PANDEMIC AND TRANSPORTATION:
But now when the situation is much better than before, why is freight industry facing so many challenges and how to overcome these challenges?
Well, there is no simple answer to this but things can be improved certainly. Supply chain industry does not operate on its own and is linked to several other industries to deliver the products from origin to destination.
CURRENT CHALLENGES FACED BY SUPPLY CHAIN INDUSTRY WITH FUTURE HOPES AND SOLUTIONS:
- Fluctuating Fuel Prices and Increased Carrier Competition/Profit Seeking Tendencies:
The spike in fuel prices is a hot issue these days and with the same old pricing for truck loads is a causing a huge strain on the freight industry. The fuel prices hike to more than $5 per gallon is not only causing troubles for carriers and causing them to haul the loads with almost no profit but there is almost minimal margins at all levels. The increasing costs for supply chain means increased shipping cost for shippers and there is more or less no certain strategic way to ease the cause.
Minimal Profits and rather losses are big causes of companies getting bankrupt. Small Trucking Companies who purchased trucks last year with the boom in the business are unable to afford their trucks now. The data from 2021, as per U.S. DOT, nearly 109,000 registered motor carriers falling under the category of new entrant status registered in 18 months. That is the highest number in the past five years, up from approx. 105,200 as of December 2020 and 90,900 as of December 2019.
But with hike in prices, the shippers and brokers are facing the challenges as well. It is basically outward domino effect which basically means when you make a change to one behavior it will activate a chain reaction and cause a shift in related behaviors as well.
SOLUTIONS AND HOPES:
Blaming each other is not a solution but figuring out the strategy is the key here. Higher fuel costs means a higher price passed on to the consumer. It is not the time to keep the huge chunks of profits, rather keep the minimal profits.Our partner, Cosmic Freight Group, a freight brokerage company, promises to prioritize the needs of shippers and carriers while avoiding the profit tendencies and the tendency of providing the privilege to some carriers over others. They promise to understand the rules of middleman-ship and works with the shippers to reduce an extra costs for shipment while providing best possible rates to the carrier. This not only helps shippers deliver the loads at good pace while also helps consumer with the costs.
The costs and their effects are a permanent part of the logistics and supply chain industry. It makes competition prominent among logistics companies. Everyone wants to have the lowest rates, while still making adequate profit. Cosmic Freight Group promises to bring any and all savings or efficiencies to your attention. We will contain your transportation costs.
- Outdated Infrastructure from years (Important factor- Port and Roadway Congestion):
The outdated infrastructure has been impacting on the freight industries and in fact all branches of supply chain. It has not only caused a strain on just supply chain but also leading to hinderance in meeting the timely delivery of goods, thus affecting the economy. For truck drivers, congestion basically means longer travel times, higher prices, and less predictable collection and delivery schedules.
"Freight bottlenecks" are bottlenecks on roadways that serve huge amounts of trucks. They can be found on highways serving large international gateways such as the Ports of Los Angeles and Long Beach, as well as significant domestic freight centers such as Chicago and major urban regions where transcontinental freight lines cross congested urban freight routes.
According to trucking.org, these freight bottlenecks are strangling America's economic arteries, with only 17 percent of National Highway System miles accounting for 87 percent of overall truck congestion expenses countrywide and the costs are enormous. Annually, the trucking sector loses 1.2 billion hours of productivity – the equivalent of 425,000 drivers sitting idle for a full year and costing the country $75 billion in freight costs. Trucks burn an extra 6.87 billion gallons of fuel as a result of the congestion, accounting for approximately 13% of their overall fuel consumption and releasing 67.3 million metric tons of CO2 into the sky.
SOLUTIONS AND HOPES:
President Joe Biden signed the $1.2 trillion bipartisan infrastructure bill into law on November 15, 2021. The plan is anticipated to generate employment across the country and provide $550 billion in government infrastructure spending over the next five years. The bill authorized $477 billion in new funding for surface transportation programs, including $347.5 billion for highways and $37 billion for bridges. Roads, bridges, mass transportation, rail, airports, shipping ports, and waterways will all benefit from this spending. So, there is a hope of improvement in terms of infrastructure, thus may be a sigh of relief for supply chain and freight industry but there is need for a lot of further improvement to keep things transition back to normal pace.
- Nationwide Driver Shortage/ Need to Improve Shipper-Broker-Carrier system:
Nationwide Driver Shortage has been a persistent issue. According to the American Trucking Associations, the United States is experiencing a shortage of more than 80,000 truck drivers approximately. Moreover, hiking fuel prices are another factor for minimal profits for carriers and thus reduction in pay wages in some cases. Trucking is not easy and that must be understood. Shortage of drivers could be a retention problem because trucking companies invest a lot in training drivers but then the continuous pressure on owner operators or even truck drivers is a huge factor in this. Poor wages, benefits and a lack of respect all contribute to the shortage of drivers and it's still fueling it today.
SOLUTIONS AND HOPES:
Again there is not a single solution to this problem. There is need for more respect in the profession. It does not mean that all trucking companies are wrong or not providing resources but the system needs a change overall.Cosmic Freight Group aims to provide carriers with good price by keeping minimal margins to ensure that they can carry all the expenses. Cosmic Freight Group works with owner operators/ small trucking business owners to provide them with good prices without any discrimination. The CEO of Cosmic Freight Group started a journey from a truck driver, progressing to own his own trucking business and started the freight brokerage business with an aim to contributing to improving the loads delivery process by not indulging in activities intended to keep big chunks of profit. This can not only for carriers and their drivers but also the Shippers as well with their costs. The company operates on the principle of improving relations, delivering goods in timely and safely manners, along with creating a happy environment where Shippers and Carriers are served with none other than best services.
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