Transportation Leaders Address Shippers at Nasstrac Meeting
ORLANDO, Fla. — Leaders of four of the largest U.S. transportation companies, speaking in a ballroom largely filled with shippers, identified issues they each were most passionate about, among them: regulations and infrastructure, electronic logging devices, productivity and the true cost of service.
The executives made their remarks during a provider panel at Nasstrac’s 2016 Shippers Conference and Transportation Expo here.
UPS Freight President Jack Holmes said any additional federal regulations should reflect a more measured approach.
He called for tying additional federal regulations to additional infrastructure spending “so we have a chance to mitigate the expense of the regulations with the opportunity to get some productivity improvement or whatever improvements may be warranted.”
He added that new regulations seem to come out every month. “Certainly, we as an industry would like the opportunity to catch our breath,” Holmes said.
Werner Enterprises President Derek Leathers said one of the most significant regulatory changes on the horizon has yet to be addressed by 50%, “roughly speaking,” of the available carrier capacity — specifically use of electronic logging devices.
“What happens over the next 18 months with ELDs as they make their way into the network?” he said.
Under a federal rule set to take effect in December 2017 — unless a court challenge underway is successful — commercial carriers will be required to use the electronic devices to record drivers’ hours of service, to replace traditional paper logbooks.
Leathers said the large, well-capitalized “first mover” carriers began using ELDs over the past 10 to 15 years and saw a consistent pattern of a 3% to 5% decrease in utilization as they made that conversion.
As more of the industry begins to convert, “I think the [percentage] impact will be greater. Am I a believer in the 10% to 15% numbers you hear thrown about? No. But I think it is a safe assumption you are going to see impact greater than the 3% to 5% the first movers saw.”
Also, he said a number of shippers have told him their corporate policy is that they wanted to begin 2017 with only ELD-compliant carriers to be a year out in front of the rule.
“Well that isn’t very far away, and I don’t see how we get there from here, in my opinion. But it is a valiant bar to set, a valiant expectation to have in their community,” he said.
FedEx Freight President Mike Ducker said the whole trucking industry was working hard to improve productivity.
But he questioned why the opportunity to use twin 33-foot trailers on the nation’s highways was defeated last year.
“What else gives you [more] fuel efficiency and 18% greater capacity and the other benefits? But we were not able to move that through the Congress. But I think that is the kind of capacity utilization that needs to be taken into account in the industry when you talk about sustainability.”
After he spoke, Ducker told Transport Topics that he did not see the issue opportunity resurfacing soon. “Effectively, there are other priorities right now” facing legislators.
Bradley Jacobs, CEO of XPO logistics Inc., said he was focused on his transportation segment — which is $10 billion of his overall $15 billion company — on measuring and removing waste and identifying inefficiencies.
“On transportation, we focus so much on the cost, not the value. One obvious cost is the price, but the other is the performance,” he said.
Jacobs said he was trying to measure for every 10 basis points of on-time lateness, whether on the pickup or delivery side, what does it actually cost, and also was trying to identify what was the total cost of the service.
He told the audience cost is “sometimes is a little deceiving” when you start to rank providers by just the price and don’t take into consideration the on-time performance.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, and FedEx is No. 2. XPO is No. 14 but has acquired Con-Way Inc., which ranks No. 4. Werner is No. 16.
