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How Should Carriers Navigate an Uncertain Economy? Technology

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Courtesy of Courtesy of Omnitracs, LLC

Industry economist Noel Perry at FTR Transportation Intelligence warned last month that the changes he expects to come to the trucking industry in the next few years will be bigger, and potentially more disruptive than those spawned by the Motor Carrier Act of 1980. Few carriers — big or small — operating in 1980 survived the post-deregulation era, he noted, and the likely changes over the next few years will be even more disruptive than those brought about by deregulation.

“This change is as big as the invention of the Interstate Highway system,” Perry said at FTR’s annual transportation conference in Indianapolis.

Most worrisome, Perry said, is a potential — he says likely — bursting of the federal debt bubble. He is expecting it to be more damaging to the economy than when the tech and housing bubbles popped the previous decade. He forecasts that in one not-so-hard-to-believe scenario payments on the national debt could skyrocket from the already-challenging 12 percent of the federal budget, to between 43 percent and 75 percent of all revenue collected by the U.S. government by the year 2030.

Such a dramatic economic shift would have enormous impacts on consumer spending and, as a result, on the amount of goods being shipped and the prices that shippers would be willing, or able to pay for shipping their goods to market.

Even if the national debt situation doesn’t explode, there’s a 50 to 60 percent probability that taxes on the trucking industry will rise by between $1.50 to $2 per mile driven as a result of political/economic/environmental decisions in Washington, D.C. designed to push a big percentage of freight off the roads, according to FTR experts.

Technology can even out economic bumps

So with a future that’s anything but certain, how do carriers protect themselves from potential disruption and to operate in such a brave new world? Technology.

It’s becoming more critical than ever for carriers to operate as efficiently as possible. While they can’t control gas prices, they can manage fuel consumption with fuel management tools. While they can’t control highway construction or the weather, they can control out-of-route miles with smart routing technologies.

But these technologies aren’t helpful if they are installed but never used. Ensuring their use has to also be part of the plan.

Keep drivers informed and educated on changes

Educating drivers in how to operate new technologies is an obvious, but easy-to-skip step in the process of preparing companies for the big changes ahead for the trucking industry.

Training truck drivers is expensive. Not only must great curriculum and teaching tools be created — pulling drivers off the road for training and paying for their time and travel expenses can add up. It can impact a trucking company’s short-term financial performance. But, long term, the money spent educating drivers in advance of the big technology, regulatory, and economic changes ahead should smooth the transition and help companies survive, and maybe even produce more positive economic results.

It will also be critical to explain to drivers why technology, regulatory and/or economic changes are happening and why the company is taking specific steps in reaction to them. This kind of transparency can go a long way toward winning those employees’ intellectual and emotional support for both the company and the changes it must implement. The economic value of full driver “buy-in” to the changes that become necessary is hard — and likely impossible — to fully quantify. But experience tells us that companies with employees who at least understand and accept changes have a far higher success rate and survival rate than those companies that push changes on workers without first winning their understanding of and/or support for those changes.

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