If you are responsible for the design of highways, bridges, ports, or terminals, read on. You need to be aware of global trends in transportation that could affect your capital program.

Getting a load on the road these days can be an accomplishment. A wave of mergers and acquisitions in the trucking industry has left customers with only a handful of national carriers to use. Some carriers have shut down low profit routes and lines that don’t fit in with their strategic plan. Many truck drivers have opted out of the business because of long hours and low pay, limiting the ability of trucking companies to guarantee deliveries.

Add in the economic and infrastructure factors described below and it is clear that the demand for trucking has out-stripped supply. Businesses that rely on the trucking industry have been caught short. Their raw material supply chain and ability to deliver finished products are impacted.

The competition for truck cargo containers could become fierce, based on this data:

• The World Shipping Council estimates that cargo movement in the United States will increase by 60% between now and 2020. This is because more goods are being produced in Asia and Europe, shipped here, and transported to their destination.
• The volume of domestic truck traffic will top 15 million tons by 2008, a 50% increase since 1998.
• The average age of a truck driver is 52. The American Trucking Association believes there will be a shortfall of 100,000 drivers in five years.
• U.S. truck drivers spend a lot of time going nowhere. A recent study found that they lost more than 234 million hours in 2004 to road delays and bottlenecks.
• In May, 2006, then-Secretary of Transportation Norman Mineta estimated that freight bottlenecks (port, rail, air, and highway) cost U.S. businesses more than $200 billion a year.

Not all companies can respond to these problems by developing their own trucking fleet, like WalMart has.

To compete, businesses are trying hard to strengthen their ties to national carriers. They are locking in cargo capacity by negotiating dedicated service. They are sharing short and long-term sales data with trucking companies to better predict hauling schedules and negotiate rates.

Trucking companies, too, are trying to
speed up delivery by embracing team driving – hiring two drivers to operate a single rig. This approach can cut delivery time on some routes from five days to two, when they can find drivers. Cargo haulers are also finding that they have newfound leverage in the industry. They are using this to set prices, pick profitable routes, and to select their customers.

None of this is good news to businesses and consumers. These trends mean higher prices, shipping delays, interruptions to service, and lots of complaints. And while one may think that the answer is moving more through our ports and rail yards, this isn’t the answer either. The mounting tide of cargo has choked these facilities too.


This article was written using excerpts from ‘Delayed in the USA’, written by John Goff and published in the September, 2006 edition of CFO magazine.