What Do Transportation And Logistics (T&L) Leaders Need To Do To Prepare For The Future Of Freight Transportation, Especially Motor Carriers?
Transportation is one of the most important aspects of supply chain management. The existence of competitive transportation rates during the 1990s compelled many companies to develop supply chains that were founded on-demand (Coyle, Novack, Gibson, & Bardi, 2011). Global and domestic transportation plays a major role in supply chain management because it facilitates the movement of products from vendors to customers. However, times have changed.
Transportation and logistics leaders need to adopt new methods of conducting business especially with regard to the use of motor carriers. High fuel prices, high labor costs, tighter transport capacity, environmental conservation issues, and infrastructure problems have rendered motor carriers a less appealing transportation method (Coyle et al., 2011). For example, problems with roads, highways, terminals, bridges, and canals interfere with the efficiency of freight transportation. Also, government regulations have forced some companies to terminate their operations. Stringent policies made their business models unsustainable.
The challenges of using motor carriers for transportation include driver shortages, increased government regulation, traffic congestion, and increased costs of doing business (Coyle et al., 2011). Despite these challenges, motor carriers are a critical aspect of freight transportation. First, leaders should find ways to improve the efficiency of their businesses. For example, they can form partnerships with other logistics companies and security firms to enhance the efficiency of operations, expand their financial base, and improve the security of transit goods. Second, they must expand the scope of their operations to increase profits and lower the costs of operation.
For example, they could consider expanding their coverage areas and adding new services to their business portfolio. Increased profits would enable them to fight competition and address the problem of high fuel costs. Another option would involve expanding beyond hauling shipments to integrating their services into customers’ supply chains. This would help them compete effectively with other companies that offer similar services. Freight transportation is very competitive and requires businesses to innovate continuously to survive.
Innovation and embracement of technology is another strategy to compete effectively and increase profits. One of the challenges regarding motor carriers is a shortage of drivers (Coyle et al., 2011). This challenge can be addressed by embracing new technologies. For instance, the self-driving truck’s technology is on the verge of being introduced in the market. Autonomous vehicle technology is reliable, cheaper, and generates more data than other modes of transport. Reduced accidents and effective data collection will lower the costs of doing business, and as a result, make freight transportation more profitable. The collection of more data from the new technology will facilitate the prediction of shipping times. Technology will lower labor costs and improve the efficiency of operations.
Leaders should also address the problem of high fuel prices and environmental conservation regulations by considering the use of alternative fuels. Alternative fuels are cheaper and they have little environmental impact. They produce fewer greenhouse emissions than fossil fuels because they are manufactured mainly from organic materials. Examples of alternative fuels that can be used include ethanol, natural gas, electricity, hydrogen, propane, and methanol.
Leaders need to act fast since future government regulations such as policies to reduce environmental degradation could affect their businesses. The challenge of high labor costs can be addressed by increasing the size of motor carriers. Big carriers are economical as they reduce labor requirements and lower the amount of fuel consumed by transporting freight. Companies that adopt new technologies and develop new operation strategies will not be largely affected by future government regulations.
Reference
Coyle, J. J., Novack, R. A., Gibson, B., & Bardi, E. J. (2011). Transportation: A Supply. Web.
Chain Perspective (7th ed.). New York, NY: Cengage Learning. Web.