John Deris, SVP of national sales for Ryder System Inc., says he’s seen more changes in the trucking industry in the past five years than in all of the 34 years he’s been with the Miami-based company.
His sentiment is shared by Gary Petty, president and CEO of the National Private Truck Council (NPTC), an Arlington, Va.-based trade association devoted to the private corporate trucking fleet industry.
Indeed, the changes overtaking the industry — and hitting retailers equally as hard as other trades — include an onslaught of new technology, constant regulatory changes and growing capacity requirements, thanks to the proliferation of SKUs in today’s supermarkets. Meanwhile, as technology is mining more data than ever before, retailers must figure out how to aggregate the numbers to make smart, timely adjustments in policy and safety procedures.
“It’s not just change we’re seeing — it’s rapid change,” says Deris. “It’s very difficult for companies to adapt. And when you throw in the profitability challenges associated with it, there’s a big element of companies not being able to do all these things.”
As a result of the growing problems facing the industry, he’s seeing a “tremendous surge” in outsourcing from companies that once solely operated private fleets. Some are choosing to go what he calls a “dedicated route,” by outsourcing all functions to companies like Ryder, while others have signed up for an on-site program, in which Ryder comes in and runs a complete maintenance operation at the retailer’s facilities.
For his part, Petty sees the trucking environment slightly differently. He says that more retailers are using a mix of private fleets and outsourcing, especially for inbound shipping. “The mix may include a 3PL [third-party logistics provider], and it will vary by store locations and seasonality,” he notes. However, private fleets are still popular in the supermarket industry, he contends, and encompass the largest companies (think Walmart) as well as smaller, regional players scattered throughout the country.
Technology Tidal Wave
The surge of new technology being rolled out to fleet managers includes direct routing and rescheduling software, GPS tracking products (including handheld devices), active safety technology, and “green” technologies to help build a more sustainable fleet, just to name a few. All of these tools have incredible potential to create a safer, more efficient fleet — but they also often require retraining and other associated costs, as well as data analysis capabilities.
One company that was actually created to help fleet managers use their own data to make better decisions is Fort Lauderdale, Fla.-based Fleet Advantage. Brian Holland, president and CFO of the company, notes, “With the advent of on-board computers and, more recently, regulations requiring electronic logging devices, the industry is trending toward holistic fleet management that considers all-in data reflecting actual operating costs, rather than relying on anecdotal, incomplete or inaccurate data or previous practices.
“Fleet executives are seeking tools to capture, visualize and interpret this type of data,” he adds. “Access to, and monitoring of, data to lower costs and improve productivity is by far the biggest trend in fleet management today. This is especially so in the supermarket and retail supply chain.”
NPTC’s Petty concurs, predicting that data management will be a major issue moving into the next five to 10 years. “I know a retailer who has saved upward of 2 million miles by using routing software,” he says. “In another example, you now have drivers that are able to let stores know in advance if they’re going to be 15 or 20 minutes late, so the store can make accommodations in preparation.”
The challenge for retailers is finding ways to continually refine their captured data and translate it into changes that can impact efficiency as well as driver safety, notes Petty.
In fact, active safety technology is one of the hottest areas of the business — and is essentially a precursor to automated trucks, he says. “With automated trucks, you’ll still have a driver in the seat, but the truck will be operating itself,” explains Petty. “This will do a lot to improve safety performance and compensate for human response time.”
In addition to safety-oriented systems, expect “green” technology to continue to grow, according to Petty and others. It isn’t too hard to imagine solar-powered trucks in the future, he observes.
For now, though, perhaps the biggest focus in the area of sustainability is on reducing emissions. “Many people are asking for ‘greener’ fleets,” affirms Ryder’s Deris. “Using alternative fuels can lower a company’s fleet emissions carbon footprint, and also their overall costs. While it hasn’t been as impactful over the last year because of the lower fuel prices in the marketplace, I think we’ll see alternative fuels take off again when we get back to a more realistic price point.” At that point, he says, Ryder will be “more than ready to take off with this technology.”
Of course, regulations have also come into play, as the U.S. government continues to focus on protecting the environment. “We’ve had three major emission changes, and we have another one coming up in 2017,” notes Deris. “Then we have another one in 2021. Every three years or so, we’re going to continue to have an evolving demand for more regulation, better technology and better equipment.”
Deris also points to numerous changes brought on by the U.S. Food and Drug Administration’s Food Safety Modernization Act. “The regulations around Hazard Analysis Risk-based Preventative Controls are going to be driving tremendous change in the food industry in the next few years,” he maintains. “It’s becoming more and more complex for companies to implement. It will change the way companies handle product, distribute product, manage the logistics of the supply chain, and more importantly, the way they do business and manage their cost controls.” In some cases, companies are dealing with antiquated warehousing and logistics capabilities, he adds.
As if regulatory changes weren’t enough to bog down their fleet management planning, retailers are also increasingly contending with multiple shipments and a proliferation of new products. “Strong competition is driving most food retailers to expand their portfolios,” explains Deris. “They’re being forced to make dramatic increases in their SKU offerings, which is forcing growth in shipping volumes and fulfillment requirements. This impacts everything from fleet usage to driver utilization — and driver shortage is a major issue that’s impacting all industries dramatically.”
In some cases, retailers must re-examine their warehousing capacity, including looking at mobile storage alternatives and updated inventory management systems, he points out.
Adds NPTC’s Petty: “This increased inventory means that companies need to have better control of their capacity internally. That will help them make sure replenishment cycles are met and will ensure better accuracy”
As SKU proliferation continues, along with a likely increase in globally traded goods, Petty predicts that long-haul trucking will gradually be replaced with shorter runs and more frequent stops. Likewise, the trend toward locally grown foods, as well as an uptick in online ordering (resulting in direct delivery to consumers), will also likely boost shorter hauls, he says.
Regardless of how the trucking industry continues to change, one thing seems certain: Companies that stay on top of fleet management trends, including better data management, will stay ahead of their competition.
Access to, and monitoring of, data to lower costs and improve productivity is by far the biggest trend in fleet management today.”
–Brian Holland, Fleet Advantage
With automated trucks, you’ll still have a driver in the seat, but the truck will be operating itself. This will do a lot to improve safety performance and compensate for human response time.”
– Gary Petty, National Private Truck Council
Every three years or so, we’re going to continue to have an evolving demand for more regulation, better technology and better equipment.”
—John Deris, Ryder System Inc.