Strategies to counter the rising costs and resource deficits in land transport
While many feel that COVID-19 is now officially behind us, its impact has had a seismic shift in the landscape of the logistics and transportation sector. The resulting turbulence in global economies has had a profound impact on supply chains and logistics as businesses adjust to the new normal.
Since 2020, a variety of new obstacles have emerged, including skyrocketing fuel costs, geopolitical disputes, regular supply shortages, and various transportation bottlenecks. Port operations have bounced back considerably since the pandemic’s peak, but there are still frequent delays and disruptions due to understaffing or wage disputes.
In the face of these challenges that continue to be the new norm, forward-thinking providers are embracing state-of-the-art technology, refining their operational methodologies, and pioneering new business tactics to navigate the current market.
What’s causing major shifts in the land transport industry?
The world was forever changed by the pandemic, and the land transportation industry was no exception. The ripple effects are still being felt today and are combined with ongoing future uncertainties.
Below are some of the major factors that have caused significant shifts in the land transport industry and continue to impact it:
Dealing with inflation
Halfway through 2023, the U.S. saw its inflation rate rise by 3.2% from the year before, marking a notable hike. This is all too familiar of the 1980s when the country grappled with widespread joblessness and economic hardships.
This uptick in inflation stems from a mix of factors:
- A rebound in demand for goods and services as businesses emerge from pandemic closures.
- Ongoing interruptions in supply chains due to increased cyber threats and geopolitical strains.
- An unfortunate string of natural disasters.
For those in the land transport sector, these latest trends have led to higher operation costs.
Staffing shortages
Recent studies estimate there is now a shortage of 80,000 truck drivers in the US, and this statistic is expected to double by the year 2030. The industry is now navigating challenging times, as it has always counted on a reliable flow of drivers to meet its demands.
The shortage has been greatly influenced by the pandemic, which prompted a wave of early retirements and a cautious approach from drivers concerned about health risks. On top of this, stricter transportation guidelines and increased competition have made it harder for companies to hire and retain dependable drivers.
Increased costs of shipping
While during the height of the pandemic, shipping costs were the highest they had ever been, costs have dropped significantly since 2022. However, despite this decline, the overall cost of shipping has still been on the rise. The Drewry World Container Index composite shows an 11.8% increase to $1,761 for a 40-foot container, showing the strong potential for continued inflation in the industry.
These unexpected spikes show the volatility of the shipping industry and highlight the need for companies to have contingency plans in place. With costs expected to continue rising, businesses must find ways to mitigate these expenses without sacrificing operational efficiency.
Effective strategies for countering land transport challenges
Although many companies have found today’s market conditions challenging, there are numerous strategies that businesses can utilize to combat the issues facing the freight industry.
Creating more efficient routes
Streamlining delivery routes has become a critical tactic in tackling escalating expenses and the constraints of land transport capabilities. This process uses cutting-edge tools such as real-time GPS navigation and intelligent route planning applications that monitor supply chain fleets and provide the most cost-effective and quickest ways to move goods from one location to another.
Designing the perfect route is more than just calculating distance, though. It involves an intricate balance of variables such as monitoring traffic patterns, weather conditions, driver availability, and vehicle capacities. By using these solutions, businesses can quickly analyze all of these factors at once and adapt their delivery strategies on the go.
By restricting travel to certain distances and durations spent en route, businesses can simultaneously scale down their costs and their carbon footprint. They’re also able to optimize the number of deliveries sent out to a single trip to customers, which greatly improves efficiency and leads to stronger partnerships.
Using intermodal logistics solutions
Tackling the hurdles in the ground transportation sector can also be addressed by embracing the strategy of intermodal transportation. This method incorporates a combination of different forms of transit – like utilizing railways, highways, and maritime routes – to create a seamless and efficient flow of goods.
By adopting a multimodal approach, companies can take advantage of each benefit that the individual transport methods offer. For example, railways may be the most cost-effective option for long distances, while trucks can provide greater flexibility for last-mile delivery.
Adopting intermodal logistics strategies allows companies to diversify their transportation methods, which can cushion against any potential challenges that might crop up. This type of approach strengthens the supply chain, making it more resilient and less prone to major interruptions.
Finding effective ways to consolidate shipments
Another critical strategy for reducing the environmental impact of ground transportation is to consolidate shipments. By combining multiple smaller orders into one larger shipment, companies can minimize the number of vehicles needed and optimize delivery routes.
Bringing shipments together does more than just limit and organization’s carbon footprint – it also trims costs by saving on fuel, labor, and vehicle maintenance. Plus, it streamlines resource use, resulting in fewer trucks driving empty and enhancing overall efficiency.
To facilitate this process, companies can utilize advanced logistics services that can identify opportunities for consolidation and optimize delivery routes accordingly. By leveraging technology, businesses can significantly decrease their carbon footprint while improving their bottom line.
Improving supply chain resilience with the right solutions
The land transportation sector is still grappling with the aftershocks of the pandemic and is dealing with a whole new set of challenges. However, businesses are countering these adversities by adopting advanced technologies and new operational strategies. The integration of GPS-based route optimization and intelligent planning software is enabling more efficient and cost-effective cargo transit while also minimizing the environmental footprint.
Companies that remain adaptive, agile, and open to new solutions are better positioned to navigate these disruptions while strengthening their supply chain resilience.
Author bio: David L. Buss
David is CEO of DB Schenker North America, a 150 year old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the North America region, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.
