Trucking Industry Insights: Roadblocks and Opportunities (Part 1)

As the trucking industry emerges from Covid-19, the future reveals roadblocks and opportunities.

Disruptions from Covid-19 have changed the way the industry operates. And a reversion to pre-pandemic operations is unlikely.

Priorities have changed. Operations have changed. And a new business model is emerging.

The trucking industry has always faced many challenges. However, post-Covid-19 the industry faces some new obstacles as well as some old ones.

Without further ado, let’s see what roadblocks hinder the trucking industry.

 

Roadblocks Facing the Trucking Industry

The uncompromising need for (available) trained and healthy drivers. Before the pandemic,

the driver shortage affected the trucking industry. In the post-pandemic world, the driver shortage will continue to hamper the industry.

That only adds to the new concern of driver health and safety.

For the moment, the health and safety of drivers take top priority. So, trucking companies must pay special attention their employees. The challenges are to maximize employment of a scarce workforce and to keep them working.

What about autonomous vehicles (AVs)? Some tout AVs as a panacea. According to some reports, they won’t be ready for decades. AI research is still in the early stages before deployment of AVs can make a material difference.

These concerns will likely continue at least until we have vaccine. Several cures appear to be on the horizon. According to a report in the NY Times, Pfizer and BIONTECH have one now that’s 90% effective. But having the necessary quantities available is the next concern.

For the short-term, expect to see health and safety of drivers remain a top concern. Without a healthy workforce, the trucking industry can’t meet customer demands. And customer demands are increasing, not decreasing.

The continuous need for speed. As stated above, customer demands are increasing. One of them is the need for instant gratification. We need only look to e-commerce as an illustrative example.

Amazon worked to meet this demand. First, it achieved that with two-day shipping. Then it further fueled customers’ expectations with one-day delivery. Other retailers have jumped into the fray, scurrying to meet this new standard.

Walmart, Best Buy, and Kroger’s have also risen to the challenge, not willing to cede any market share to Amazon.

As a result, the need for speed is here to stay. But there’s a twist to this.

The persistent need for agility.  Besides expediting delivery, companies found new ways to deliver products to customers. In many cases, businesses treated retail stores as distribution centers. Businesses bypassed their retail stores and shipped directly to customers.

That helped move products to customers more effectively and efficiently. And they accomplished this under challenging conditions imposed by the pandemic.

Responsiveness to customer needs was important before the pandemic. As we emerge from the pandemic, it’s even more important. That makes agility even more important. That’s true as customers expect businesses to continue providing services during disruptions.

As a result reliability has become essential.

The constant need for reliability.  Disruption, dislocation, and delay characterized global supply chains. Covid-19 exposed supply chain weaknesses worldwide. Recall critical shortages in basic supplies: toilet paper, hand sanitizer, and protective masks.

Predictability gave way to unpredictability and instability. For example, the pandemic skewed demand cycles, rendering planning ineffective. Even retailers like Walmart and Amazon were unable to meet customers’ basic demands. Reliability suffered across the board.

As a critical link in supply chains, trucking companies strive daily to ensure safe, on-time deliveries. To assure that, information flow has become a critical enabler in attaining reliability.

That entails better internal communication as well as closer communication with customers. Keeping customers informed helps set expectations. Closer communication also helps to identify and resolve issues before they become problems.

Constant communications enable truckers to operate with greater precision and intensity. That will help to boost reliability. While important before Covid-19, reliability’s prominence has risen to a new level. To stay competitive, reliability must continuously improve.

The growing need for sustainability.  With the onset of Covid-19, we saw a reduction in CO2 emissions as trade came to a virtual halt. Yet the acute need to maintain profitability sparked a renewed interest in sustainability. For example, balancing truckload capacity and driver availability arose out of austerity.

That included smarter use of trucks and more efficient network and route planning. That influenced better fuel management and an increase in back hauling. The benefits of improved trucking operations enhanced sustainability.

Covid-19 showed that sustainability goes beyond regulatory compliance. To stay competitive, trends indicate tucking companies will likely make sustainability a strategic goal (ATRI).

Expect this to strain resources in the short-term. Meanwhile, benefits may not materialize until the long-term. Failure to adapt to this new operational environment may disadvantage truckers.

The unending need for containing costs.  There’s no disagreement that maintaining cost control during the pandemic was crucial. Maintaining ongoing operations under extreme conditions challenged the best trucking companies. Lacking stability and predictability, truckers had to find new ways to contain costs.

New costs came in the form of prepping trucks and work sites for daily use. It also included containing costs associated with hiring, training, and retaining truck drivers. That placed a premium on virtual operations. That, in turn, dictated investments in relevant technologies.

Once the CDC approves a vaccine (Pfizer and BIONTECH are close now), some of these costs will diminish. Until then, investment in workarounds will continue. As businesses return to pre-Coronacrisis conditions, companies must manage new costs with care.

Despite the challenges facing the trucking industry, opportunities also present themselves.

 

Navigating the Road Ahead with Confidence

The trucking industry’s roadblocks have been outlined above. Some things have changed, and others remain the same. Regardless, challenges persist as truckers navigate uncertainty and volatility.

A few things are clear. We’ve seen noticeable change in priorities. Health and safety of drivers is a top priority now. It’s always been important, but now, due to health concerns, it’s critical.

Also, the former business model is no longer competitive. Instead, adding value through delivery of relevant services is the new mandate.

You may be struggling with how to tackle uncertainty and volatility head-on, even as you’re reading this post now.

If so, contact American Global Logistics to help you get ready for the next generation of trucking.

We’ll help you navigate the roadblocks with peace of mind in good times and bad. More important, we’ll help you convert those roadblocks into opportunities. (See Part 2 of this blog post that focuses on opportunities facing the trucking).

If you’re looking for a partner that can deliver resilient, reliable, and innovative services check out American Global Logistics.

Simply fill out the form here to start the conversation.