Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
How important is it for truck fleets to retain newly hired drivers for 90 days? Very, according to the American Trucking Associations' (ATA's) chief economist.
Bob Costello told the NASSTRAC shippers conference and transportation expo in Orlando yesterday that driver turnover rates would be roughly halved if all new hires stayed for the first 90 days of their employment. If Costello's estimates are accurate, that would pound a major dent into turnover, which for large fleets—those with more than $30 million in annual revenue—hit 102 percent in the fourth quarter, according to ATA data released Monday. That marked the second straight quarter that turnover for large fleets hit 100 percent or higher, and the first time that's happened in back-to-back quarters in four years, ATA said.
At smaller truckload carriers, the fourth-quarter turnover rate rose 21 points, to 89 percent. Still, the churn at smaller fleets was six points less than in 2014's fourth quarter, ATA said. The turnover rate at less-than-truckload (LTL) carriers rose one point, to 11 percent, and averaged 11 percent for all of 2015, ATA said. LTL driver turnover is usually less than in truckload due to higher pay and because LTL's relatively short hauls allow for more home time for drivers.
For fleets, driver retention has been as challenging as, if not more than, recruitment. Qualified drivers, well aware that carriers are upping wages for good operators, are not shy to jump from carrier to carrier at almost a moment's notice. The jilted fleet loses a driver and then has to invest the time and money to find a replacement.
Late last year, ATA estimated that the industry was short about 48,000 drivers. If current trends continue, the driver shortage will reach 175,000 by 2024. Costello said he doesn't expect the shortfall to be so acute because it would lead to intolerable increases in the prices of goods, as there won't be enough drivers to move them to market. The shortage will be due mostly to the pace of driver retirements—the average driver is at least six years older than the average worker in other industries—and the dearth of women in the field, Costello said. Women account for only 6 percent of all drivers, according to ATA data.
For now, there is less pressure on fleets to find drivers, because freight demand isn't particularly strong. U.S. GDP will grow by only 2 percent this year as a strong dollar makes U.S. exports less price competitive in world markets and also hits domestic production by cheapening import prices, Costello said. In addition, the surge in shale energy exploration and development, which proved a major tailwind for truckers from 2010 to 2014, has dramatically abated.
Elevated inventory levels in the U.S. are dampening new order activity, as businesses can sell from existing inventory rather than place orders to be shipped. The government's total ratio of inventories to final sales, which covers industry, wholesalers, and retailers, hit 1.41 in February, its highest level since mid-2009. The ratio needs to decline to between 1.30 and 1.35 to spur a new cycle of ordering and shipping, according to Costello.
However, Lee Klaskow, senior analyst, transportation and logistics, for Bloomberg Intelligence, told the gathering that inventory levels will remain elevated for the rest of the year and possibly into 2017, as the supply chain struggles to reduce a nearly two-year accumulation that began with the awful winter of 2013-14 that paralyzed much of the country's freight network and compelled businesses to hold more buffer stock as a form of insurance against late or missed deliveries.
Fleets that added tractors and trailers in 2015 are now in the process of scaling back their activity. Tractor counts at truckload carriers, which rose 0.7 percent in 2015, will decline 0.6 percent in 2016, Costello predicted. In the LTL segment, tractor counts, which rose 5.6 percent in 2015, are now increasing at less than 2 percent, he said.
The cumulative impact of these trends is a renewed buyer's market for trucking services. Spot, or noncontract, truckload rates are in free fall, with no immediate end in sight. Contract rates, which have held relatively steady but generally follow the spot market's lead, will stagnate this year, according to Klaskow. The analyst sees truckload pricing at the major carriers as either staying flat or rising up no more than 2 percent during the 2016 cycle.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.