Trucking
is arguably the most essential and expensive aspect of beverage
distribution.
And trucking today involves a lot more than simply moving
product from one location to another. At a recent meeting
of the Georgia Motor Trucking Association, James L. Hebe,
president and chief executive officer of Freightliner Corp.,
Portland, Ore., addressed the future of trucking:
“The age
of information technology and the new rules of intercontinental
and global competition are transforming trucking from every
angle you care to consider it – from engineering and equipment
specification, to operations, logistics, fleet management
and information management,” he said. “The business
today of trucking and truck manufacturing is in its biggest
transformation since the advent of the motorized truck.”
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What follows
is an excerpt from Hebe’s speech on where the trucking industry
is headed in the future:
“Your business,
and everyone else’s for that matter, is being driven by three
major concepts:
- Globalization
- Deregulation
- Concentration
(consolidation)
Let me translate
what I believe some aspects of their influence will be on
this business.
1. North American
trucking companies and transport companies are no longer safe
in just Canada, the United States or Mexico. As our customers
respond to global sourcing, global competition and global
selling, successful carriers must create or be a part of a
global transportation infrastructure. Witness what happens
every night at FedEx, UPS, Emery and every major freight hub
in North America where goods from all over the world are carried
on small carrier’s equipment to final destinations, and you’ll
appreciate how far this concept has come.
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2.In the future,
your operations, marketing and information technologies, coupled
with the infrastructure of your equipment supplier, will have
more influence on your operating ratios than the savings that
the equipment will bring. In the past 10 years or so, fuel
economy improvements driven by engine manufacturing, aerodynamics
driven by us, drivetrain efficiencies driven by time and component
suppliers, coupled by increases in used truck values, have
probably contributed more to cost savings in fleets than operating
efficiencies. Well, that is about to change! Real improvements
in fleets’ operating revenues will come in the next five years
from true operating efficiencies – the competitive battle
among carriers has really just begun. Remember I said this
– he who has the best information technology interconnected
to provide superior customer service through a service support
infrastructure wins – period. In short, trucking will become
a real professional business, and sophistication of technology
will advance profitability more than short-term equipment
improvements.
3.Truck manufacturing
will respond by focusing on two distinct product requirements
– productivity and safety; and two soft-side issues – service
support technology and used truck capabilities.
4.Amalgamation
of types of carriers will result in a transport system that
is indistinguishable and inseparable by type. There will no
longer be national LTL carriers, national TL carriers – we
will evolve into a single system of multi-modal, multi-faceted
logistics providers that adapt to freight requirements on
a momentary basis through a highly sophisticated global transportation
infrastructure. In this new world, size will win because of
technology and its costs. Other industrial consolidation demands
it and density of equipment on multiple traffic lanes will
be the biggest competitive advantage.
5.Carrier alliances
will explode and prosper. Everyone can’t be everything to
everyone. Look at recent actions in the airline industry where
partnerships are formed to control passenger movement within
an alliance system rather than duplicate the services of competing
carriers. I believe large logistics operations are the beginning
of this development, but soon we’ll see far more growth of
carriers in modal and segment alliances and international
networks to control large volumes of freight for large shippers.
Traffic lane
density will be the basis of competition, in everything from
freight rates to driver attraction and retention.
6.Nothing will
replace trucks as the primary freight mode; in fact, trucking
will grow at rates equivalent to GDP growth. There is room
for everyone in the business to grow and prosper, but not
enough room for everyone on our highways. Infrastructures
cannot handle our own growth, let alone growth driven by population
and economic prosperity. We must as a nation invest more in
our highways, and as an industry, more in safety!
7.Finally – Trucks
will change. The vehicles you operate 10 years from now will
be very different… If you aren’t considering a complete
revolution in thinking of how trucks will be in the next generation
– you’re dead.
“…Today
a truck is node in an intrinsic logistics and communications
network; a node whose every move matters; a node so interdependent
with the rest of the operational network that at Freightliner
we feel we have to understand and underpin it all – from design
technology to route and driver planning, to resource allocation
from our suppliers to our customers.”
