In June, the Council of Supply Chain Management Professionals released its annual State of Logistics Report, and the study's conclusions are not likely to raise much in the way of hopes that our long, bumpy ride along an economic trough will end soon.
Rosalyn Wilson, senior business analyst at Vienna, Va.-based Delcan Corp. and author of the report, told shippers and reporters gathered in Washington for the report's release that the "underlying pieces are not falling into place to support anything more than weak growth" for the rest of 2011.
Yet logistics costs, led by transportation, are rising faster than the overall economy. Driven by demand, higher fuel costs, and tight capacity, total transportation costs in 2010 were up 10.3 percent to $768 billion, according to the report, even as the overall inflation rate remained low.
Tight capacity in the truckload sector remains a particular concern. As Senior Editor Mark Solomon recently reported, "Available truckload capacity is dearer than at any time since the middle of the last decade, experts say. While the reasons for the shortfall are manifold—a weak economy that forced truckers to sideline rigs, a shortage of available drivers, rising operating costs, and a lack of adequate credit for carriers to replace aging equipment or expand their fleets—the fact is, rig counts are down by as much as 15 to 20 percent from their 2006 peaks."
The driver issue is particularly worrisome. When carriers gain confidence that demand for capacity has some legs, capital investment will eventually follow. But finding drivers—long a source of concern—is only going to get more difficult. The American Trucking Associations (ATA) reported in late June that longhaul driver turnover had hit an annual rate of 75 percent in the first quarter of 2011. That's the highest rate since the second quarter of 2008.
It may seem odd that while unemployment remains high, carriers cannot find enough drivers. But you don't have to look far to understand why. Longhaul driving is a grueling job. Regulators, rightfully, have cracked down on unsafe drivers, and new rules will take more of them off the road. Looming changes in hours of service regulations will make it tougher to make a good income.
Shippers can help themselves through fair dealing with their carriers and just plain humane treatment of drivers at their docks. That won't solve the broader issues vexing carriers just now—nothing would provide a cure faster than a return to robust growth—but it can mean their own freight will move on time at a reasonable rate.