Trucking & Logistics Challenges Today

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

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 a list, but perhaps the biggest concern is the need for greater technology advancements and innovation without exceeding the budget.Download A Free Financial Toolkit

Top 6 Challenges Facing Trucking and Logistics Companies

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 1st in 2005, 2nd in 2006, and 3rd in 2007, fuel attained the top ranking again. Though motor carriers in 2008 aggressively sought to recoup fuel cost increases with fuel surcharges, 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 harming 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.

ADP. Payroll – HR – BenefitsImproved Customer Service

Gone are the days when people used to wait weeks for their shipment without making any inquiry. Customers now always want real-time transparency on their delivery, such as the shipment’s exact location.

Courtesy of 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 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 the local and state governments take threaten that compliance will exceed their benefits.

CorpNet. Start A New Business NowOnboard Truck Technology

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

Additionally, the costs related to the ELD (Electronic Logging Device) Mandate are a significant cause of concern for the industry. It is not clear how productivity will be affected by the deployment of ELD and how the collected data will be used.

Driver Shortage

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

The recent optimistic prediction of the trucking industry shows that the demand for truck drivers surpasses 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 retention, HOS (Hour Of Service) regulations, and the growing scarcity of truck parking further increase the already competitive and rapidly changing industry problems.

Considering these issues, cutting a few corners will not help much for logistics companies. They must adopt a strategic approach to eliminate the bottlenecks and improve their business processes, consequently reducing transportation costs. They may outsource their essential functions (like bookkeeping, payroll, etc.) to focus more on strategic decisions.

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