As trucking capacity tightens, shippers are increasingly concerned about their ability to get goods to customers on time, logistics executives said Wednesday.
“We’re starting to see on-time delivery failures increase,” said Rick Sather, vice president of customer supply chain North America for Kimberly-Clark.
“Our failure rate (in 2011) was more than double than in 2010,” said Rick Jackson, executive vice president of Mast Global Logistics, a Limited Brands subsidiary.
Sather and Jackson both spoke on a panel at the release of the Council of Supply Chain Management Professionals annual State of Logistics report for 2011.
Trucking capacity is at a “tenuous equilibrium” in mid-2012, said Rosalyn Wilson, senior business analyst at Delcan and the author of the 23rd annual report, sponsored by Penske Logistics.
That equilibrium is likely to shift as capacity tightens and freight volume rises. “Make contingency plans now for the day you can’t get a truck,” Wilson said.
Capacity at truckload carriers tracked by The Journal of Commerce dropped 0.6 percent from a year ago in the first quarter and was down 15.9 percent from 2006.
“I think we’re heading to a point where we might be getting out of equilibrium quicker than we think,” Sather said in an interview with The Journal of Commerce.
“We’re seeing signs in certain areas that capacity is tightening, and we’re seeing signs that service is more challenged than it used to be,” he said.
In some regions and at some times it’s becoming harder to find trucks that can make time-sensitive delivery windows for Kimberly-Clark customers, Sather said.
“We’re not seeing dramatic reductions in service levels, but we’re used to seeing high levels of service over a multi-year period, and we’re seeing that start to fall down.”
To date, capacity has been tightest in the congestion-plagued Northeast and in the Southeast, where the produce season siphons away trucks, Sather said.
The solution, he said, is to work more closely with trucking suppliers, sharing information on shipments and scheduling to better balance deliveries.
"It comes to understanding the dynamics of why capacity is tight in that region and working with our carriers to minimize day-to-day potential misses.”
“As you think about the kind of relationship you want with your providers, it guides you toward a much more collaborative way of doing business,” Jackson said.
At Limited Brands, parent of retail chains including Victoria’s Secret and Bath and Body Works, “we’re thinking about capacity and capability,” he said.
“On the truckload side, 2011 was one of the most challenging years we’ve had,” Jackson said. “We’re very excited about how intermodal has stepped in.”