Are you planning for the long term?
The Department of Transportation (DOT) has recently released a detailed study on consumer trends in the United States and freight/logistics implications through 2045. This article provides highlights from the DOT's study that Shippers should be aware of to align with the trends and reduce delivery costs.
We will be covering:
-Population trends and why centralized warehouses can reduce shipping costs
-Freight volume trends and intermodal changes
-Why shippers should plan for the long term
Consumers are moving south and west; staying in Major Metropolitan Areas
It is predicted that 91% of the population will live in either urban or suburban areas by 2045, up from 83% in 2010. Logistically speaking, fewer long hauls out to rural areas, and more deliveries in congested parts of the country like the LA basin or New York City. Businesses should plan for this shift and evaluate their consumer's ship to location. A good practice is increasing regionalized shipments and a warehouse centered to demand. By centralizing your warehouse, a shipper can leverage nearby highways and reduce the time and distance to make service. Even if you're not planning on moving, you should routinely review the distribution network and the real estate market to secure market competitive rates on space. Finally, be proactive and know the market to avoid overpaying on your warehouse lease. Stay ahead of the game and put more money back in your pocket.
Volumetrically speaking, all modes of transportation are set to increase by 2045. Trucking will increase by 43%, rail by 37% and ocean will increase by 10%. Air remains an anomaly and the demand is for a niche market, but it will also be on the rise. While trucking remains at the top of the list for volume, it is important to note that the cost to make deliveries in the present day is grossly overpriced. Capacity issues and low fuel prices should sustain lower rates. However, unlike ocean which is routinely seeing pendulum swings in rates, LTL is still fairly stable. Although leaders suggest short term, companies should be locking in contracts for lower rates. In the long term, the rates themselves may not be the entire problem. Truck congestion may become a newer issue as highways become overpopulated with commuters. If regions like LA and NYC become even more densely populated, peak times for travel will grow longer, and more of these interstates or highways will have traffic. It is estimated that nearly 30,000 miles of our busiest highways will have bumper to bumper traffic on a daily basis. So how do we solve this from a shipper's perspective?
2045 is 30 years from now- isn't that a little far out?
Thirty years is certainly a long time to be looking forward and planning ahead. In the here and now, shippers can be fighting for more competitive rates and reducing or even eliminating fuel surcharges. But what companies can glean from this are the long term trends. When more highways become heavily congested over the course of a few years, a delivery that would normally take 12 hours from Salt Lake City could take 14 hours to arrive in Los Angeles. Finally, our advice for companies is to keep an eye on their consumer's location and be open minded to moving closer to them and prevent overpaying for long haul deliveries or missing service in the future.
Learn More - about population distribution and budgeting accordingly for freight shipping. Contact us to find out how CPC can help with your shipping services needs.