It is an excellent time to be in the transportation industry. E-commerce has been good for it and will continue to fuel its growth. Growth creates challenges and trucking companies – who want to be successful – must change to meet them. The companies which can adjust will profit from the new opportunities the next several years provide.
Here are three challenges a carrier must overcome in the next few years.
- Changes in Capacity – At of the end of 2017, the electronic logging device (ELD) mandate took effect. Experts predict a productivity drop of 4% to 6 % as companies start to comply. This compliance will have a negative impact on capacity at a time when there is an increasing demand for it.
- Buyers’ Expectations – Business-to-business (B2B) and business-to-customer (B2C) buying habits and expectations are shifting. They are increasingly expecting faster, more flexible delivery and pricing options.
- Freight Demand – The shifts in B2B and B2C delivery requirements have caused carriers to switch to more frequent shipments which are lighter in weight. Companies have to learn how to set rates based on density rather than tonnage, and still make money without pricing themselves out of a contract.
What are some of the answers to these problems?
Focus on Logistics – Logistics have always been critical in transportation, but today’s shipping challenges make it more so. A business’s operational efficiency and productivity will make or break it in an industry where new standards are being set (i.e., just-in-time delivery, automated warehouses, multi-vendor, multimodal, final-mile).
Improve Technology – Many trucking companies do not efficiently use technology, but that is no longer an option. The time has come when it is impossible to take advantage of the e-commerce boom without the right technology. Contracts with minimum tech requirements will soon become the norm, with particular emphasis on mandatory security.
Implement Analytics – Tracking and calculating margins, estimates, costs, bids, cash flow, productivity, and profit becomes complicated as loads are smaller, more frequent, and with more diversity. Carriers without best practice analytics are going to have a difficult time managing their rolling costs per service line, mile, route, driver, and truck.
Transportation companies who can adapt during this period of growth will thrive; those who cannot adapt will not survive. Think Netflix vs. Blockbuster. Remember that while you cannot control change, you can control how you respond to it.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: