Driving Home A Point by Tim Higham
The trucking challenge you face can still lead to opportunities.
November 11, 2008
Transportation and logistics are going to get worse - a lot worse. I don't want to paint a bleak picture, but the outlook for traditional transportation and distribution will make grown men and women cry.
Why? Two major reasons: First, trucks run on oil, and oil prices are going to rise for decades to come. That's right - decades, given the growing demand for oil from China, India, South America, Central America, Europe - everywhere. This is a fact. It won't change no matter how much we want it to.
Second is the aging population in the United States. This quantifiable fact means fewer truck drivers - a lot less.
So, that was the bad news. At least we got it out of the way. Now to the good news. These challenges create opportunity as we all look for different (and better) ways to accomplish things.
For example, technology that can help you manage your distribution efforts can no longer be ignored. Technology will help you drive less deadhead (empty) miles, find more one-way common carriers, locate your racks and control distribution "by the numbers." Ignore technology at your peril.
Every other industry I can think of has embraced technology - and the leaders in those industries are at the top because of their leadership with technology. Growers emerging as leading companies are getting there by re-inventing themselves - and using technology to do so.
We also will see more cooperative agreements between growers in the future. I already see this with some of the major players sharing trucks to make sure every truck is full. Again, technology is the key to making this work. When you leverage the technology available, the savings are obvious.
For growers using their own trucking fleets, we will see more and more separating their trucking business from their growing operations and giving the trucking operation its own P&L responsibility.
The advantages are many. The trucking company still serves the grower as its main client, but it is now free to load other commodities on the backhaul leg of a route. I have seen this turn a grower's trucking operation from a cost center to a profit center in less than a year. Moreover, the liability issues are transferred to the trucking company and, therefore, protect the grower's assets. It's a sure fire win-win for all concerned.
We will also see truck engine technology advance. Lower emissions will be a continued focal point of the government's agenda. However, this is always a sticky topic because engine technology is usually centered at improving emissions, which in turn reduces mileage. Thus, engine technology gains are actually negative overall, and have been for two decades.
One future technology that will help with the customer service side of distribution is truck tracking technology. Some will be GPS-based and others cellular-(phone) based. I like to call such technology "accountability tracking" because what we have found is that it keeps your drivers honest, on time and on task. Customer service will improve as a direct result of driver accountability.
The bottom line is that distribution involves trucks. This fact will never change. In hundreds of years, trucks will still be moving your material to your customers. The difference will be how you fill the trucks, route the trucks, reduce the deadhead (empty) miles driven, find drivers, and manage your distribution network for maximum efficiency. The good news is that it is relatively easy to do if you use the available technology to do it. Those growers who do will rise to the top of the food chain - and to the top of the Greenhouse Grower Top 100 list.
Tim Higham is the CEO of Interstate Logistics Group, the largest dedicated logistics provider to the horticultural market. You can eMail him at thigham@InterstateLG.com. Learn more at InterstateLG.com or call toll free at 866-281-1281 x1323.