The freight industry is a vital part of the financial engine of the United States. With consumer spending representing more than two-thirds of the U.S. gross domestic product, the ability of trucks, trains, ships, and airplanes to transport goods to their intended destinations is ultimately what enables the economy functioning. The commercial trucking industry alone hauled nearly 11 billion tons of freight in 2021, according to the American Trucking Association (ATA). In doing so, it generated more than $875 billion in total revenue, making it the biggest mover of domestic freight.
Yet the freight industry — trucking, in particular — is dealing with several challenges. How it maneuvers its way through those challenges may have a sizable impact on whether the economic road ahead will be smooth or riddled with potholes. Here are some of the issues the freight industry is experiencing and what business owners are doing to address them.
Challenge No. 1: Ongoing labor shortage
In the wake of the pandemic and the shutdowns that ensued, many industries have struggled to find workers. For trucking companies, however, finding help has been a problem for a long time now. This is due primarily to deterring factors such as low pay, long hours, and the solitary lifestyle that it often entails for drivers. By late 2022, trucking companies needed an additional 78,000 drivers to keep up with the pace of demand, according to the most recent statistics available from the ATA. If the trend continues, the shortfall could top 160,000 by 2031.
With varying degrees of success, motor carriers have made a number of business decisions to attract and retain drivers, including boosting pay, making it easier to obtain commercial driver’s licenses, and improving work-life balance. Whether those efforts are enough to make up for the driver shortage remains to be seen.
Solution: Artificial intelligence
Some organizations are also leveraging artificial intelligence as a way to boost productivity. While fully autonomous trucks are still not commonplace on the nation’s roads, AI has allowed for the creation of advanced driver assistance technologies. They rely on a combination of sensors, cameras, software, radar, and other technologies that help drivers navigate more safely.
As the American Transportation Research Institute (ATRI) pointed out in a 2020 report, “the rapid pace of autonomous vehicle development has the potential to affect many aspects of trucking industry operations,” including by enhancing productivity and improving safety. There are also a number of automakers that are either building or planning to build both fully and semi-autonomous trucks. Semi-autonomous trucks are those that require human interaction to perform certain tasks related to the truck’s operation.
Aside from on-road automation, motor carriers are also using technology to manage their fleets and optimize their routes. For example, through GPS, employers can track the location and status of their drivers in real time. This enables them to determine how long it takes to get from Point A to Point B and apply that knowledge to craft more time-efficient routes and schedules. Additionally, AI is proving to be helpful in identifying available parking spaces, the shortage of which is slowing the speedy movement of freight. While lawmakers are introducing legislation designed to boost truck parking infrastructure, there are downloadable mobile apps that enable truckers to find open spots. According to the ATA, the average driver spends 56 minutes each work shift looking for open parking. This downtime translates to an average of $5,500 in lost wages per year.
Challenge No. 2: Truckload capacity constraints
Another issue that is intertwined with the driver shortage is truckload capacity. With demand for trucking services persistently high, and availability of truckers low, the current state of trucking forces motor carriers to make decisions that can affect their profitability and their relationships with customers and businesses. This dilemma is exacerbated when they lack enough trucks to move products, which is common for smaller carriers that need to be constantly aware of expenses.
ATA Chief Economist Bob Costello has frequently discussed this challenge in the trade association’s monthly tonnage reports, which detail the amount of freight the trucking industry hauls over time. Truckload capacity constraints have also contributed to the supply chain problems much of the world has faced since the pandemic.
“Demand for trucking freight services remains strong, but for-hire contract carriers are capacity constrained due to the driver and equipment markets,” Costello said, as reported by Truckinginfo.
In a 2022 Benchmarking Survey Report from the National Private Truck Council, limited capacity was cited as a leading pain point for the freight industry, along with driver-related issues, the cost of fuel, regulations, and a few other struggles. Parts and equipment shortages are also contributing to the capacity crunch among truck manufacturers.
Solution: Truck-sharing
One of the ways organizations are working around this issue is through truck sharing. As the term suggests, truck sharing involves multiple businesses sharing one or more trucks for the transportation of goods, even though those items may be different in nature and have different destinations. A truck may be owned by a truck-sharing company, for example, or by another motor carrier that rents out unused space to other companies. This approach can be arranged through a truck-sharing platform or application that enables carriers to coordinate with one another. In addition to making more efficient use of resources, truck sharing can also help reduce costs and greenhouse gas emissions.
Oren Zaslansky, founder and CEO of the logistics company FlockFreight, told Supply Chain Brain that shared truck loading makes good business sense because it allows for more efficient use of existing resources. “Many goods can be put together in a very agnostic way that creates value for everyone,” Zaslansky explained.
Truck sharing also helps to reduce the freight industry’s carbon footprint by reducing the number of fuel-burning trucks on the roads. In the average year, one commercial truck emits 223 tons of carbon dioxide, according to FreightWaves. That is roughly the amount of carbon that 14 people produce in a year.
Challenge No. 3: SEC’s climate disclosure rules
Originally issued by the Securities and Exchange Commission in 2010, climate disclosure rules are a set of regulations that require publicly traded companies to reveal any information pertaining to their production processes that can potentially harm the environment by contributing to climate change. Some of these rules were updated in 2020, and they require organizations to increase their reporting on how they may be exacerbating the effects of global warming. For trucking outfits, much of that information pertains to their fuel emissions. The SEC created these rules for transparency purposes so investors can make more informed decisions and put their money toward organizations that share their values and priorities.
Even though the rules are not legally binding, the SEC can still impose penalties for companies that fail to comply.
Solution: Zero-emission trucks
Cognizant of their impact and eager to be part of the solution, some fleets are investing in zero-emission trucks or ZETs. Zero-emission trucks look like any other commercial vehicle but without exhaust. ZETs, which are powered by electricity from batteries or fuel cells, produce minimal pollutants.
Since the federal government has ramped up its spending on electric charging station infrastructure, supporters of ZETs within the trucking industry contend that it makes sense for companies to put their money toward this type of equipment. In addition to helping decrease their carbon footprint, it also incentivizes investors to put their money behind organizations that are climate-focused. Many consumers like to buy from companies that uphold sustainable business practices. As a 2020 poll from the National Retail Federation revealed, over 70% of consumers say they are willing to spend more on items or services from companies that are transparent about their production methods.
Other ways that trucking companies can be more climate-focused without reducing productivity include reducing their empty miles by adopting a full truckload strategy (FTL) and prioritizing tire maintenance, writes Emily Newton, an industrial journalist for Global Trade. Ensuring that tires are properly inflated increases fuel efficiency by reducing a tire’s resistance. “Even simple changes to business processes that help maximize the number of FTLs can have a major impact on emissions,” Newton wrote. “Employing these tactics paves the way for a more sustainable trucking industry.”
The challenges the freight industry faces are solvable through a combination of technology and improved processes. Inspirage has expertise in both areas. We bring the right teams and technologies together to optimize agility and drive operational excellence for all product-based industries. Contact us today to learn more.
