The Logistics Challenges Facing the Local Motor Carriers in America
According to a third party logistics study conducted by Capgemini, it was established that ‘cutting the transportation costs’ apparently makes the top of the list as far as concerns for the logistics industry (Saltzman & Belzer, 2002). Numerous concerns are facing this industry, but the most critical and challenging concern is related to the need to have higher innovation and technology advancement but remains budget-conscious. The paper will analyze the logistics challenges facing the local motor carriers in America.
The local motor carrier industry in the US plays a critical role in the country’s economy. Local motor carriers are considered the backbone of the country’s freight system where they carry more than 80% of the entire domestic cargoes by value and approximately 70% by weight. Additionally, the overall freight carried by the rest of the modal transports also entirely relies on the local motor carriers with offers access to the seaport terminals, air cargo, and railroad. The overall motor carrier industry’s flexibility has enabled local motor carriers to serve almost all freight transport market sufficiently, which helps to meet the demands of the shippers with quality levels of services (Hanowski, Wierwille & Dingus, 2003).
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Some of the challenges facing the industry include: first, the fuel cost has been one the major problem in this industry. Fuel cost has been the highest cost that contributes to the ‘cutting transportation cost’ concern. Research has shown that higher prices of fuel are more likely to increase overall transportation cost for the majority of the local motor carriers in the US by pushing up the fuel surcharges. Saltzman & Belzer (2002) asserts that the rising prices of diesel fuel have been escalating surcharges adding to the freight rates that have apparently been reversing the trend that cut deeply into the revenues and earnings of the truckers as fuel prices plummeted. The second key challenge is the economy, whereas the fuel prices rise, a deepening credit crisis emerges. Further, the rapidly increasing inflationary pressure tends to take greater toll on the US economy. The increased regulations will thus pressure the local motor carriers industry, excess capacity, slumping demand and even increase in fixed and marginal key cost centers (Pai, 2012).
There is also the challenge of driver shortage and retention. Arguably, the hiring and retention processes have remained the major issue despite the lower demand. Despite the fact that the continuous sluggishness of the economy will relieve a significant amount of pressure, the respondent has apparently continued to be a major concern (Hanowski, Wierwille & Dingus, 2003). Government regulations have also continued to be a key area of challenge for the local motor carriers in the US. Saltzman & Belzer (2002) posits that the safety regulation in the US is the ultimate responsibility of the Federal Motor Carrier Safety Administration, however, over the years; a majority of the carriers have continued to experience additionally regulations imposed on them by the federal, state and local authorities.
Congestion has also raised significant concern in this industry. Despite the fact that the problem has apparently experienced a constant rise in terms of of rankings since the year 2005, its decline from the 4th position in the year 2007 to the 6th might be clearly illustrated by the recent drop in the motor trips and car miles travelled caused by the increases in the fuel prices for all the local road users (Pai, 2012).
In the recent years, environmental issues have also continued affecting the local motor carriers in the US. Research has shown that the anti-idling and several emission reduction regulations established by either the local or the state governments have created a greater challenge that the cost of compliance might ultimately exceed benefits. Finally, technology Strategy and their implementation are critical to the industry (Cantor, Corsi & Grimm, 2006). It is true that the industry understands and supports numerous benefits of the modern technologies; however, specific questions remain on how these local motor carriers would pay for them and who would help in the improvement’s implementation.
It is true that it might be challenging to address all these concerns adequately. Therefore, outsourcing all or even a significant portion of the business process and freight might arguably provide the needed expertise, capacity, people and even critical IT systems required to help lower the expenses, improve overall supply chain visibility, efficiently manage the supply chain and also achieving a higher level of the regulatory compliance (Roy, 2001). Digital Solutions have further been emphasized as part of the most suitable strategies to address the challenges facing the local motor carriers in the US. Onboard truck technology might also be an essential solution to these problems. The industry understands and supports numerous potential benefits of such technologies. It has been pointed that Electronic Onboard Recorders (EOBRs), is the most prolific technology topic and practical tools to monitor HOS compliance.
According to Cantor, Corsi & Grimm, (2006), Remote Freight Bill Entry Solution might help cut on the cost of operation because, a fully automated program would evidently eliminate the need for the human intervention, improve overall bill entry process’ accuracy and standardization that would allow for quality metrics to be met. Finally, tort reform can also be employed to manage the logistics challenges where it helps in minimizing the industry harms that are caused by inequitable and excess civil judgment towards the trucking companies.
In conclusion, the paper has critically examined the benefits and the potential challenges that are currently facing the local motor carriers in America. The local motor carriers help links the major modes of transports such as railroad, airports and seaport terminals. Despite the benefits associated with the local motor carriers, some challenges have continued affecting these carriers including increased cost of fuel, congestion, government regulation and financing the adoption and implementation of technologies. One of the suitable solutions to address these problems includes outsourcing and adoption of cost-efficient technologies.
References
Cantor, D. E., Corsi, T. M., & Grimm, C. M. (2006). Safety technology adoption patterns in the US motor carrier industry. Transportation Journal , 20-45.
Hanowski, R. J., Wierwille, W. W., & Dingus, T. A. (2003). An on-road study to investigate fatigue in local/short haul trucking. Accident Analysis & Prevention , 35 (2), 153-160.
Pai, D. R. (2012). The US motor carrier industry: estimation of operational efficiency using DEA. International Journal of Logistics Systems and Management , 12 (2), 227-245.
Roy, J. (2001, January). Recent trends in logistics and the need for real-time decision tools in the trucking industry. In System Sciences, 2001. Proceedings of the 34th Annual Hawaii International Conference on (pp. 9-pp). IEEE
Saltzman, G. M., & Belzer, M. H. (2002). The case for strengthened motor carrier hours of service regulations. Transportation journal , 51-71.
