We all know how truck fleets rooted in moving freight domestically have had to change — or die — over the last 25 years, as federal deregulation and economic times good and bad roiled the industry.
And we all know that over the same time frame, trucking's taken a lot of business away from the rails, leaving very bulky commodities as the primary traffic crawling over those steel roads.
But how does trucking fare vis-á-vis that other great leg of surface transportation — maritime? We all know plenty of trucks are busy out there hauling marine containers to and for our nation's ports, but is there opportunity for “land-line” fleets to score any of this freight were they to venture into this corner of trucking?
Perhaps, suggests a new report issued last month by Armonk, NY-based IBM Business Consulting Services. The IBM consultants who authored the report point out that, thanks to the explosive growth in container traffic, container shipping companies must transform their business mode or risk being outmaneuvered by The good news for container haulers, according to IBM Business Consulting Services, is that near-term profits in the market for container shipping services are at an all-time high and the market's growing at 8-10% per year.
The bad news — for container haulers who don't go with the flow — is that this strong market growth coupled with customer demand for greater reliability at lower total cost are “putting considerable strain on existing industry infrastructure,” challenging these service providers to find new ways to remain competitive.
“To remain competitive, shipping companies must rebalance their businesses by offering more time-definite services,” says Derek Moore, associate partner at IBM Business Consulting Services, an author of the report.
“The key to this transformation will rest on an organization's ability to adopt a culture that embraces a business model which more evenly balances traditional asset optimization with product reliability and visibility,” Moore continues.
Gee, that sounds like what the average for-hire or private truck fleet is expected to do day after day.
Indeed, according to the report, “the greatest long-term challenge for container shipping lines in meeting and adapting to new market forces is the potential competition from package delivery providers like UPS, TNT and DHL. They possess the type of business cultures, systems and processes needed to offer the product reliability and visibility demanded by shippers. Compounding this is the existing business culture of many container shipping lines, which are simply not culturally-predisposed to modify their mantra that asset utilization is king.”
So it's IBM's contention that a decade from now, “land-based providers will have acquired the capabilities needed to offer door-to-door services with parcel industry standards of reliability — largely in collaboration with some container shipping lines that are primarily port-to-port providers. Unless existing lines respond to meet customer demands, the package providers will redefine the structure of this industry.”
And as the line here on land is blurring between package-delivery and less-than-truckload operations, it's anyone's bet who all from trucking will cast their lines with the container shipping operations.
Other key findings in the report include:
Container shipping companies expect to achieve greater reliability at lower total cost through “more tightly Integrated” technology systems.
Industry structure will be more concentrated with the top 10 players controlling 80% of the market.
For more information, go to www.ibm.com/bcs.