THE FUTURE OF TRANSPORT – GETTING PAST THE ROADBLOCKS
Written by Enrique Montañés García, SVP, Supply Chain, CHEP Europe
23 April 2018
The business of getting goods and materials from A to B poses a problem as our transport system is hitting some nasty bumps in the road.
Over the last few years, truck transport in Europe has changed radically, from a buyer’s to a seller’s market. There is a serious capacity crunch, with most countries seeing growth. Where market forces would normally be expected to fill such a gap, this isn’t happening for reasons that seem intractable. One of these is the inexorable rise of online shopping, with next-day home delivery and a huge number of product lines. Smaller but higher frequency loads all along the supply chain mean many more trips, along with inefficient part loads and empty miles.
However, at the same time as this increased need, the number of drivers is decreasing. It’s a job with long hours and solitary conditions, taking drivers a long way from home, with ever more restrictive regulations, which result in fewer and fewer young people getting attracted to it. For example, in the UK around 64 per cent of drivers are over 45 and will be retiring in the next 10-20 years, with only 2 per cent of employed drivers under the age of 25 (FTA analysis).
This shortage is now a serious brake on the ability of transport companies to meet demand. At the end of 2017, it got so bad that European capacity dropped by over 23 per cent compared to Q4 in 2016, with transport prices increasing by 14 per cent (according to Transport Market Monitor #34). However, many shippers seem to think that this will blow over, and all will return to normal. But this seems unlikely. In America, which often leads Europe in such trends, a similar crisis has been going on for 5 years now.
The problem is that the system we have at the moment is inherently inefficient and unsustainable – both in business and environmental terms. So, unless something fundamental changes, it will keep deteriorating.
Is there anything on the roadmap to look forward to?
Autonomous trucks are in the disillusionment phase of the hype cycle – after the initial excitement, we are now aware they are not the easy path to take. Regulators are looking at the safety issues, and recent investments in existing vehicles mean it could take decades before companies want to retire them.
There are already planned pilots with semi-autonomous trucks in the UK during 2018, and they could be appearing on the roads as soon as 2020. But widespread use that would impact on the driver shortage will be a lot further down the road. What can we do to help with our more immediate transport problems?
We can do what we tell our children to do all the time: we need to share more.
And we can start with truck utilisation. Even big companies with advanced digitalised supply chains are running empty loads using more drivers than necessary. Many of these big companies struggle to talk to each other, so the information that might help optimise loads is not available. We need to collaborate better.
This is starting to happen. At CHEP we introduced our transport collaboration program 6 years ago, and we are now operating optimised collaborative roundtrips with over 150 organisations— and growing. During the first years, we were combining CHEP empty pallet movements with our customer’s transport needs. We extended this to helping to share loads between our customers, too by leveraging our unique position of visibility in the supply chain as well as our role of a trustee among multiple organisations. This is already saving over 3.5 million empty miles and over 5,500 tonnes of CO2 each year.
Sharing plans as early as the production development phase will make a huge difference to the ability of the overall supply chain to coordinate transport movements. Progressive integration and communication between companies (including competitors) will be needed to make collaboration like this become the norm, helping us all move more goods, more frequently, with less driver dependency and waste.
This won’t be easy. Companies like CHEP can play a role in getting carriers, producers and retailers together, but we will all need to work towards a shift to a sharing culture if we are to have a transport market that can deliver the future we need.