmann, current head of the Transportation Intermediaries Association (TIA). All four panelists were wisely selected by Regan - each was very insightful, in a slot usually populated by trucking CEOs and other big shots.

Early on, Regan got things going by asking the audience of some 200 people which of them believed their transportation costs were going to rise more than 5% over next 12 months. SCDigest estimates that some 75-80% of the audience raised their hands - an incredibly high number that shows where shippers believe rates are headed.

Starbuck's Robinson soon thereafter emphasized that in this rate environment, shippers need to rethink the way they interact with carriers.

Currently, "Every rate negotiation with a carrier must be accompanied by a parallel discussion about how to improve carrier efficiency in doing business with you and making life better for the driver," he noted.

The challenge is that when freight demand exceeds carrier supply, while carriers may be happy to discuss with shippers how to improve efficiency at the dock and more, will they really respond to that effort by reducing rates? Likely not - though maybe the good news is that the carriers may at least be more likely to accept a shipper's freight tender after such improvements.

By far the most interesting and frankly controversial comments from the panel were made by Jeff Tucker, who said the current mania over the truck driver shortage is "overrated."

He cited the fact that over the past 30 months, the government reports that the number of "for hire" carriers has actually increased by some 30,000. That is hardly a sign of a huge driver shortage, Tucker argued - someone is driving those trucks.

Tucker acknowledged that the driver market was "tight," but said it was not nearly the disastrous situation it is often made out to be. "The freight is moving," he said.

In fact, Tucker said the reason the situation is so dire is that a driver shortage really has hit the industry's largest carriers, where much of the media's attention is focused. While those large carriers do indeed face driver issues, the situation is much better at medium and smaller carriers, Tucker said.

He said driver retention was often much better at those smaller carriers, which take a more personal approach to driver relations, and can also often offer a better quality of life, Tucker said.

Tucker's comments frankly took a little air out of the room, given the belief that there is an extreme driver shortage has become an accepted truth in the industry over the past couple of years.


(Transportation Management Article Continued Below)

 
CATEGORY SPONSOR: SOFTEON

 
 

A few members of the audience and on the panel pushed back a bit on Tucker's comments, though the number of new carriers entering the market was hard to argue with.

After the panel, moderator Regan noted to SCDigest that "what Tucker did not take a look at is the exodus of drivers from the market. Yes, some new drivers have entered the market, but you have to balance that with what's happening in the total market, as well as the longer term trends."

Regan said he serves on the board of a publicly traded carrier, and that driver retention is clearly one of the most important issues the company faces.

He also noted that "When a company like Walmart goes out and starts advertising for drivers on ESPN and other big time sites, with Walmart offering a base pay of $70-80,000 per year for one of the most desirable driving jobs in the industry, and that they are having challenges filling those is a real indication of where we are headed."

TIA's Voltmann also had several interesting comments. He believes, for example, that when the Federal Motor Carrier Safety Administration (FMCSA) finalizes rules and timing for what on now being called electronic loggers (formerly electronic on- board recorders), it will have a bigger impact on service than many shippers realize.

He said that the loggers will prevent drivers at small and medium carriers from "fudging" times relative to Hours of Service limits, and that many shipments that are made on time today may be jeopardized when that loophole is closed. (Many large carriers have already implemented such devices.)

Volmann offered similar thoughts on coming rules relative to driver "coercion," which hardly anyone well understands, and most shippers have not paid any attention too.

While those coming rules have mostly to do with trying to push a driver to take an illegal load or violate HOS rules, Volmann said it is possible that if a driver shows up for a load but does not have enough hours left to deliver it on time, a shipper could not call a carrier to ask for a different driver because taking the work away from driver 1 could be considered coercion.

That right now is just a hypothetical until the rules are finalized, but let's just say this is something most of shippers and others need to pay more attention too.

There was much more of this excellent discussion, but these were the highlights of a really great session. Great job by all the panelists and moderator Regan.

What is your reaction to these transportation panel comments? Do you think the driver shortage is overblown or not? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

 


   
 

Recent Feedback

Your recap accurately summarized what was an excellent session. All the panelists were well informed and were not reluctant to share their knowledge. Their perspectives were different and Regan did a first class job balancing the presentations and adding his own insight. Everyone attending the session should have left knowing much more than when the program started.


Jack Ampuja
President
Supply Chain Optimizers
Oct, 22 2014
 
   
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