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May 14 2018

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May 14 2018 | The Journal of Commerce 15 www.joc.com Cover Story "When we look at the vocational labor that is scarce already, it's on its way to be even more scarce," Knight-Swift CEO Dave Jackson said in April. "Every vocation seems short on labor." And trucking "seems to have a disproportionate number of baby boomers still as a significant portion of our workforce. We shouldn't jump to the conclu- sion that these new trucks will find their way into the marketplace immediately with the driver." The question is, how do shippers, especially larger businesses shipping higher volumes, build bridges that can connect them to that oth- erwise hidden pool of capacity? The answer may lie in technology developed by 3PLs and brokers and digital marketplaces such as Convoy. com, Uber Freight, Trucker Path, and NEXT Trucking. Many of these drivers are equipped with more and better technology than was available a decade ago to help them manage their business. At the same time, though, there is no definitive answer on how much capacity is actually untapped by the traditional third-party logistics pro- viders and whether these technolo- gy platforms are finding new drivers as much as adding known drivers onto another platform. There is also the labor perspec- tive that the driver shortage is actu- ally a pay shortage and that if annual salaries were high enough, every single piece of freight would move, even with the ELDs. Whether the threshold is $70,000 or $100,000, the number is well short of what the average driver currently makes. For the shipper, the reality is the storm front is now here. Strong eco- nomic growth means more freight is on the move, but drivers cannot accomplish as much in an average workday operating on an electronic log unless they can quickly move in and out of the docks. The answers exist, but shippers must ask themselves tough ques- tions about what they are willing to do to survive the market storm. JOC Email: ari.ashe@ihsmarkit.com Twitter: @ariashe_joc Email: bill.cassidy@ihsmarkit.com Twitter: @wbcassidy_joc is and (with) the capacity shortages, shippers are saying 'We're going to have to lock into dedicated trucks just to be sure,'" CRST's Rusch said. "Most of the ones that (CRST sub- sidiary) Gardner Trucking does are small: six, 10 or maybe 15 trucks. But the customer knows the capacity will be there, guaranteed." "A year or two ago, dedicated car- riage may have seemed too expensive compared with one-way, but the com- bination of better service, guaranteed capacity and, now, rate competitive- ness have just increased demand for dedicated service," Werner Enter- prises' Leathers told The Journal of Commerce. "We currently have more dedicated demand in the pipeline than we've seen in the last 10 years." More than half of Werner's 7,385 truck fleet is now in its ded- icated business. NFI, too, made the decision a few years ago to move the majority of its assets from one-way to dedicated service. "I was recently speaking to one of our manufac- turing customers and asked, 'How much time do you have to go and chase down a carrier to get a truck?' He said, 'That's my problem. I'm spending a lot of time right now that I don't really have," NFI CEO Sidney Brown told The Journal of Commerce. Like Leathers, he said there is more demand for dedicated carriage than at any point in the last decade. New trucks, but empty seats To meet pent-up demand, US truckload fleets are ordering more trucks. Truck orders averaged 45,400 units per month in the first quarter, according to ACT Research. It's the second-highest average for net Class 8 orders in history. No amount of orders, though, can add capacity on the highway unless there are qualified drivers to fill truck seats. ty hours a day, such as weighing, inspections, maintenance, filling out paperwork, refueling, finding their next load if they're an owner-oper- ator, and searching for an overnight parking space. That's not to mention dealing with bumper-to-bumper traffic on the highways and conges- tion caused by accidents. With inefficiencies rife in this part of the supply chain, it's only natural that carriers prefer ship- ments that maximize their returns during a workday. Efficient shippers of high-paying freight get a leg up on less profitable business. Shippers have increasingly studied new options to alleviate the rising transportation costs in their contracts and the so-called tweener trips being eliminated under ELDs. One option is dedicated trucking service. Usually, these are multiyear deals that provide protections to both sides to address the concerns about rates and equip- ment commitments. Covenant Transport and Werner Enterprises typically sign two- or three-year dedicated contracts. CRST and NFI Industries have been locking in three- to five-year deals. "With the spot market up the way it "The combination of better service, guaranteed capacity and, now, rate competitiveness have just increased demand for dedicated service."

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