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24th Annual Study of Logistics and Transportation Trends: Serving up friendly freight

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Current conditions have rendered the primary pursuit to reduce transportation costs ineffective. A cure for the “cost savings addiction” is a collaborative partnership that has an aligned long-term view of mutual success. By Mary C. Holcomb and  Karl B. Manrodt | Logistic Management

The worst global recession since World War II precipitated an evolution intransportation that’s still in progress. For shippers, excess transportation capacity during much of the recession enabled them to negotiate substantial reductions in transportation rates.

These cost savings became a key contributor to many shippers’ bottom lines; and after multiple years of being able to obtain sizable discounts in their transportation rates, shippers have taken these savings for granted.

[blockquote style=”2″]The results of the 24th Annual Trends and Issues in Transportation and Logistics Study indicate that these cost savings are even more important today as financial performance is essentially flat year-over-year for a large percentage of companies participating in the 2015 survey.[/blockquote]

For motor carriers, the lessons learned during the severe economic downturn, along with the impact of several regulatory changes, have compelled them to maintain a level of discipline regarding capacity that has kept them from returning to pre-recession behavior. The upshot is that demand for transportation has exceeded the available capacity in several surface transportation modes.

Forecasts indicate that this imbalance will increase as the driver shortage in trucking gets worse in the future—and the new reality for shippers is one of transportation rate increases into the foreseeable future. This situational change has many shippers experiencing the pain of withdrawal from their previous, enviable position.

For the first time in our careers, carriers, rather than shippers, are in the position of power in the relationship, and the shift has put new meaning and emphasis on the familiar terms “favored shipper,” “shipper of choice,” and “carrier-friendly freight.”

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