Transportation

May. 21, 2019

Transportation Update: Balancing Supply and Demand

By Bob Evans, Johns Manville Sr. Logistics Manager

A recent report from transportation services experts at C.H. Robinson highlighted an improved balance between supply and demand due to a variety of overlapping factors. The report, titled “The U.S. North America Surface Transportation Market Update Q1 2019” details contributing factors and highlights how each could impact the transportation industry. The report also touches on how data and technology are influencing the industry’s reaction to the balance.

See below graphic with further detail on these drivers.  

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This is something transportation teams at Johns Manville are also experiencing. A few factors JM is focusing on include:

  • Carrier partnerships: The U.S. economy remains strong, giving the feeling of continued demand for building products. JM transportation teams are prepared to meet this demand through a continued focus on carrier partnerships, a critical part of a shipper’s strategy to support stability in productivity and reduce costs.

  • Driver satisfaction: An increase in drivers helps JM meet customer goals more efficiently. JM works closely with drivers via “JMShip,” a platform that 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.

JM expects capacity to remain tight in 2019 and is encouraging customers to remain flexible when planning shipping and receiving schedules and to plan ahead when possible. Despite the industry’s sensitivity to the performance of the broader economy, the American Trucking Association’s (ATA) latest tonnage index equals a healthy 113.2. The ATA number is calculated based on surveys from its membership, which includes month-to-month and year-over-year results, relevant economic comparisons, and key financial indicators.

Feb. 12, 2019

How consistency and flexibility can address regulatory changes in transportation

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.

Driver Shortage

Driver Shortage

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.

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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.

DAT Solutions 2.png

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?

DAT Solutions 3.png

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.

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Oct. 18, 2018

How JM is Countering Continued Capacity Challenges in the Transportation Industry

By Dave Sardinta, Johns Manville Sr. Logistics Manager

A capacity crisis continues to plague the transportation industry – this occurs when there are more loads than there is capacity (or trucks) to move those loads. Continued economic strength, government regulations and the Electronic Logging Devices (ELDs) continue to be the driving factors.

The Morgan Stanley Van Index shows the ratio of available loads for every available truck, and has come off its high of a 9:1 ratio and settled back down to a 3:1 ratio (note the red line in the chart). The ratio is forecasted to increase slightly, driven by strengthening demand into peak season.

Driver shortage remains ever-present in the transportation industry – time away from family and a less-than-glamorous lifestyle are among the deterrents for attracting new drivers. Carriers are increasing driver pay to never seen levels to keep their current drivers and to attract new ones. As driver pay rises quickly and overall operating costs increase, shipping companies are having to charge higher rates to move goods. 

Transportation Graphioc Square Space.png

 

DAT Solutions wrote that it cost nearly 40 percent more to ship a “dry good” a mile than it did a year ago. In fact, according to DAT Solutions and the Cass Freight Index Report, shipping cost hit an all-time high earlier this year and have remained near that level ever since.  This means companies like JM, are experiencing unplanned inflation for both inbound and outbound transportation cost with no end in sight. 

So, what is Johns Manville doing to combat these challenges? We are working hard in our continued pursuit to become a “Shipper of Choice.”

On Oct. 23, we’ll rollout a new check-in/check-out process for our carriers at our larger shipping locations. Utilizing kiosks, this new process will provide real time information for our warehouse and loading crews as well as allowing us to measure our facilities loading performance. The goal is to have carriers loaded and, on the road delivering our products as fast as possible.

We’re also evaluating our loading operating hours and staffing, and to ensure efficiency each step of the way.

Our goal is to partner with our carriers – and all organizations that support our efforts to deliver product solutions for our customers – with the respect and first-class partnership that they deserve.