Trucking is arguably the most essential and expensive aspect of beverage distribution. And trucking today involves a lot more than simply moving product from one location to another. At a recent meeting of the Georgia Motor Trucking Association, James L. Hebe, president and chief executive officer of Freightliner Corp., Portland, Ore., addressed the future of trucking:

“The age of information technology and the new rules of intercontinental and global competition are transforming trucking from every angle you care to consider it – from engineering and equipment specification, to operations, logistics, fleet management and information management,” he said. “The business today of trucking and truck manufacturing is in its biggest transformation since the advent of the motorized truck.”

What follows is an excerpt from Hebe’s speech on where the trucking industry is headed in the future:

“Your business, and everyone else’s for that matter, is being driven by three major concepts:

  • Globalization
  • Deregulation
  • Concentration (consolidation)

Let me translate what I believe some aspects of their influence will be on this business.

1. North American trucking companies and transport companies are no longer safe in just Canada, the United States or Mexico. As our customers respond to global sourcing, global competition and global selling, successful carriers must create or be a part of a global transportation infrastructure. Witness what happens every night at FedEx, UPS, Emery and every major freight hub in North America where goods from all over the world are carried on small carrier’s equipment to final destinations, and you’ll appreciate how far this concept has come.

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2.In the future, your operations, marketing and information technologies, coupled with the infrastructure of your equipment supplier, will have more influence on your operating ratios than the savings that the equipment will bring. In the past 10 years or so, fuel economy improvements driven by engine manufacturing, aerodynamics driven by us, drivetrain efficiencies driven by time and component suppliers, coupled by increases in used truck values, have probably contributed more to cost savings in fleets than operating efficiencies. Well, that is about to change! Real improvements in fleets’ operating revenues will come in the next five years from true operating efficiencies – the competitive battle among carriers has really just begun. Remember I said this – he who has the best information technology interconnected to provide superior customer service through a service support infrastructure wins – period. In short, trucking will become a real professional business, and sophistication of technology will advance profitability more than short-term equipment improvements.

3.Truck manufacturing will respond by focusing on two distinct product requirements – productivity and safety; and two soft-side issues – service support technology and used truck capabilities.

4.Amalgamation of types of carriers will result in a transport system that is indistinguishable and inseparable by type. There will no longer be national LTL carriers, national TL carriers – we will evolve into a single system of multi-modal, multi-faceted logistics providers that adapt to freight requirements on a momentary basis through a highly sophisticated global transportation infrastructure. In this new world, size will win because of technology and its costs. Other industrial consolidation demands it and density of equipment on multiple traffic lanes will be the biggest competitive advantage.

5.Carrier alliances will explode and prosper. Everyone can’t be everything to everyone. Look at recent actions in the airline industry where partnerships are formed to control passenger movement within an alliance system rather than duplicate the services of competing carriers. I believe large logistics operations are the beginning of this development, but soon we’ll see far more growth of carriers in modal and segment alliances and international networks to control large volumes of freight for large shippers.

Traffic lane density will be the basis of competition, in everything from freight rates to driver attraction and retention.

6.Nothing will replace trucks as the primary freight mode; in fact, trucking will grow at rates equivalent to GDP growth. There is room for everyone in the business to grow and prosper, but not enough room for everyone on our highways. Infrastructures cannot handle our own growth, let alone growth driven by population and economic prosperity. We must as a nation invest more in our highways, and as an industry, more in safety!

7.Finally – Trucks will change. The vehicles you operate 10 years from now will be very different… If you aren’t considering a complete revolution in thinking of how trucks will be in the next generation – you’re dead.

“…Today a truck is node in an intrinsic logistics and communications network; a node whose every move matters; a node so interdependent with the rest of the operational network that at Freightliner we feel we have to understand and underpin it all – from design technology to route and driver planning, to resource allocation from our suppliers to our customers.”