Are North American trucking operators facing the perfect storm?
The perfect storm is usually defined as a combination of events which, taken together, lead to a catastrophic outcome. Such may be the case for the North American trucking sector which is facing a series of challenges, some old, some new, which threaten logistics efficiency. Firstly the old. The driver shortage, of which I have written many times, has reached critical proportions. It is estimated that the sector is, or soon will be, facing a shortfall of 50,000 drivers. The reasons for this have been well-documented - long hours, declining pay rates and a general change in younger drivers’ attitude to the work/life balance are foremost among them. There are, however, new factors coming into play. The EDL Mandate (electronic logging device rule) introduced last year electronically records a driver’s hours, replacing the paper logbook some drivers used to record their compliance with hours of service requirements. It is fair to say that this has not been universally popular with either operators or drivers. Some operators say that the devices are defective and that there are software integration issues while some drivers and safety enforcement personnel are still learning how to handle the new paperless systems. There also appears to be a number of trucking companies which are undecided whether to comply with the ELD rule or to quit the business altogether, thereby adding to the capacity shortage.
Another factor exacerbating the crisis is the recent extreme wintry weather affecting much of the eastern United States which has significantly slowed deliveries. Add in the worsening congestion at a number of US ports and a general increase in consumer demand and you have all the ingredients necessary for the perfect storm. Some shipping lines, led by CMA CGM, have implemented an Emergency Intermodal Surcharge of around $300 per container where they have been nominated to provide carrier haulage services in certain key markets. In the run-up to Easter, the capacity situation will only worsen and there are serious ramifications for many industries, not the least of which is automotive.
As is often the case however, every cloud provides a silver lining for someone. In this case it is the emergency freight sector, which is increasingly being asked to compensate for unreliable or delayed shipments. Emergency freight is not cheap and its long term use is not sustainable for many shippers. Whilst we can’t control the weather, something needs to be done to ensure the welfare of the transportation sector and, consequently, the US economy.
Simon Duval Smith
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