Uneasy lies the shipper’s head …

From Supply Chain Digest

Dan Gilmore, Editor-in-Chief of Supply Chain Digest had some quotes and predictions about the coming projected  – and dreaded – huge increase in shipping costs across the board. In his online magazine dated Feb. 18, 2011, Gilmore quoted Mike Regan of TranzAct Technologies: "Today we are witnessing early warning signs that may very well result in a "Supply Chain Tsunami." Shippers who ignore these warning signs may see their transportation costs go up by as much as 10% to 20% within two years. … "If you are a supply chain or logistics executive within your company, what would happen if you presented a budget to your CEO that showed transportation costs had increased by 20% from 2010-12?"

Gilmore cites some experts’ predictions about recent developments in the trucking industry which will have major impact upon shipping across the country: 

Right now oil is at its highest price per barrel ever in any February. (and this was before the Middle East erupted in citizens’ protests in multiple oil-supplying nations.) 

CSA 2010 will likely shrink the available pool of truck drivers, as it scrutinizes every driver’s safety record much more closely than other rulings in the past. Experts expect the pool of drivers to be reduced by 15%, as carriers will refuse to hire drivers with anything in their records that the new CSA 2010 pinpoints. This will push shipping rates up as carriers have to pay better drivers more to keep them. 

HOS changes will take their toll as well, reducing the ‘just in time’ service many shippers have come to rely on as drivers run out of available hours. Experts here expect driver availability and carrier capacity to be reduced by 12%. 

Gilmore also noted that carriers aren’t adding either tractors or trailers to their fleets. 

The crumbling infrastructure being rebuilt will also potentially add to the costs of shipping, as paying for those bridges and highways to be at least repaired will come from – you guessed it – the taxes on fuel paid by motor carriers and owner-operators.

At present, federal policies seem to be favoring rail transportation over truck transportations for shipping goods and commodities.

There are other considerations, of course. But it seems evident that many factors are going to drive shipping costs up drastically – and affect the trucking industry dramatically. Stay tuned for further developments. And – better teach your truck to swim.

Find Gilmore’s complete editorial here: http://www.scdigest.com/