By Bob Evans, Johns Manville Sr. Logistics Manager
“Trucking companies can choose which loads to take on. In December, the most recent month for which data is available, carriers charged an average 22% more than they did a year ago in the spot market.”
“Trucking companies can’t add capacity fast enough to take advantage of the flood of new business. Fleets say they are plowing a hefty portion of the extra revenue from shippers into recruiting drivers. Many expect to raise pay later this year. Even then, “unseated trucks”—big rigs that could be hired out but have nobody to drive them—are becoming more common.”
“The unemployment rate was 4.1% in December…” “ Those rates, which make up the majority of business for many large trucking firms, could rise 6% to 8% this year…” – The Wall Street Journal, December 2018
So, what does this mean for Johns Manville and our customers?
Last year pushed the limits on the transportation industry and significantly impacted the entire supply chain – and projections show this may continue. Driver shortage is expected to reach 176,000 in the next seven years. A number that is forcing shippers and customers to more closely look at shipping and receiving practices, adjusting safety stock levels, order lead time and patterns. And, overall consistency helps carriers to plan, count on and service the freight.
One key factor that impacted the transportation industry was the enforcement of Electronic Log Use (ELD). Regulatory changes enforcing ELD, a requirement of commercial drivers to prepare hours-of-service records of duty status, began on April 1, 2018.
Carrier productivity: The ELD negatively impacted carrier productivity, which was estimated to be roughly 3 percent, compounding an already constrained market.
Price increases: The ELD mandate drove price increases for (formerly) one-day routes of 400 to 700 miles. Shipments that previously had one-day transit times are now two-day and therefore, carriers changed rates accordingly to earn the revenue per day needed to be sustainable, resulting in double-digit inflation across the network.
Intermodal conversion: Shippers looked to convert over-the-road freight to intermodal service, as rail lines looked to improve productivity and profitability, resulting in the closure of 350 ramps.
Detention/delays on multi-drop shipments: According to the U.S. Government Accountability Office “Commercial Motor Carriers,” about 65 percent of drivers reported lost revenue, either because detention time caused a missed opportunity to secure another load or because hours-of-service expired and were required to return later.
Johns Manville is working closely with transportation providers to make freight more attractive and improve overall consistencies in the transportation industry. In Fall 2018, Johns Manville deployed the new “JMShip” platform to 22 Johns Manville facilities. This platform provides an improved experience for carriers when they check in and out of plants helping to organize practices that reduce wait time and allow drivers to provide direct feedback on their experience. The capabilities of this platform are expected to expand in 2019, further elevating the JM experience. Currently, Johns Manville provides 24/7 access and drop and hook capabilities at shipping sites, where feasible, to improve the carriers’ and drivers’ efficiency.
Customers can also help shippers improve capacity in the market through planning ahead on orders and reducing adjustments to delivery dates where possible. Flexible shipping and receiving schedules are critical to carrier productivity. Also, drivers should be able to move in and out of docks within two hours.
Here are a few of the questions Johns Manville is asking, to improve upon transportation challenges:
How do we reduce loading and unloading delays?
How can we expand shipping/receiving hours to both a.m. and p.m.? Is there flexibility?
Do we have space to provide parking and/or drop and hook opportunities?
Do we provide facilities for drivers to take a break from the truck? (e.g. Wi-Fi, coffee, restroom facilities)
Do we encourage our team to treat drivers with respect?
Are our order patterns consistent with sufficient lead time?
This year points to a strong economy and low unemployment, transportation modes nearing capacity, continued concern over trade wars and existing tariffs, and increased focus on driver retention and recruiting by increasing pay and signing bonuses. Johns Manville believes that capacity will continue to be tight, and therefore will continue to adopt solutions and strategies that aim to positively impact the industry.