Digital Edition

January 2 2023

Issue link:

Contents of this Issue


Page 83 of 131

82 Journal of Commerce | J anuar y 2, 2023 Surface Transportation IN PERSPECTIVE ANNUAL REVIEW & OUTLOOK 2023 Jeff Tucker Building resilience This is the logistics sector's version of insanity. But shippers can break free from this death cycle sim- ply by recognizing that most truckers are now driving for smaller fleets. When capacity gets tight, large car- riers tend to tweak their networks, reduce the number of extra trucks they normally provide to custom- ers, and even turn down recurring business in some cases. In addition to a roster of large carriers they trust, shippers also need dozens — maybe even hundreds — of smaller fleets that they can tap in a pinch. Finally, shippers must use brokers strategically to gain steady, reliable access to capacity that is spread across more than 350,000 active trucking companies in the US. Shippers who use brokers effectively place their brokers on an equal foot- ing with their largest asset-based carriers during lane awards, not just on "backup" or low-volume lanes. These shippers use on-time performance data to drive decisions in agnostic fashion, regardless of whether a partner is asset- or non- asset-based. Good brokers handle primary lane awards as well as any large carrier, and the data show it. By better integrating brokers into a shipper's business, their carriers see the shipper as an important cus- tomer and can act as shock absorb- ers, providing an extra truck, for example, when the largest carriers are stretched too thin. By better understanding the marketplace — and by balancing and diversifying procurement and lane award strategies — shippers can use market data and internal performance indicators to navigate a changed mar- ketplace and select the best providers possible. This builds resilience and flexibility to better weather the next storm that is undoubtedly on the near-term horizon. JOC Jeff Tucker is CEO of Tucker Company Worldwide and chair of the National Industrial Transportation League's (NITL) Highway Committee. Contact him at change their organizational DNA. The trucking market has fundamen- tally changed over the last decade. According to Federal Motor Carrier Safety Administration (FMCSA) data collected by, the US for-hire fleet added more than 1 million net drivers during that time, bringing the total to 3.5 million drivers, and the number of active for-hire carriers more than doubled to 361,800. Today, 54 percent of drivers work for fleets with fewer than 100 trucks, with the average being 5.3 trucks. That's a clear sign many drivers want to work for themselves and/or for smaller fleets. As desperate as the largest carriers are to recruit them, many of these drivers are saying "no" to bonuses and employment. Many larger fleets have added drivers, but not as many as smaller fleets, and often through acquisition, as opposed to the traditional recruitment and hiring processes. In other words, there is no over- all shortage of drivers, but the bigger the carrier, the bigger the problem they have in finding and retaining drivers. Second, shippers must avoid making the same mistake as their predecessors and competitors. An insidious serenade whispers to large shippers when the spot market equalizes after a boom, "reduce the number of carriers and brokers and favor asset-based providers." RESILIENCE IS NOW the proverbial holy grail for international logistics. The COVID-19 pandemic, Russian President Vladimir Putin's aggression in Ukraine, and issues surrounding China's claim to the Taiwan Strait have brought the need for resilient and durable supply chains into sharp focus. In every capacity crisis, occur- ring roughly every two years of late, a market shock exposes this lack of resilience, which in turn causes organizational pain, blown freight budgets, and other compliance fee charges that harm shippers' bottom lines and stock prices. Recent history suggests that the next capacity crisis could come in 2023 or early 2024, but shippers can't afford to wait. To be more successful in managing the next crisis, they must begin changing their behavior today. In short, cargo owners have much more control over capacity than they are led to believe. To build resilient supply chains, shippers must adapt their procure- ment strategies and re-engineer how they buy and award freight lanes, such that the next crisis ends up being more like a speed bump than a brick wall. By returning to the same behaviors cycle after cycle, shippers contribute to their own individual crises, as well as the larger supply chain crises. And with each of the past three capacity crises more severe than the one that preceded it, this has become an extremely dangerous game. Fortunately, the cure is simple. It takes understanding how the mar- ketplace has changed over the past decade and structuring a successful path with the requisite flexibility and durability. First, shippers must use data to Cargo owners have much more control over capacity than they are led to believe. Ceri Breeze /

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - January 2 2023