By Darren Chan
Co-founder & Product, LoadDocs
Blockchain, data analytics, supply chain visibility… All the ways technology stands to make third-party logistics providers (3PLs) more competitive was a major discussion driver at the Transportation Intermediaries Association annual event held last week in Southern California.
Keeping up with the latest in sales, marketing, compensation and workforce diversity all also won significant airtime at the TIA 2018 Capital Ideas Conference & Exhibition.
Still, one topic dwarfed all others at the major logistics industry meeting: The capacity crunch consuming companies across the sector.
Attendees were quick to point out that the second half of 2017 and first quarter of 2018 have been a challenge for much of the freight industry, since it’s never been more difficult to connect the dots to deliver large-scale freight loads.
The combination of a healthy economy and the unprecedented driver shortage that took center stage at last month’s Truckload Carriers Association’s Annual Convention have helped swing leverage back into the hands of carriers. As a result, 3PLs and shippers are increasingly seeking processes and technology that can help them source carriers and develop closer relationships.
Digging for data
As companies across the supply chain look to adapt to this new reality, more detailed information is increasingly in demand.
Data that is digestible and actionable plays a crucial role not only for internal operations, but also for 3PLs and shippers to communicate with their carrier base. Being able to model carrier networks and overlay demand allows both the 3PL and partner carriers to increase utilization.
In a TIA panel representative of the carrier base, Derek Leathers, CEO of Werner Enterprises, preached sustainable networks — that it’s about “more than matching capacity with demand.” He stressed that 3PLs should be more willing to be a “representative” for asset-based carriers.
Darren Hawkins, President and COO of YRC Worldwide, expressed similar sentiments, adding that 3PLs could educate customers on how carriers operate and what shippers should expect. That’s especially important considering that in the past, lost productivity related to poor scheduling or inefficient warehouse operations were placed on the back of drivers.
Damon Langley of TMW Systems faulted the appointment process leading to excessive detention times removing the equivalent of 50,000 trucks from the market. Now, things are changing. Ironically with the rollout of ELDs, carriers have easier access to the data that surfaces inefficient shippers and consignees.
Rates to peak in the second quarter?
Data also lends carriers credibility during negotiations to force shippers to shape up by adding labor, consider drop trailers, or pay up under more stringent detention policies.
Though the economy is expanding and fleets are adding drivers, they can’t fill their empty trucks at a fast enough pace to keep up with the demand. That means rates look likely to keep rising in the second quarter as reefers shift their attention towards produce season, further constraining the dry van supply.
However, the window to push shippers to change and make those efficiency gains stick might be narrow.
Truckstop.com’s Chief Economist, Noël Perry, predicts that rates will peak in the second quarter. By the third week of January 2019, spot rates will return to normal and contract rates will lag by another six months, based on forecasts that next year’s utilization rates will mirror 2015 and 2016.
Longer term, with data more easily accessible, average pricing will be dead. The spread between attractive loads and unattractive loads will grow. Supply chains will become far more stratified, remarked Perry.
Mark Montague, Senior Industry Pricing Analyst at DAT predicts that in the long run, more freight will be moved on a ad-hoc pricing or adjustable pricing model.
Given the pricing forecast and capacity crunch now combining to disrupt the logistics landscape, 3PLs need now more than ever to implement processes and systems that will enable them to make quicker, data-driven decisions while simultaneously strengthening carrier relationships.
Interested in the next wave of workflow technology transforming logistics? Try out a free LoadDocs demo.
