Carriers need to be opportunistic, and to move toward a more flexible and more nimble structure. The forces of change, like the thunderous roar of a raging river, are upon us with ominous intensity. Some fleets fight, paddling furiously to escape the treacherous currents. Others go with the flow, hoping for calmer water. Neither works.
To navigate the currents of change, it is wise to survey the rapids, plot a course of action, and then lead the change. When an industry leader scouts the river and offers his perspective, it is wise to look through his eyes.
Jim Hebe, president and CEO of Freightliner Corp., did just that in recent remarks before the Heavy Duty Manufacturers Assn. Following is his list of the 10 key developments transforming the trucking business.
Amalgamation. The traditional barriers that used to divide segments of the industry are blurring. What separates truckload, less-than-truckload, leasing, and private carriers has become so indiscernible today as to be irrelevant.
Logistics. The industry's drive to reduce costs is propelling the logistics business. Though still in its infancy, logistics goes beyond connecting routes and gets into connecting information, integrating and consolidating diverse data sources, and distributing that data as refined information.
Consolidation. The lure of achieving competitive advantages through either vertical integration or by new economies of scale is creating a group of large national carriers.
There are about 50,000 Class 8 buyers today. Of those, 3/10 of 1% of the buyers purchase about 30% of the trucks. That gives a high degree of concentration of market power to a few carriers.
Intermodal. The most common intermodal combination, truck-rail-truck, has represented the fastest growing segment of transportation in the U.S. over the past 15 years. But now it is running into its own bottlenecks in the form of rail and terminal capacities, limited rail investment, and its inability to handle most time-sensitive shipments. But intermodal also embraces land, water, and air. This will drive the push for equipment specifically designed to function optimally within each mode of transportation. Thus, sizes and configurations of equipment are about to explode.
Productivity. A North American economic growth rate of 3-4% annually promises to increase truck tonnage by about 10% every three to four years. A parallel increase in the number of trucks to handle this tonnage threatens to create intolerable congestion coupled with continued driver shortages -- unless investment is made not in more truck/trailer combinations, but in more productive ones.
"On-highway trucks even five years down the road should look much different from today," Hebe said. "Trailers will be longer, chassis will be lower, there will be more axles, and some tractors will not have hoods." That's right -- he predicted that by the turn of the century the COE longhaul highway tractor will be back in vogue.
Full-service leasing. The role of national full-service leasing companies will change, taking on more of the look of truckload carriers and logistics companies. With heavy-duty trucks becoming more reliable and less costly to operate, leasing is becoming less attractive. Only medium and light trucks hold much promise.
Urbanization. Urban congestion, clean-air standards, and security considerations will change how freight is handled in urban areas. The hours that trucks are allowed to operate in cities will be restricted, and smaller distribution vehicles will take over for highway trucks. Use of engines powered by alternative fuels will increase in non-attainment areas.
Maintenance. As fleets concentrate on their core competencies, they will reduce their in-house repair and maintenance operations, replacing them with dealers or other third-party facilities.
Uptime. As asset utilization becomes more critical, look for truck owners to become much more insistent on guaranteed uptime, reasonable repair times, and guaranteed parts availability.
Information technology. Computers, data communications, and electronics will assume even greater importance in the way fleets and independents do business, as well as in the way vehicles are designed, serviced, and supported.