In 2017, the transportation marketplace will rebound from a soft 2016, and carriers will have substantial leverage in their negotiations with their customers. This will compel shippers and 3PLs to look at how they are using technology and analytics to manage their freight costs.
There are several reasons why capacity will tighten in the latter half of 2017. First, a casual look at Class 8 equipment orders confirms that carriers are not adding capacity.
Second, the recruitment and retention of drivers isn’t improving, and could get worse if carriers lose drivers to surging construction/home building industries. The Federal Motor Carrier Safety Administration under a Trump administration may be less inclined to expand their regulatory powers, but concerns about driver health issues aren’t going away, so retaining drivers will be even more challenging for carriers.
Third, with the Owner Operator Independent Drivers Association having lost its ELD court challenge, we will see more carriers using ELDs throughout the year since they must be compliant by December 2017. The ELD decision will result in increased driver attrition and carriers adjusting their networks based on a 3 percent to 5 percent loss in productivity.
If shippers start getting high single-digit, or worse, double-digit rate increases, expect to see C-level executives asking transportation professionals for some ideas or alternatives to lower costs and to improve their bottom-line results.
This increased pressure from the C-suite will force professionals to utilize technology to free up time by eliminating wasteful practices. Savvy shippers will proactively review data and perform analytical projects to lower rates or implement more efficient supply chain processes that drive out costs.
One final encouraging prediction: This is a great time to be a transportation logistics professional. With supply chain and transportation issues barging in to the C-level suites, 2017 may well be the beginning of a supply chain renaissance where artists (a.k.a. that’s you), are valued and appreciated for your contributions.