The Supply Chain is a term most Americans never heard, much less discussed, prior to the pandemic. However, the issues of distribution and supply lines are an increasingly trending topic. People are discovering empty shelves at their retail locations, delays in shipping online products, and a host of other unaccustomed supply concerns.
The Increasing Visibility of the Trucking Industry
These issues have consumers asking questions about “Why?” They are also rethinking their attitudes towards the trucking and transportation industries. It is easy to take things for granted when everything a consumer wants is “just there” when they want it, and “just arrives” when they order it. There is a new awareness of the fact that millions of professional truckers are involved in that modern miracle of logistics.
All aspects of the traditional freight and distribution industries are under stress today. That stress is creating a wide range of changes. Those changes are occurring out of necessity in some segments, and as an opportunity for expansion and new efficiencies in others.
These activities are attracting the attention of the media and the public. While the seemingly mundane world of freight seldom garners headlines, the pandemic has changed that perspective.
Robert Falerta, Executive Chairman of the Channel Company, discussed this changing environment in a recent editorial at CRN. He discusses the merger of Tech Data and Synnex as one industry event that will have a significant global impact on distribution and logistics.
Changing from the Top Down and Bottom-Up
The newly combined entities will create a mega-distributor that will handle $57 billion of annual trade. The merger moves the private Tech Data into the public fold with Synnex’s NYSE position. According to the CEO of Tech Data, Rich Hume, the combined megacompany will “be able to offer our customers and vendors exceptional reach, efficiency, and expertise, redefining the experience and value they receive.”
This merger was seen by most as a decision of opportunity, one not forced by market conditions. On the other end of the spectrum, the commercial trucking segment of the transportation industry continues to witness a series of mergers, acquisitions, and bankruptcies that are more driven by necessity.
The rapidly changing landscape will continue to create new levels of capabilities and expectations for efficiency driven by tech and streamlined channels.
The Rising Role of Trucking
The end results of these changes are seen by many as increasing the dependence on trucks over rail as the Intermodal transportation segment adapts to this new environment.
The American Trucking Association underlines these conclusions in its US Freight Transportation Forecast to 2022. The extensive survey was prepared in conjunction with work by Martin Labbe Associates and HIS Global Insight. Produced just prior to the pandemic, the conclusions are being borne out at an even more rapid pace than anticipated.
The primary insight in this report predicts that the U.S. will see a 24 percent increase in freight tonnage in 2022, producing a 66 percent increase in revenue for the industry. The bulk of that increase for next year, and the next decade, is occurring in the trucking segment.
The report details the expectation that trucking will see an increase of 67 percent in tonnage with a corresponding increase of 82.2 percent in revenues. Rail tonnage will increase also, but by a much lower 15.3 percent.
The summary impact of these changes will see the 2022 freight landscape dominated by the 70 percent share of freight transport conducted by trucks and rail declining to 14.6 percent.
While sea transport is projected at a more modest growth rate of 7 percent, the overall intermodal market is expected to reach more than $30 billion in 2022, up from $11 billion in 2016. This also drives the demand for more reliance on commercial trucking for the final distribution-to-the-end-user solution.
As the vital role of trucking gains more visibility, it is impacting the demand for infrastructure investment in roads and bridges, new technologies to aid commercial drivers and safety, and new pressures to raise rates and compensation for commercial truckers.
