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NITL: An Assembly of Innovative Service Providers
Fort Lauderdale, Florida, November 14th. The votes are counted, no court cases, no questionable butterfly ballots, and quite uneventfully, the current executive of the National Industrial Traffic League (NIT League) have been elected. Congratulations to the newly elected team as the association representing the voice of the shipper hosts its 93rd annual general meeting and Transcon 2000 Trade Show.
Last years show in San Antonio was one of the better shows l had attended. Based on what l saw and the feedback I received, the 2000 show surpassed last year both in terms of activity and new offerings. This years attendance was boosted by strong representation from companies in the east who likely found Fort Lauderdale to be an easily accessible location.
The theme of the show - Moving Freight through doors marked Innovation - was appropriately named. Innovation was certainly obvious to all in attendance, as evidenced by the new and well-defined service offerings by carriers and 3PLs Dot.com enterprises, along with a numbers of application service providers (ASPs) and software suppliers, were also out in force, bringing new and improved functionality to their markets.
In terms of the Less-than-Truckload (LTL) sector, clearly services have further progressed to offer more options. Expedited and time definite services such as 10 a.m. delivery and guaranteed specific time delivery (to plus or minus one hour) are offered as premium services, supplementing the standard LTL product, which to a large degree has turned out to be a basic commodity.
The larger LTL carriers, in addition to offering more service-level options, continue to expand their wings both in terms of geography and the modes of transport as they aspire to gain a greater share of the Air Cargo Forwarder and NVOCC Market.
Also evident in the area of LTL is a greater emphasis on the marketing of alliances between the regional carriers. Promotional materials displaying alliance logos to illustrate the combined service area of aligned partners conveys the message of a seamless integrated system. As the regional carriers compete, now with a stronger Star-Alliance style value proposition on the traditional turf of the national carriers, their coverage area has increased as they gain access to increased traffic. This also offers a greater choice to shippers that want to reduce their carrier base.
It should come as no great revelation that developments in e-commerce offerings continue at a fast pace, not only in the LTL market place, but across all modes. For the shipper, full suite B2B offerings from freight desk applications for costing and booking to comprehensive management reporting, freight claim management and imaged Proof of Delivery (PODs) deliver more and more value as these factors become highly productive tools.
On the truckload carrier side there are signals of a movement toward niche operations by a number of carriers who, for example, focus their attention toward providing creative solutions developed for a particular industry. Similarly, others are positioned to provide service excellence in restricted geographic territories. The offering of dedicated service by truckload carriers is also being looked at with renewed interest.
The presence of the technology companies in Fort Lauderdale was greater than I have seen at any other transportation show. This would include the software suppliers, ASPs as well as the dot.coms. Generally, these companies are inclined to be highly focused in terms of delivering high-value solutions to their market. Collectively their range of services and their target markets are exceedingly varied.
The notion of a transportation show with transportation service providers displaying their service products to commercial shippers has been long left behind. There were ASPs that had origins in the financial industry, promoting event messaging systems to their new target market the motor carrier. Vehicle tracking and driver messaging systems were being targeted at a similar audience. Add to this dot.coms that embrace transportation providers as a big part of their future and others that look to commercial shippers as their market and you still only have a small sliver of what Transcon 2000 was about. The whole show was buzzing with activity which became increasing louder as the clock got closer to the closing bell.
In terms of how our industry views the coming year, I drew the following impressions from my informal discussions with many of the participants at this event.
Ongoing concerns facing the industry in general in the United States continue to be the subject of transportation media discussion. The rail merger issue and what will ultimately be the outcome of the changing face of the rail networks. In particular, the maintaining of a competitive price and service environment remains a major concern to the larger rail shippers. This issue, deferred by the moratorium, as with the issue of drivers hours of service, remains an open item for the industry. The driver hours legislation has been put on hold in the United States. But if and when this legislation does go through, it will represent additional cost to the carrier and consequently to his customer. From the carrier perspective, the cost of fuel and the shortage of drivers continue to present challenges for many carriers both in Canada and the United States.
General expectations for the year 2001 are for a slight softening of the market. Increases in interest rates are expected to contribute to slower economic growth. Not surprisingly further consolidation of the industry is expected. This was underscored by the announcement during the show that American Freightways had been acquired by the Fedex Group.
Most carriers, both Truckload and LTL, anticipated doing more business with 3PLs during the coming year. In one case, a carrier I spoke with advised that their national accounts team had been disbanded in favor of a focus of partnering with 3PLs. This partnering is happening both at the request of the shipper as well as carriers and 3PLs working closer together for mutual gain.
In terms of the regional LTL carriers, few expected to increase their current geographic coverage in favor of a focus on optimizing the use of their assets and increasing profitability within their existing service area. In general, there seems to be little to report with respect to a solution to the driver shortages, although this has not yet impacted on all carriers. One company I spoke with had to decline a potentially rewarding contract for distribution in the San Francisco bay area due to the acute driver shortages in that area. It is imperative the carriers in general find new ways to attract drivers to the industry.
Several truckload carriers I spoke with predicted reductions in their ranks. Carriers that are unable to pass the increased cost of fuel to their customers and face higher costs in terms of recruiting and maintaining drivers may be forced or elect to discontinue operations.
Annual shows are interesting: looking back at the last show reveals just how much can happen in one year. The industry meets again in Charlotte, North Carolina, in November 2001. For some companies, Fort Lauderdale may have been their last show - I am referring to independents now being absorbed into larger groups. For others, not even in business yet, Charlotte may be their first show.
Two predictions, one almost certain and one definite. Almost certain is that I will never win in the business card draw offered by that large Canadian Custom Broker that I keep running into at these shows. There is something curious, namely, this is a heck of a losing streak! (I will give it one last shot at the Canadian Industrial Transportation League in March and after that no more cards.)
On the other hand, some more definite news: the pace of change in the field of logistics will do nothing but increase as it remains an open and exciting field and one that will continue to offer great opportunities for the innovators of today.