Capacity issues among challenges facing the freight industry

airplanecargoCapacity—too much of it, or too little—is a top concern in the freight industry, according to speakers at the 17th Annual Freight and Logistics Symposium in December.

In the keynote presentation, Rosalyn Wilson, senior 
business analyst with Delcan Corporation, said both ocean and air cargo have too much capacity. Throughout the recent recession, ocean carriers continued to order and float new megaships, creating problems with overcapacity and low pricing, thus raising solvency concerns and uncertainty for shippers.

On the air cargo side, 
overcapacity is due in part from
 airline passengers choosing to carry on their luggage rather than pay to have it checked. As a result, the cargo holds of passenger planes have extra space for premium air cargo— which is estimated to have about a 65 percent profit margin for passenger airlines, she noted.

On the flip side, trucking, which is the largest component of the supply chain industry, has operated at 95 to 97 percent capacity for the past three years. Wilson believes this capacity crunch will create major problems for the industry by 2016 and 2017.

Other speakers also noted capacity issues—whether a shortage of drivers or an abundance of data. Chip Smith, CEO of Bay and Bay Transportation, said a major issue is the ability to find and keep enough qualified drivers.

Jason Craig, government affairs manager with C.H. Robinson, said a particular challenge his firm faces is what to do with the massive amount of data available in the supply chain—and how to get more out of it.

Cargill’s Randy Brown, vice president of transportation and logistics, said Cargill is rolling out an improved global analytics capability to make use of its data.

Summaries of the presentations are in the symposium proceedings, available on the event web page.

Posted in Economics, Events, Freight

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