Motor Carrier's Role in Cities Economic Development Term Paper

Excerpt from Term Paper :

Transportation

Motor carriers have populated America's highways for the past several decades and have driven a transportation model that has fueled the growth of just-on-time shipping and a value-added marketing approach that emphasizes the 'extras' that land-transportation shipping provides to its customers. Most experts agree that within the logistics industry, the modes of transportation can be categorized as; air, motor carriers, pipelines, railroads, and water. When discussing motor transport vs. other forms of shipping, experts also agree that "each has advantages, which is why more and more companies are using intermodal methods of transport…they may use railroads for long-haul transport and motor carriers to deliver goods and materials to their final destination" (Lang, 2011, p. 13).

Motor carriers have come a long way since the early heyday of cross-country carrier shipping that saw cutthroat discounting and the challenges that come with deregulations. However, the "adeptly managed carriers learned to operate in this new market-driven environment" (Dobie, 2005, p. 37). Many of these trucking companies quickly learned to discern the customer's needs and desires, and then would respond accordingly with value-added services. According to Dobie, the 1970's and 80's were a period of time that saw "deep discounting by carriers that were not cognizant of the costs of providing service and were intent on promoting growth by serving all possible customers to achieve economies of density and/or to generate cash flow at short-run survival levels" (p. 37).

As most business personnel quickly learn, a short-term survival based on generating short-term revenues is usually not a method for long-term growth, stability and profitability.

This proved true for many carriers during these times, and hence consolidation was the name of the game in the 1980's land transportation industry. Dobie once again accurately points out that "the transportation industry itself has changed as carriers of all modes have consolidated through bankruptcy, mergers and acquisitions, made use of intermodal opportunities, and acquired all or partial ownership in non-domestic carriers" (p. 38). What the future holds for many of these carriers looks a lot like the past decade, where further regulations, additional consolidation, value-added services and an emphasis on proactive strategies will be the key to profitability.

Adapting to many of the new regulations and standards will be of grave importance to these firms. New rules of the road govern how long drivers can drive, and how much rest they are required to have as compared to hours on the road. Regulations passed in 2003 "prohibits truckers from driving more than 11 hours in a row, working longer than 14 hours in a shift, and driving more than 60 hours over a 7-day period or 70 hours over an 8-day period" (New Rules, 2006, p. 12). There were additional regulations that have since been modified that also affect the path traveled by shipping firms in the future. The modifications affected short-haul operators much more so than long-haul operators whose regulations were not modified.

According to New Rules, "the most important change under the new rule allows short-haul operators not required to hold a commercial drivers license…to extend their work day twice a week" (p. 12); and the short-haul operators will no longer have to maintain logbooks as well. This was a rule that was unenforceable (on the most part) anyway, but it does lead to some interesting scenarios.

Some of those long-haul operators in the future may have to contract with short-haul operators to move goods and products from a main shipping location to various 'outposts' without the restrictions placed on long-haul operators.

It is a well-known fact that over the last few decades truckload transportation has supplanted railroad transportation as the most prolific and efficient method for shipping product throughout the United States. However, railroads have seen a resurgence within the last 10 years or so. This is a problem, but it could also be an opportunity for trucking companies in the future. Looking it as a problem, some would say that each mode of transportation is fighting for the same piece of the shipping pie. Stating it does not make the statement true, but those who view it in that manner may be missing the boat (no pun intended). One recent description of the trucking industry provides a look at how the shipping process takes place; "full truckloads have to be picked up at an origin location and delivered at a destination location. A load dispatch window specifies the earliest time a load is ready for pickup at the origin location and the latest time that the load can be picked up at the origin location and still reach the destination location at a desired time" (Archetti, Savelsbergh, 2009. P. 417). Sometimes the load can be freighted via railroad and sometimes through carriers and still reach the location within the specified timeframe. Therefore, shipping becomes a matter of convenience and price.

It is likely that most shippers understand that fact, and consequently are constantly seeking improved pricing and flexibility among shippers, whether the shippers are railroads or trucks really does not matter to most shippers if both can supply the same service.

A 2007 report showed that "motor carriers represent the largest category of transportation-related expenses" (Wilson, 2007) while another report determined that "the basic motor carrier value proposition is developed around the four themes of time, place, value management, and value-add" (Randall, Defee, Brady, 2010, p. 5). The Randall et al. report also found that "it appeared that the motor carriers were supporting their value-generating capabilities based upon elements unique to their firm" (p. 18).

Most reports seem to find that motor carriers in the future will have to provide a variety of value-added services that will include such factors as cost, speed, reliability, capability, capacity, and flexibility (Murphy, Wood, 2008). These factors seem to be the ones that are most important to the shipper(s). It would seem likely then that the carriers will modify and adapt their specific strengths to those needs and desires of the shipper in order to maintain advantages over their competitors.

The problem that many shippers face over cost issues is the same problem faced in the 1970's and 80's when the cost was stagnant across the board, with all shippers facing the same fuel costs as everyone else, as well as unionized workers who receive the same pay and benefits as their competitors. A situation such as this does not lend itself to short or long-term discounting, as evidenced by the many carriers that tried it earlier and are no longer around. The question then remains as to how a carrier can differentiate itself if costs are constant for everyone.

Some would say speed is a determining factor, and this is true as well, but as long as a carrier has enough of a window based on speed limits and other considerations, it is likely that most companies are comparable in this regard as well.

Some firms are much more capable and reliable than their competitors, and these two factors can be very effectively applied. Additionally, the tools and technology employed by companies in today's shipping world allow for a company to be much more reliable. Providing customers with the capability to check the status of an order online, is one method of reliability that sets company's apart. In the future therefore, technology will likely play a much larger role in shipping than it has in the past. Technology allows for checking the status of an order, and it also allows for a process of verification that an order has arrived and is not a partial or incomplete order.

Other technology allows for the tracking of individual shipments through gps monitoring, and tracking devices placed within the product. Gone are the days when hijacking of shipments took place with impunity. Now, companies can track down to the…

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