Trucking Logistics Challenges

Trucking Logistics Challenges- Complete Controller.

In the current globalized business environment, logistics plays an important role in trade facilitation and has become a key element to the success of business operations. However, due to volatile customer demands and complex business models, it is very difficult to streamline logistics management.

According to a logistics study conducted in Capgemini, cutting transportation costs tops the list of the most challenging issues logistics companies face. Some other historical points make up the list, but perhaps the biggest concern is the need for more extraordinary technological advancements and innovation without exceeding the budget. Here are the top six challenges trucking and logistic companies face.

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Fuel Costs

Unsurprisingly, fuel costs pose a significant challenge to logistics companies. The industry cannot keep up due to the recent rise in fuel costs, especially diesel. These high fuel prices are likely to affect transportation costs in the U.S. in the form of increased fuel surcharges.

After ranking first in 2005, second in 2006, and third in 2007, fuel again attained the top ranking. Though motor carriers aggressively sought to recoup fuel cost increases with fuel surcharges in 2008, the industry simply could not keep pace with the unprecedented rise in diesel fuel costs.

Economy

Along with the revolutionary increase in fuel prices, other issues, such as the credit crisis and rising inflation, are having an adverse impact on the U.S. economy.

This crisis has resulted in increased regulations, stringent compliance laws, decreases in demand, and, most importantly, an increase in both marginal and fixed costs, further reducing the profitability of the logistics industry.

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Improved Customer Service

Gone are the days when people waited weeks for their shipments without asking questions. Customers now want real-time transparency on their deliveries, such as the exact location of the shipment.

Thanks to the advanced technology available, the location of shipments is as linked as social networks. Therefore, trucking and logistics companies must also bear the expense of facilitating these online services, which can be very expensive and time-consuming, especially for small and mid-sized companies.

In addition, surveys show that most customers are not interested in paying for services like express delivery, further hampering profitability.

Environmental Issues

The majority of average corporate CO2 emissions occur in the supply chain, which has increased the requirement for more transparent and accountable practices from logistics companies. Furthermore, anti-idling laws and other environmental-related initiatives taken by the local and state governments pose the threat that compliance will exceed their benefits.

Onboard Truck Technology

As we previously discussed, the rapid advancement in technology has created many challenges for trucking and logistics companies to stay current with upcoming advancements. Though these latest technologies seem attractive, their implementation can be quite challenging.

Additionally, the costs related to the ELD (Electronic Logging Device) Mandate are a big cause of concern for the industry. It is unclear how productivity will be affected by the deployment of ELD and how the collected data will be used.

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Driver Shortage

Until trucking companies implement Tesla’s automated truck, the logistics industry’s requirement for quality truck drivers remains a perennial top issue.

The recent optimistic prediction of the trucking industry shows that the demand for truck drivers will surpass the supply by around 50,000 drivers. This figure can rise to 175,000 in the next five to seven years.

Conclusion

These are only some of the challenges faced by trucking and logistics companies. Issues like driver retentionHOS (Hour Of Service) regulations, and growing scarcity of truck parking further increase problems faced by the already competitive and rapidly changing industry.

In light of these issues, cutting a few corners will not help logistics companies much. They must adopt a strategic approach to eliminating the bottlenecks and improving their business processes, consequently reducing transportation costs. They may outsource their basic functions (like bookkeeping, payroll, etc.) to focus more on strategic decisions.

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