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Making the Case for Managed Transportation Services

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THE TRANSPORTATION MARKET IS FRAUGHT WITH CHALLENGES

It’s a trucker’s market right now, and as freight continues to move into the boardroom at a rapid pace, more shippers are turning to transportation management services to help them navigate challenges, save money and improve overall supply chain visibility.

Driver shortages, capacity imbalance, federal government regulations and overall robust economic conditions are all currently playing havoc with transportation costs. At the same time, companies are grappling with new standards of velocity, market choice and cost for their products. Consumers are demanding better variety and greater availability at the lowest possible cost—further increasing complexity and intensifying pressure on supply chains. When an organization’s supply chain capabilities are lacking, it leads to increased costs, troublesome shipping complications and dissatisfied end customers—all of which can take a serious toll on a shipper’s bottom line. To meet continually-changing consumer demands and expectations in an increasingly-competitive market, shippers need fast, efficient supply chains that can go the distance.

SURVIVING IN A CARRIER’S MARKET

Demand for trucks is greater than usual right now, with the supply of vehicles impacted by a reduced driver pool, a hot economy and mandates like the electronic logging device (ELD) rule. The latter is effectively diminishing the number of drivers who are available to operate vehicles. Exacerbating the problem is an industry that has been reluctant to invest in new vehicles over the last couple of years. “Combined, all of these factors have put the balance of supply and demand out of kilter in the transportation world and effectively created a trucker’s market,” says Transplace CEO Frank McGuigan. “At the same time, retailers are upping their compliance fees and fines, and both retailers and the manufacturers are trying to reduce inventory levels. Everyone wants just-in-time service to reduce back-of-the-store inventory.” These unprecedented freight capacity conditions are not only making it difficult for shippers to operate in, but it’s also chipping away at their bottom lines. “I’ve never seen a market as constrained for capacity as the one we’re in right now,” says Mark McEntire, senior vice president of operations, Transplace. Those demands are putting even more strain on an already-constrained transportation market, where back-to-back hurricanes in 2017, rapid growth in e-commerce sales and an overall economic lift are also disrupting the balance. “We’re in the middle of a perfect storm here,” adds McEntire. “For shippers, it’s all about finding capacity in a market where a lot of carriers have consolidated or gone out of business—and lost a high number of drivers to other industries—over the last several years.”