Provider Damnation 68: Carriers

In our last, and only Provider Damnation post to date, we talked about how 3PL Firms were a damnation because in exchange for cost savings obtained by the 3PL, the organization gets IT headaches. In exchange for flexibility, the organization gets a loss of visibility. And in exchange for focus, the organization gets a complete loss of control.

At this point, carriers might have thought they got overlooked because we chose to focus in on the 3PL that wants to take over part of your business and make you as dependent on them as an addict on meth (which is one of the most physically addictive drugs ever created) and seemingly overlook them. But like an elephant, the doctor never forgets that all they do is hide yet another layer of damnation – the carriers themselves.

Thanks to the outsourcing craze that began in the 80′s, no one makes their own stuff anymore which means that they are dependent on logistics carriers to get the products to the warehouses and then again to get the product to the retail stores. And these carriers know that, to use a common expression, they got you by the balls. Now it’s true capacity isn’t always at full capacity, especially in off season, and at these times there is some negotiation room, but at peak season when the holiday rush is closing in and half (or more) of your annual sales are at stake, and they’re at peak capacity, they’re in control and they know it.

Fuel surcharges pile up. Overtime charges pile up more. And you’ll pay because if you don’t, your product won’t arrive on time, putting your sales, and profits, at risk. But this isn’t the biggest problem.

It’s bad enough that they can put you over a barrel at any time, but it’s even worse when you can’t even get your product delivered. There has been a shortage of drivers for the past decade, and it’s only getting worse. According to a recent article over on JOC.com, not only is the US truck driver shortage getting worse, the driver shortage in the US alone is now an estimated 40,000 drivers with a turnover rate of 96%. But this is just the tip of the iceberg. With so many drivers set to reach retirement age over the next 5 to 10 years, the global driver shortage could reach into the millions in the next decade.

According to a joint report just released by the U.S. Department of Education, the U.S. Department of Transportation, and the U.S. Department of Labor entitled Strengthening Skills Training and Career Pathways across the Transportation Industry, more than 2 million jobs in the trucking subsector will need to be filled within the 2012-2022 time frame and nearly half will be in the trucking sub-sector as more than half of the current truck drivers will reach retirement age by 2022!

Soon it might not be a matter of how many ridiculous overcharges and surcharges you have to pay at peak season to get your product delivered, it will be a matter of if you can even get your product delivered at all! (Let’s put it this way, unless you’re ready to embrace Uber-like delivery services, this is likely going to be a reality very soon.) Carriers have you over a barrel, and soon, from lack of good planning, they’re going to lose that barrel, leaving you stranded on a bare dirt road. The only upside is at least you’ll be in the right place to summon a crossroads demon should you choose to embrace the damnation that is coming for you.

At this point, SI has to ask, do you still doubt this is the year of damnation?