Trucking might be one of America’s most demanding jobs. It requires long hours on the road and days away from family. Worker protections, like limits on the number of hours truckers can drive every day, don’t always have the impact they’re supposed to, as journalists often discover. Plus, self-driving vehicles could put truckers out of work in the near future.
Considering all that, it’s probably no surprise that the trucking industry is facing a shortage of drivers. NPR reported in January that trucking companies will need to hire nearly 900,000 more drivers to keep up with demand.
More than 70 percent of goods Americans consume are moved by truck, a 2017 American Trucking Association report said. And we continue making more and more purchases online, which means more and more packages are crisscrossing the country on interstate highways.
The truck driver shortage makes truckers’ labor more expensive. But if shippers and carriers can embrace innovative last-mile delivery strategies — that is, get parcels off trucks and onto bikes or into lockers sooner — they can stay ahead of those rising prices.
Understanding the Trucking Industry
Like all industries, trucking sees ebbs and flows. When there’s a driver shortage, like this one, wages tend to rise to attract more employees. But when trucking companies face tough economic times, they may cut pay or push drivers to do more with less.
Shippers should watch the industry carefully to keep up with these rises and falls. Trucking companies — many of whom are contractors hired by carriers like FedEx and UPS — pass their costs onto those carriers, who in turn pass them on to retailers and manufacturers in their shipping contracts.
Shippers who can identify shifts in marketing fundamentals can preserve their shipping rates and even set themselves up for future rate advantages.
Adapting to Last-Mile Delivery Trends
Shippers are increasingly moving away from reliance on trucks for residential deliveries. FedEx, UPS and their competitors are constantly using data to increase the efficiency of their routes, so trucks can deliver more packages over fewer miles.
Many urban centers are planning with a renewed focus on pedestrians and alternative modes of transportation, limiting trucks’ access to some neighborhoods.
Yet at the same time, demand for urban commercial and residential delivery keeps growing — the 2017 MHI Industry Report predicts 40% growth by 2050.
Together, these challenges are prompting exciting innovations in last-mile delivery. UPS rolled out electric bike deliveries in Pittsburgh and five European markets last year to complete next-day-air deliveries. Amazon’s drone delivery service is in private trials in the United Kingdom, but could deliver packages in urban centers in 30 minutes or less.
On top of those experiments, many retailers and shippers have adopted the locker model: Ask customers to pick up packages at their convenience in a nearby location. FedEx offers package pick-up at thousands of Walgreens, Kroger and FedEx Office locations. Amazon has installed more than 2,000 secure lockers in places like apartment building lobbies, where customers can enter secure codes to collect their parcels. Centralizing drop-offs makes delivery more efficient for drivers; plus, it eliminates the threat of doorstep theft.
Last-mile delivery is still very much in flux, but we expect most carriers to adopt a variety of these strategies as they adapt to rising trucking expenses.
Collect and Analyze Data About how Your Packages Travel
Analyzing shipping data can help your company identify inefficiencies — with a specific eye on reducing the distances your packages have to travel or the cost of that transportation.
For example, executives at auto parts manufacturer KC HiLiTES knew they were paying too much for shipping, but didn’t realize they were their carrier’s largest account in the rural region outside Flagstaff, Arizona.
Reveel’s consultants helped executives evaluate their contract with that in mind: Their contract basically covered the costs of their carrier’s residential deliveries in that area. Taking that framing into their next contract negotiation, they were able to reduce shipping costs by 18%.
KC HiLiTES already had a decades-long relationship with FedEx and UPS. What changed the game for them was industry data about their region — which they didn’t have internally, but Reveel’s consultants were able to share.
That’s a big part of Reveel’s value proposition: Not only can we help companies analyze data about their own shipping habits, but our consultants have information about every aspect of the shipping industry.
We can help you understand where you fit on truckers’ routes, carriers’ distribution networks and within their last-mile delivery plans. And we can help you put all that knowledge toward savings on your shipping contracts.