NASSTRAC 2015 – Day 1 Review – National Shippers Strategic Transportation Council

Review of day 1 at the NASSTRAC conference, Walt Disney World, Florida

Supply Chain Station is covering the NASSTRAC conference this year as this issues discussed in the conference are fundamental to both supply chain operations and costs.

For those of you who are not aware of NASSTRAC, they are an association of shipping companies, beneficial owners of freight, 3PL suppliers, carriers, and technology companies.  They focus on shipping industry education, representing their members’ views in Washington, and oppose unfair regulations impacting transportation or supply chain operations.

NASSTRAC focuses on keeping its member companies fully up to date with events and trends going on in the world of shipping and transportation. Read more about NASTRACC at www.nasstrac.org

Opening panel discussion forum

The show kicked off with an excellent panel discussion between a number of transport industry executives. One topic of interest in the panel discussion was on a point put forward by Werner’s Derek Leathers who announced that the average length of haul journey has dropped by as much as 25% since the year 2007.

Leathers put this down to the fact that many manufacturers and retailers now position their distribution outlets closer to market in order to be able to deliver products in a shorter space of time, and to be able to react more quickly to changing demands;, but it’s something that reduces haul distances.

The effect of the reduction in haul distances

Haul distances which used to average out between 700/800 miles per trip have now fallen to a new average of around 500 miles, and often even lower, into the high 400s. These shorter journey times have some interesting consequences

  • Lower returns on company assets as a result of being paid less due to the reduced distances
  • The impact on drivers who receive lower pay for lower mileage
  • The positive gain on drivers who spend less time away from home and family

The case for the introduction of twin 33-foot trailers

Henry Maier of FedEx spoke about the productivity improvements that switching from using 28 foot trailers, to instead using twin 33-foot trailers, could facilitate. This is currently being discussed in terms of new traffic legislation. Maier posited the theory that these twin 33-footers were safer than the existing one-piece 28 footers because they are so much more stable when moving and cornering; they offer an extra 18% in productivity in terms of load haulage, and they are greener because carbon emissions are amortized over bigger loads.

More investment needed in road systems

Jack Holmes of UPS made a strong case for the need to address certain issues in transport infrastructure to improve competitiveness; in the same way that many other countries around the world have done in recent years. Mr. Holmes commented on the fact that there is not enough money being invested by the US government which is preventing any significant improvements from being made. This is also exacerbated by the growing amount of legislation that is making it increasingly difficult for road transport companies to make decent profits.

Rising costs of new vehicles

The driver shortage was naturally discussed, but more emphasis was being put on the rising costs of new vehicles. Whereas as only a few years ago, driver operators were only paying approximately $40,000 on a new truck after trading in their old one, today’s prices mean that owner operators are struggling to raise the finance to afford new trucks at $90,000, and even where they can, they then face an uphill struggle to maintain loan payments, something which is being made even more difficult to achieve against a background of declining haul distances and reduced profits.

Derek Leathers of Werner’s also voiced his opinion that larger hauliers are in difficulties too, with new tractors and trailers now requiring an investment in the region of over $200,000 each.

Short haul railways

In addition to the panel discussion forum which was played out before a main audience of over 300, there were several “breakout” sessions, one of which explored the problems facing a short haul 300 mile railway line operated by the Florida East Coast Rail Company and running between Jacksonville and Miami. They operate 6 northbound trains per day and 6 southbound. The problem is that for every 4 or 5 loads entering Miami, only 1 goes back out again. Discussions ensued about direct connections in Jacksonville to cover the shortfall in the southeast via a 2-day service, something that appeared of great interest to the audience.

The use of local, regional based parcel carriers

Another interesting “breakout” session took place on the mounting challenges being faced by the parcel shipping sector. There is a growing trend to use regional based carriers and this is a trend which is fast catching on in certain areas of the US. This is being fuelled by cheaper prices and faster deliveries, whereby local based regional parcel carriers are sometimes able to beat the delivery times offered by the larger nationals like UPS, by a day, or sometimes as much as 2 days.

The only thing for buyers to consider is that in certain cases, bulk prices and rebates offered by the larger carriers can be adversely affected by the business taken away from them. It means that buyers need to do their homework carefully in order to choose the most economical route taking all factors into consideration.

The impact of dimensional weighing

The last breakout session we cover in this brief resume of day 1 at the NASSTRAC conference and expo, is the issue of national parcel carriers now introducing dimensional weighing programs, depending on using weight or cube whichever is in the favor of the carrier.

This is now standard practice with UPS and FedEx but it is costing customers as much as up to 15% to 16% more, with medium volume, low weight parcels being hardest hit. It puts the onus back on buyers to be more selective about the size and weight of their packaging options.

That bring us to the end of our review of day 1, but Supply Chains Station will publish summaries on the remaining 3 days, plus a summary at the end of the conference by way of a recap on the impact these issues will have on supply chain operations and costs.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>