If you were born between the 70’s and 90’s, you’re definitely privy to the phenomenon that is Mario Kart 64. It’s brought you fond memories of joy, laughs, and occasional fights from those playing with you. You may also appreciate the metaphors it has with supply chain management and distribution needs.
Here are some current trends in the transportation industry that will affect your supply chain management.
Shortage of Drivers: Like picking out a driver in Mario Kart, nobody wants to get stuck with Toad. Recent trends in the carrier industry have seen a shortage of truck drivers with proper certification and training. The demand is there but the supply is not. According to a 2015 American Trucker’s Association (ATA) report, the driver shortage was expected to reach 48,000 in 2015 could rise as high as 175,000 by 2024 if current trends continue. Causes include an aging driver population, lifestyle, competitive job market, and increased driver regulation. With reduced fuel prices, labor is quickly becoming the highest operational cost for carriers. As a result, higher premiums for labor are infused into the supply chain and customers end up screaming like they got hit with a red turtle shell. Kablooie goes your budget.
Truck Capacity Utilization: Because of driver shortages and higher labor costs, carriers have been decreasing spend on new asset investment and current fleets are consequently seeing capacity utilization near 100%. Imagine that you’re debating on sticking with the banana peels or dumping them for a box of red turtle shells. The longer you wait, though, the bananas start to go rotten and that’s what carriers are seeing as the cause of higher fleet maintenance costs. So to speak.
THE MAIN TAKEAWAY? All these factors affect asset management, capital spending, and growth strategy for the trucking industry. Even with crude oil and diesel fuel costs trending downward, carriers are still experiencing difficulty counterbalancing their rising costs while trying to recruit drivers to meet increasing demand. As a customer trying to mitigate supply chain risk and costs, you should do extra research into your choice of carriers.