On Dec. 6, 2021, an illustration of a containership at dock made the cover of the famed New Yorker magazine. The picture featured Santa pulling the ship to shore, thus saving Christmas for everyone. While humorous and lighthearted, the recent supply chain challenges are real and personal for everyone.
At no other time in recent history have transportation and the supply chain been a topic from the dinner table to the boardroom, whether it’s purchasing a new car, procuring building materials, or shopping for Christmas.
As the economy and industrial manufacturing reopened quickly in late 2020, the supply chain and its interconnected parts worked to restart as well. It is not by accident that the logistics world is a vast “chain” of relationships, partners and stakeholders, each relying on the others’ ability to forecast, schedule and deliver. Simply put, each must operate effectively or else bottlenecks can quickly occur.
The challenges within transportation — especially the movement of hazardous goods — are real. Tanker transportation is a specialized subsegment of the larger trucking industry. The pool of available trucks, drivers and carriers is smaller than other modes. Increased safety training, insurance requirements and specialized tank trailers are all necessary to provide the level of service the industrial gas market expects.
According to the American Trucking Association (ATA), in 2021 the industry reached a historic high in the shortage of truck drivers versus market demand at 80,000. At current levels, the shortage could eclipse 160,000 within 10 years, based on current demographics and forecasted freight demand increases.
Most inside the transportation and logistics industry realize this is a decades-old problem without a singular cause or solution. It’s a complex issue that will not be solved simply by focusing on one angle. A few highlights, provided below by the October 2021 “American Trucking Association Driver Shortage Report,” shed some light on challenges and opportunities as we move into 2022.
- The high average age of current drivers increasingly leads to more retirements, medical leave and shifts to other industries.
- Women make up only 7% of all drivers, well below their representation versus the total workforce, which presents a unique opportunity to engage, educate and train.
- Increased drug testing as a safety requirement runs in sharp contrast to states legalizing marijuana (a substance still banned federally).
- The federally mandated minimum age of 21 to drive commercially across state lines limits the broader talent pool.
- Post-pandemic labor issues persist as drivers leave the industry at a higher rate and training schools shut down.
- Drivers desiring increased home time and flexibility in schedules, like other industries.
- The worsening of infrastructure issues, such as traffic, congestion, lack of truck parking spots and wait time to load and unload, contribute to often stressful working conditions.
- Shippers pay on a per load basis, and carriers pay drivers the same way. This creates volatility and uncertainty in a driver’s income level week to week.
During initial backlogs and scrambling to move product, an acronym — VUCA — surfaced in business circles. VUCA stands for volatility, uncertainty, complexity and ambiguity. For years, the supply chain had operated largely within balance. That all changed in 2020. Businesses were forced to accept the “new normal” and adapt within a VUCA environment moving forward.
Thankfully, there are countermeasures that can be developed within supply chain planning:
- Be more in tune with partners’ needs and business goals, increasing speed to market.
- Display patience and plan for disruption before it happens.
- Be trustworthy, open and transparent in uncertain situations.
- Invest in the needed partnerships, people, systems and technology to rise to the challenge.
- Share critical data and forecasting with trusted partners.
- Create a broad range of response actions and contingency plans.
This mindset is critical within energy transportation and logistics, where the variables of seasonality, weather patterns, changes in price and supply availability all play a role, sometimes all at once. For this reason, there is value in partnering with logistics companies that understand butane and propane markets, but also operate a diversified portfolio of commodities to help manage the volatility.
Grammer Logistics is seeing changes in truck driver supply versus demand by region, shaping new pricing structures. New strategies are emerging that guarantee a set minimum amount of business per week for both short-term projects and longer-term agreements. Weekly minimums help regulate a driver’s income level per day/per week and allow the transportation to better plan capacity for the shipper.
Exploring the option of transloading product closer to the end destination can also be beneficial. Transloading is often implemented during some sort of disruption — whether rail, pipeline or refinery — but is now becoming a core part of shippers’ overall risk mitigation strategy. By utilizing rail to truck, the strain on available truck capacity can be lifted and shifted closer to the last mile at a shorter length of haul. Trucks can be concentrated in a shorter run, allowing for more turns per day with the same amount of capacity.
The past few years have shown us to expect the unexpected. None of us have a crystal ball to show when or where the issues will occur in 2022. However, we can lead in our respective areas by sharing information, sharing our challenges and collaborating to help each other win.