The U.S. trucking industry is massive, sustaining millions of stakeholders in a market that is worth close to a trillion dollars annually. Its sheer scale brings in volatility to capacity and volumes available to haul, determined by macroeconomic factors that dictate supply-and-demand equations across the spectrum.
FreightWaves caught up with Tech Mahindra executives Lakshmanan Chidambaram, the president of Americas strategic verticals, and Pravat Rath, the vice president of the company’s retail business group, to discuss the factors leading to the excess capacity predicament in long-haul trucking and the increasing need for capacity in last-mile delivery.
“The surge in capacity we saw over the last few years has resulted in excess capacity that is not getting utilized today, hurting the trucking companies. They are cutting down costs in every possible way, with several companies even going bankrupt,” said Chidambaram.
On a global scale, the drawn-out U.S.-China trade war and the more recent coronavirus debacle will continue to have a definitive impact in reducing the volumes being hauled. Being the world’s largest exporter and second-largest importer, China is a behemoth in global trade and the shutdown of its logistics machinery will send ripples all across North America.
“The sentiments are not very positive. There’s a strong indicator that supply chains could alter. Instead of acquiring from China, it could shift to elsewhere on the globe. It could come back to the U.S. or go to Southeast Asia, but this uncertainty is not healthy,” said Chidambaram.
That said, the rise of e-commerce is synthesizing demand for last-mile delivery capacity. Consumers getting accustomed to having products delivered at their doorstep are posing problems to retail chains like Walmart and Costco, though they have a ubiquitous storefront presence across the country.
With their backs to the wall, these retail giants are now looking to make the in-store buying experience more exciting for their customers. This apart, they are also starting localized direct-to-consumer (DTC) deliveries, which could potentially reach their customers faster than Amazon — courtesy of their physical store proximity to a significant portion of the population.
“With the advent of new technologies like 5G, there will be new kinds of offerings that the DTC companies will come up with so that we can have not only faster deliverables but a much richer experience in ordering online and getting them fulfilled,” said Rath. “Traditionally there have been these long lanes like L.A. to New York or L.A. to Chicago that had seen an increase in capacity but are now not getting utilized as much as it should be. But as these capacities are coming down, the e-commerce capacities are growing phenomenally.”
Data analytics of consumer buying patterns are driving a futuristic race that is dubbed “yesterday’s delivery” — a concept of setting logistics in motion on products that have not been ordered but will be ordered in the near future.
E-commerce companies that cater to consumers with a long buying history on their platforms can anticipate their needs well in advance and keep the products ready in warehouses close to their locations, ready to be shipped at a moment’s notice. This would help shorten delivery cycles to a few hours from the moment an order gets placed — an improvement from the same-day delivery models that are growing in relevance today.
“Ultimately, all this goes towards improving customer experience and towards understanding your customer behavior better. Over a period of time, these companies will start knowing us better, as much as we do or sometimes even better than we do ourselves,” said Chidambaram. “They will know our past and current buying behavior and use that to predict what we will buy in the future. This will help them to plan production, give us the right incentives to order the product and move it to our doorstep faster than ever.”
Tim
I so dang true
Art
Great post.
Another FW article mentioned $59k median pay.
$59k over 70 hours on-duty is $16 hr.
Which parent would want that for their kid?
Might as well work at McDonalds and go home after 8 hours…
Noble1 suggests SMART truck drivers should UNITE & collectively cut out the middlemen from picking truck driver pockets ! UNITE , CONQUER , & PROSPER ! IMHO
Check this trucker’s response to truck driver ads
Quote:
“The picture represents what the trucking INDUSTRY use too be….I have 20 years experience and not 1 person is responding too my ad…..It just goes too show that you people that advertise truckers wanted,,,YOU GUYS ARE SO “FAKE” THAT ITS UNBELIEVABLE….WHY IS IT THAT WHEN YOU CHECK THE JOBS ON KIJIJI ITS ALWAYS THE SAME OLD ADS. WHAT IS YOUR PROBLEM?IT REALLY LOKES LIKE YOU PEOPLE CANNOT KEEP YOUR DRIVERS….I KNOW BECAUSE I HAVE BEEN ON THIS SITE FOR A WHILE WITH 20 YEARS EXPERIENCE AND NO ONE HAS COME FORWARD TO OFFER A PROFESSIONAL DRIVER WITH 20 YEARS EXPERIENCE A JOB . ..YOU GUYS ARE SO FAKE. …LIARS…..DENIAL…..ECT….GET “REAL”AND HONESTY HELPS A LOT……”
LOL !
James
How bout companies start hiring new fucking drivers instead of guys who are fairly close to retiring. Your not going to fill in all those 68,000 plus seats if you refuse to hire fresh/new drivers. I’ve had my CDL for only 4 months now, and I’ve tried every company I could find after SWIFT screwed me over on my contract, forcing ME to pay them back six grand after a “Minor” backing accident (aka scraping the paint off an old trailer), and as of now I’m already feeling like even getting a CDL, let alone learning how to drive a truck was just a big waste of time, and a huge waste of my money.
Jaferi Whitfield
Your full of bullshit this is not true
Jon
Try hot shotting it’s a new career may help you get back in the seat I agree with alot of the drivers it’s a cut throat world out there just keep your head up remember always get out and look your in charge what you do reflexs on your ability to drive accidents causes insurance to go up so now your a high risk driver. Something will come across try Western Express they hire anyone
Karla
I had a chauffeur’s license since the 80s and 90s because I had to get off the road. Raise my four kids I don’t have any recent experience so nobody wants to hire me right now so there is no trucker shortage I’ve got my class A right now but nobody will hire me because I don’t have any recent experience so quit complaining about the shortage unless you want really want to hire drivers and from my point of view you don’t want to hire drivers you just want to hire steering wheel holders the ones who constantly wreck your truck not somebody that will actually try to take care of your vehicles
Jaferi Whitfield
So true they are theives.
CM Evans
Karla, find a company that is self insured. They will put you with their approved trainer for a short period of time to refresh the required skills. Tyson Foods comes to mind. They’re all over the country and they don’t just appreciate their drivers, they appreciate their people.
terry bell
Sad part is trucking is starting to be crippled by the acconamy. Companies are not treating drivers right and companies think about there pockets more then our drivers. Drivers would be more appreciated would make a big different. Money is root of all evil. More companies would be nicer from drivers if company would not be pushing drivers to the burn out stage.
Ken
Agreed keep playing with the truck drivers keep making it harder for us to make a living and when is nothing left on the shelves to buy you all will be sorry then nobody wants over the road anymore everybody else has got a cost-of-living raise over the years but not the trucker’s we should be making $75,000 years were still making $40,000 a year nobody’s into long-distance anymore and it trucking companies are folding up like crazy and it’s only going to get worse
Jojo
Money is not the root of evil…. the LOVE of money is the root of evil (aka greed)
Joe Dirt
I have to laugh at the industry trying to sell the idea of a shortage of truckers. There is no shortage of drivers, just a shortage of PROFESSIONAL drivers who are tired of the roadside BS inspections from the DOT and willing to stay gone from their families for a month at a time. Oh they promise you’ll be home weekends etc then you’re out for 3 weeks. Families now don’t tolerate being separated that long anymore, with only 2-3 days home then gone again. Companies used to care about their drivers, now it’s all about the snakes (brokers) worried about their precious %while we do the work. How many occupations require you to work a 70hr week with no overtime pay, 10hr or 34 hr restart pay? Hell we do all the work and the brokers do nothing but give a p/u # and get a healthy % of our pay.Trucking is considered in the top 5 most dangerous occupations yet drivers aren’t paid there worth. I was asked by a new breed/ chalkboard graduate about any advice I could give him, sure, find another profession. Nuff said.
Mad Trucker
So true I have been driving for 14 years I hate this industry. My son said he wanted to drive trucks I lost my marbles I’ll be dam if I let my son be treated like dog crap. It’s to many trucking companies that don’t have a clue how to run a trucking company. Then the these European companies are popping up in ever state and are screwing the drivers over want even pay then there wages.
Jason young
I agree with you. My son said that exact same thing i almost had a heart attack.
Art
Great post.
Another FW article mentioned $59k median pay.
$59k over 70 hours on-duty is $16 hr.
Which parent would want that for their kid?
Might as well work at McDonalds and go home after 8 hours…
CM Evans
Let the boy drive the trucks for a little while, but teach him how to own and operate multiple trucks. The best of both worlds.
MrBigR504
Yeah, multiple trucks with no freight or good drivers!
Art
Good stuff Joe.
The proliferation of illegal aliens driving trucks as independent contractor “employees” has killed the pay.
It’s just not worthwhile for anyone who speaks English.