Use of Technology, Faster Deliveries Offer 3PLs Path to Grow, TIA Says
This story appears in the April 18 print edition of Transport Topics.
SAN ANTONIO — Despite a number of continued regulatory concerns, freight brokers and logistics companies have the ability to expand their businesses through better use of technology and by participating in the growing demand for faster delivery of goods purchased online, officials of the Transportation Intermediaries Association said.
TIA President Bob Voltmann told the group’s annual conference here that movement by some companies to provide one-hour shipping requires a tripling of warehousing space and “opportunities [for brokers] to touch that freight.”
Although companies such as Amazon.com, Wal-Mart Stores Inc. and Target Inc. most likely will figure out how to handle these faster retail deliveries on their own, “there are a myriad of midsize and smaller retailers that will turn to you to figure this out,” Voltmann said.
Logistics firms are handling more shipments and are keeping a bigger percentage of the revenue from each load, based on data reported by dozens of TIA member firms in the fourth quarter.
Even if freight demand slows, opening up excess capacity, brokers and logistics companies will succeed unless there is a “perfect convergence” of freight and trucks “at the same place and at the exact same time.”
He added, “Since that never happens, there is a lot of opportunity for you.”
More than 1,000 people attended the 2016 TIA conference April 7-10 — a record, and up more than 100% since 2008.
TIA Chairman Jeff Tucker called the brokerage segment “the marketplace for technology,” which will further improve freight transportation efficiencies in the future.
“Technology catapults business forward,” Tucker said, citing load boards and other management software. “If that technology and the coming technology somehow knocks us off our horse … shame on us.”
At the same time, Tucker, who is CEO of logistics firm Tucker Co. Worldwide and QualifiedCarriers, which obtains monthly motor carrier data, warned brokers against using the federal government’s Compliance, Safety, Accountability scores in any form to determine which carriers to use for shipments.
CSA is a “broken program” and the industry is “still trying to decipher what these scores might mean,” he said.
“I personally believe if you use BASIC scores you are putting your company at risk,” Tucker added.
He also downplayed the often-discussed nationwide shortage of truck drivers, suggesting it was more a retention problem faced by the larger fleets.
Tucker cited data showing the total number of for-hire truckers increased over the past four years to 2.4 million from 1.9 million, and the number of carriers (many of them just one truck) also rose significantly during the same time period.
Voltmann cited several other critical regulations, including the electronic logging mandate that takes effect in December 2017. He said it was unclear just how much it will alter capacity, but “they will have an impact on how things are done.”
TIA will continue to push for a national hiring standard of truckers “because it makes sense,” he said.
The idea behind the law would be to create a single standard for determining how carriers are qualified based on licensing, insurance and safety rating.
“We can’t have interstate commerce in a $15 trillion economy when you are worried about what does this mean in Bear County, Texas. That is not interstate commerce.”
He praised the upcoming drug and alcohol clearinghouse rule, which will make the industry safer. However, he also said it “raises questions that we as an industry will need to figure out, such as how long someone needs to be clean in order to be safe.”
Also, he urged attendees to brace for a push by the U.S. Department of Labor, before the Obama administration winds down, to raise the employee overtime threshold to $50,400 in annual salary, which excludes commissions. That compares with $23,660 currently.
He said this would have major negative financial implications on the industry, and TIA and groups such as the Chamber of Commerce are fighting it.
“We are going to help you figure out how to deal with it should it come to pass,” Voltmann said.
Senior Features Writer Daniel P. Bearth contributed to this article
