September 24, 2018 • Posted in Webinars

Achieving Supply Chain Excellence Amid Rising Trucker Workforce Shortages And Costs

An efficient, agile supply chain is vital for plastics businesses to remain competitive in today’s global market. But how do companies navigate the added challenges of a shrinking truck driver workforce and increased costs to deliver on-time and keep customers happy? This question was the subject of M. Holland’s second Plastics News Fireside Chat series of 2018, featuring four industry experts: Mike Coots of Plastic Express, Jordan Hoffman of G&D Trucking/Hoffman Transportation LLC, Mike Mobley of Echo Global Logistics, and Pete Nutley of M. Holland Company. Together these panelists shared their perspectives on how supply chain partners and customers can work together to mitigate some of the industry challenges disrupting services and driving up costs.

The Trucker Shortage

Over the last 15 years, the U.S. has experienced a growing truck driver shortage. According to CNBC, there is currently a 51,000 deficit of truck drivers. An aging workforce and a recovering post-recession U.S. economy have led to fewer truck drivers, increased freight costs, and service disruptions. Combined with last year’s Gulf Coast hurricanes and recent policy changes such as Electronic Log Device (ELD) mandates, the logistics industry faces a perfect storm, which has created a sense of urgency to resolve this multi-faceted issue.

Panelists discussed several options to alleviate these issues:

Attracting a Younger Workforce: The trucking industry is facing increased competition when it comes to attracting a younger, millennial workforce. In a healthy market with increased job opportunities, younger generations of workers– who in the past may have opted for a career in trucking– are now taking positions in warehouses, construction, or trucking for big-box retailers that offer a similar experience, more standard work hours, and the opportunity to be home with their families each night.

“We need to find ways to incentivize our industry and make it attractive for someone who wants to drive a truck,” said Hoffman. He continued, stressing the importance of making the industry more attractive by encouraging younger drivers with better pay and benefits and a strong company culture.

Achieving Efficiency Through “Reasonable Flexibility”: Demands and constraints on capacity in conjunction with current market conditions and ELD mandates create the need for flexibility up and down the entire supply chain to ensure maximum efficiency—and improve trucker experiences. According to panelists, by keeping all areas of the supply chain aligned with current market conditions and working together as a cohesive supply chain unit, companies can achieve “reasonable flexibility,” a phrase coined by Hoffman.

When all members of the supply chain work together, they can achieve maximum efficiency. However, with truck drivers’ time tracked by the minute through ELDs, any delay accessing a customer’s receiving dock, piping, or conveying system can prevent them from getting jobs done and create more disruption further down the supply chain. According to Mobley, every minute given back to the driver is more time put back into the broader market, which helps maximize efficiency and limits disruptions in the supply chain.

Addressing the truck driver shortage and limiting disruptions are key to balancing the supply and demand ratio and decreasing logistics costs for the plastics industry. But other industry factors coming down the pike, such as significant polyethylene (PE) resin expansion and imminent international trade policy changes, are set to have continued and profound impacts on plastics industry supply chains.

Impending Disruptions: PE Expansion & International Policy

In the last two to three years, almost 10 billion pounds of PE resin entered the market. In the next few years, as much as 15 billion pounds more is expected, most of which will be exported. According to Nutley, this is causing a regional supply chain issue in the Houston area.

While many companies have invested in infrastructure to help package PE resin for exportation, there is still a need for trucks and trains to move packaged resin from warehouse to port– something the Houston region, for example, does not have the infrastructure to support. According to Coots, this will cause the bubble to expand beyond Houston and into other markets across the U.S.

“People are starting to invest in other markets,” said Coots. “What can’t be handled in Houston will be sent to places like Dallas, Charleston, Savannah, Norfolk, and the West Coast where they have more capacity for packaging, container storage, and freight or truck movement.” Coots also stated that we aren’t likely to see some of that PE capacity moving to other regions until the Houston market can no longer handle the influx. All of this will put an additional strain on an already taxed trucking industry.

Meanwhile, impending international trade negotiations such as Chinese tariffs and NAFTA renegotiations are causing tremors throughout the supply chain, leaving product set for exportation taking up space in warehouses. According to Nutley, all companies can do right now is stay nimble and ready to react to policy and market changes as they arise.

Being A Good Supply Chain Partner

Staying nimble amidst rapid and impending change can be tough and, to accomplish this, supply chain partners need help from clients and partners. Supply chain challenges are expected to continue for the foreseeable future, making the relationship between customers and logistics partners critical to improving the supply chain.

The panelists identified the following best-practices for optimal freight coordination:

  1. Communicate: It’s important for shippers to be transparent and share information and strategies with their carriers. Many issues can be mitigated through strong, ongoing communication.
  2. Be Predictable & Flexible: Whether ensuring on-time pickup and delivery access or creating off-hour delivery windows to avoid peak time disruptions, all parties within a supply chain should exercise “reasonable flexibility.” This means being prepared for incoming deliveries and flexible when faced with delivery challenges.
  3. Educate & Evangelize: Companies with established, proven best practices and efficient processes should proactively share that information with their distribution, logistics, and shipping partners up and down the supply chain. Transparency and education can be critical to optimizing coordination between all clients and partners.

It is crucial for all parties within a supply chain to work together to increase efficiency, help decrease disruption and cost, and mitigate ongoing industry challenges. This collaboration is imperative to keep a competitive advantage within the plastics industry. Watch this latest Fireside Chat on M. Holland’s YouTube Channel. For more information about the Fireside Chat series and to find out when the next episode will air, click here.

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