A Logistics Outlook for 2017

1/15/2017

As seen in the Journal of Commerce Annual Review and Outlook, 2017

By Michael A. Regan, Chief of Relationship Development, TranzAct Technologies

In 2017, the transportation marketplace will rebound from a soft 2016 and carriers will have substantial leverage in their negotiations with their customers. This will compel shippers and 3PL’s to look at how they are using technology and analytics to manage their freight costs.

There are several reasons why capacity will tighten in the latter half of 2017. First, a casual look at Class 8 equipment orders confirms that carriers are not adding capacity.

Second the recruitment and retention drivers isn’t improving and could get worse if carriers lose drivers to surging construction/home building industries. The FMCSA under a Trump Administration may be less inclined to expand their regulatory powers, but concerns about driver health issues aren’t going away so retaining drivers will be even more challenging for carriers.

Third, with Owner Operations Independent Drivers Association having lost their ELD Court challenge, we will see more carriers using ELD’s throughout the year since they must be compliant by December 2017. The ELD decision will result in increased driver attrition and carriers adjusting their networks based on a 3% to 5% loss in productivity.

If shippers start getting high single digit, or worse, double digit rate increases, expect to see C-level executives asking transportation professionals for some ideas or alternatives to lower costs and improve their bottom line results.

This increased pressure from the C-Suite will force professionals to utilize technology to free up time by eliminating wasteful practices. Savvy shippers will proactively review data and perform analytical projects to lower rates or implement more efficient supply chain processes that drive out costs.

One final encouraging prediction: This is a great time to be a transportation - logistics professional. With supply chain and transportation issues barging in to the C-Level Suites, 2017 may well be the beginning of a supply chain Renaissance where artists (a.k.a. that’s you), are valued and appreciated for your contributions.