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Prime Mover Magazine

Trucking industry “churning with disruption”

The commercial road transport industry is confronting an “era of logistics uncertainty”, according to a new report released in the US.

The annual State of Logistics report, compiled by consulting firm AT Kearney with the help of the Council of Supply Chain Management Professionals (CSCMP) and Penske Logistics, found that e-commerce, new technologies and business tactics, plus more regional and last-mile freight demand could upend the industry’s economics “for years to come”.

While focusing primarily on US economics, the report also touched on a range of megatrends affecting the commercial road transport industry globally.

According to US news outlet, Fleet Owner, which published a preview of the report, one such key trend is that e-commerce retailers are winning customers away from traditional brick-and-mortar stores by promising fast and free delivery to innumerable locations across the country.

“To fulfill this promise without crushing profit margins, they are looking to reduce shipping costs and reconfigure distribution networks.”

In line with that, the report found that regionally oriented distribution centres have emerged as linchpins of advanced networks as retailers offering same-day delivery move goods closer to densely populated areas.

“Those redesigned distribution networks require new trucking routes, with motor carriers shifting line-haul routes to transport merchandise from national distribution centres and rebalance volumes between local and regional centres,” Fleet Owner summarised.

Connected vehicles and ‘Uberization’ are considered to have the greatest near-term disruptive potential, but some shippers and motor carriers are found to be reluctant to adapt Uber’s ride-sharing model – at least for now.

Electrified trucks could, meanwhile, “spawn a new business model in trucking” – allowing motor carriers to rent power through interchangeable batteries that are swapped out at stations along highways as they run out of juice.

This approach, based on aviation industry practices under which airlines rent power from engine manufacturers, could drive down operating expenses and equipment costs for truckers, Fleet Owner summarised.

The AT Kearney report also stated that uncertainty must not be confused with slowing the pace of change. Conversely, it noted that many industries are now “churning with disruption” as newcomers and incumbents vie for market share, and innovation undermines old business models.

“One thing is certain: ‘business as usual’ won’t return,” commented Sean Monahan, an AT Kearney partner.

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