U.S. trucking firms could be in the proverbial driver's seat by the end of the decade as favorable supply-demand dynamics combine with information technology adoption to generate solid profits and take market share from a railroad industry struggling to keep pace with innovation, according to the 29th Annual "State of Logistics Report" that was released today.

The report, prepared by consultancy A.T. Kearney Inc. for the Council of Supply Chain Management Professionals (CSCMP) and presented by third-party logistics (3PL) provider Penske Logistics, said advanced line-haul technologies such as autonomous vehicles and truck platooning could be widely available to shippers over the next three to seven years. That phenomenon, combined with truckers' ability to adopt advanced technologies to reduce their operating costs, will narrow the cost differential between the modes and put railroads under increasing competitive pressure, especially since rail suppliers have not been as aggressive in embedding performance-enhancing technology into their products, the report said.

Truckers are leveraging these tools to cull unprofitable or marginally profitable shippers from their ranks, and to marginalize businesses that adhere to the transactional, rate-driven mindset that in the past has paid short shrift to the needs of fleets and drivers, the report said.

The rosy outlook for truckers seems counterintuitive, given challenges ranging from finding, hiring, and keeping qualified drivers; the productivity squeeze accompanying compliance with the federal mandate requiring most vehicles to be equipped with electronic logging devices; higher diesel fuel prices; road infrastructure problems; and elevated operating costs. For now, the authors said, railroads are sitting pretty as strong demand gives them pricing power—especially in intermodal—and as productivity improvements boost profit margins and the newly enacted corporate tax cuts increase their cash flows. Intermodal costs rose by double digits year over year, in part as shippers struggling to find over-the-road capacity converted traffic to the railroads.
Truckers sitting in sweet spot as decade winds down, State of Logistics Report says – DC Velocity