"The exploration of truck carrier capacity challenges in freight

transportation"

1. Historical perspective of truck carrier capacity challenges ............................... 2

2. Problem diagnosis ............................................................................................ 3

2.1. Driver shortage analysis ................................................................................ 4

2.2. Truck shortage analysis ................................................................................ 5

2.3. Growth of e-commerce .................................................................................. 5

3. Impacts, advantages and limits of the current carrier capacity issues .............. 5

4. Prospective solutions and Recommendations .................................................. 6

4.1. Increase in collaboration between shippers and carriers .............................. 6

4.2. Improve transit times ..................................................................................... 8

4.3. More focus on employees ............................................................................. 9

4.4. Use of AI in fleet management .................................................................... 10

4.5. Complementary recommendations ............................................................. 10

5. Solutions assessment..................................................................................... 11

6. Reference list ................................................................................................. 13

 "The exploration of truck carrier capacity challenges in freight
transportation"

1. Historical perspective of truck carrier capacity challenges

Over the last few years, different carriers of Freight Transportation (FT) like the
Less Than Truckload (LTL) and the Truckload (FTL) started to face significant
carrier capacity challenges, due to the pandemic, the shortages of drivers and
trucks, and the increase of the e-commerce industry.

The increasing drivers shortages become evident in different countries across

Europe along 2021 (BBC News, 2021). This can be seen through a report
released by the BBC news (Figure 1.), where the increase in job postings for
heavy good truck drivers revealed the high level of driver shortages.

Figure 1. Shortage of drivers across Europe

Source: (BBC News, 2021).

In the same way, the worldwide e-commerce activity have not only growth fastly
along the last two years, but it is also expected to increse more in the upcoming
years, achieving a increase of more than $7 trillon by 2025 acording to the
forcast made by Cramer-Flood (2022), which is shown in Figure 2. In UK, the
e-commerce activity increased by 36% between the end of 2020 and the start
of 2021 (Coppola, 2022).
 Figure 2. Growth of e-commerce worldwide

Source: (Cramer-Flood, 2022)

As a result, both the shortage of drivers and the increase in the e-commerce
activity, together with the shortage of trucks, led to many companies of FT like
UPS, Old Dominion and U.S. Express manifest carrier capacity issues within
their operations (Garland, 2021; Transportation Insight, 2021). Hence, the LTL
and TL space performance is expected to be severely impacted in the following
months (Peckham, 2021).

2. Problem diagnosis

Given the facts mentioned above, it is possible to identify the causes that gave
rise to the current capacity challenge that carriers are experiencing. Among the
main ones, we have the driver shortage, the trucks shortage and the increase
of e-commerce, which are also events that have been developing recently.

To understand the main problem, it is necessary to analyse the preceding

events that gave rise to it, for this the cause-effect analysis shown in Figure 3
is proposed. Where, by breaking down the different causes, it is possible to
have a clearer vision of the current truck capacity issue, allowing us to think of
possible solutions that can solve this problem.
 Figure 3. Cause – Effect Analysis for carrier capacity issues in FT

Source: Self developed

2.1. Driver shortage analysis

A truck driver represents an essential factor in the Freight Transport System

(FTS) for the development of its operations (Petty, 2021). Nonetheless, the
covid-19 was one of the factors that led to the shortage of drivers, through the
closure of truck drivers schools and the imposition of Covid-19 vaccination
requirements. For example. In the US, a vaccination mandate was established
for all Foreign Truckers starting on January 2022 (Ronan, 2022).Another factor
that contributed to the driver shortage is the migration issues like Btexit.

However, the driver shortage is a problem that has been growing for some time,
due to the high labour turnover existing in the FT industries. Among the factors
that contribute to the increasing labour turnover we can mention the following:

• Competition:

There is a high competition among trucking companies for drivers, as drivers

are always looking for the next company who is going to pay them the most
and with better working conditions.

By September 2021, there is a driver turnover rate of 80% at larger carriers

and a lot of that turnover is made up of people moving from one company
to the next (Transportation Insight, 2021).
 • Health problems:

Truck drivers spend hours on the road and the lifestyle poses many
challenges, personal health is one of the leading causes of high turnover
rates in the industry.

• Challenging tasks:

A truck driver daily faces different challenging tasks along their journey, like
the challenge of parking, they also do not have much control over their
schedules and often have to wait sometimes hours for crews to load and
unload their trucks.

2.2. Truck shortage analysis

As we can see in Figure 3, another cause for the carrier capacity issue is the
shortage of trucks. A truck has a short life, trucking companies expect to get
about three years of good use until they turn it over to the used market. By
September 2021, there was a nine-month wait for a new truck and some
manufacturers are not even taking new orders (Transportation Insight, 2021).

Another factor that led to the truck shortage is the eating equipment. As Jacob
Hawkins highlights that the LTL is at pick right at capacity and they normally do
not have that much parcel freight being pushed to their networks (Peckham,
2021). Other factors such as unskilled stuff and poor loading quality are also
contributing to the eating equipment.

2.3. Growth of e-commerce

Then, we have the increase of the e-commerce industry as the third cause for
the truck carrier capacity issue, specially we’ve seen a huge and fast increased
in the last two years a cause of the Covid-19 pandemic (Cramer-Flood, 2022).

3. Impacts, advantages and limits of the current carrier capacity issues

The truck carrier capacity problem analysed in section 2 had certain impacts on
the operations of the FTS. Such is the case of the LTL transactional market,
which is seeing tight capacity, generally widespread delays, and longer transit
times, with 87.9% of shippers reporting a delay in deliveries (Deming, 2022).
Another impact was reflected in home deliveries at an all-time high, due to the
 rise in e-commerce (Estes Express Lines, 2021). In the same way, carriers are
facing challenges in the hiring process (Estes Express Lines, 2021).

However, some advantages arose from the current challenge in FT, among the
most outstanding are shown below:

• Carriers are focusing more on improving their distribution systems, since

this event allowed them to identify their weaknesses and from this create
strengths.

• Alliances are consolidated between companies to strengthen the supply

chain.

• Technology is being improved and implemented for FT.

• The increase of e-commerce sales, by improving their capacity

performance.

• And new sources of work are giving opportunity to more people of different
genders and ages to be part of the shipping and carrier industry.

On the other hand, the main limitations of the current capacity challenge in FT
are the capacity constrains under uncertainties such as weather issues,
hurricanes, winter storms and pandemics. Which are factors in the environment
that, although they cannot be controlled, strategic operations can be
implemented to be prevented and thus reduce their impact.

4. Prospective solutions and Recommendations

Different recommendations are presented below as potential solutions to the

problem analysed in FT, as well as the challenges involved in its realization.

4.1. Increase in collaboration between shippers and carriers

With today's capacity constraints, it is more critical than ever for shippers to
collaborate closely with their carriers to arrange their freight shipments ahead
of time.

A theoretical model for collaboration between shippers and carriers under the
environmental conditions of driver and truck shortage is presented in Figure 4.
There, we can see that the interdependence created between shippers and
carriers under the current environmental condition, leads both actors of the FTS
in the need to establish operational collaboration strategies for their
performance.

Figure 4. Collaboration model for shippers and carriers

Source: Adapted from (Fugate et al., 2009)

Therefore, to establish operational collaboration strategies between shippers

and carriers, elements such as joint planning, communication, risk/reward
sharing, trust, and commitment are considered, as Lambert et al. (2004)
suggest that these elements constitute the basis for strategic collaboration.

➢ Joint planning: The shipper should estimate the cargo volume and
deliver it to the carrier beforehand.

➢ Communication: Shippers need to communicate better with carriers and

third-party logistics companies.

➢ Risk/reward sharing, trust and commitment: By increasing transparency

between shippers and carriers, high trust, commitment and risk/reward
sharing are created in their partnership. So, they should be able to share
information for letting the carrier schedule transportation for reflected
production, allowing drivers to be assigned regular routes, thus reducing
driver turnover.
 The challenge for this possible solution is that every collaboration initiative
requires tactical day-to-day tasks, which must be executed with discipline for
achieving the objectives. Otherwise, the interruption of collaborative actions
could have a detrimental impact on its performance (Fugate et al., 2009).

4.2. Improve transit times

As we could see, one of the main factors that led to the current challenge in
carrier capacity is the driver shortage, making each driver's time on the road
critical for creating efficient operations. As Deming (2022) affirms that building
in extra time at every phase of the shipping process is one of the smartest things
it can be done to address freight capacity issues.

In this way, to reduce the length of time a driver waits at the dock door and
increase the amount of time he or she spends on the road, new processes
should be established and resources committed to make the shipping and
receiving dock exchange more efficient.

Some strategic operations to achieve this is presented below:

• Loading and unloading processes should be improved.

• The operations of packing and staging shipments should be carried out

ahead of time so that they are ready for pick-up and will be loaded
smoothly.

• The implementation of “live load” to “drop‐and‐hook” operations should

be considered. This process can be seen in Figure 5, where the driver
arrives at the dock, unhooks from the delivered trailer, hooks up to
another trailer, and then proceeds to the next destination. In this way,
shippers' transportation expenses are reduced, carriers' potential
revenues are increased, and everyone saves time.
 Figure 5. “Live load” to “drop-and -hood” operations

Source: (Convoy, 2020)

Although the investment in new trailers can be a challenge for this solution, its
implementation allows for an almost continuous dock-exchange process
(Fugate et al., 2009).

4.3. More focus on employees

Carriers need to focus more on their employees to avoid the shortages of

drivers and stuff. For instance, the actions that should be taken are the
following:

• Make the pickup and delivery process easier. By doing this, it is possible
to maximize capacity as well (Healy, 2022).

• There should be more predictability in terms of when drivers return home

at the end of the day.

• The transportation system planner might be trained by the carrier for

eradicating waiting, accidents, driver turnover, injury and slowdowns.

• More consistent routes should be developed, allowing drivers more time

at home and lowering driver turnover. As Davis et al. (2004) suggest that
the driver turnover may be reduced to 5% or less if a driver could be
home every day.
4.4. Use of AI in fleet management

A potential solution for the current capacity issue in FT is the use of IA. By
implementing this technology in the fleet management system, both carriers
and shippers will benefit saving time, reducing cost and increasing safety for
drivers. Some of the applications that can give a solution to the carrier capacity
issues in FT are mentioned as follows:

➢ Traffic management: It facilitates the analysis of traffic patterns,

providing drivers with information on the fastest route. In this way,
carriers will be able to deal with delays by efficiently using the limited
resources of drivers and trucks.

➢ Optimized routing: The use of IA can help the carrier to plan the most
effective route what can shorten journeys and also to get information
about actual road situation (Šusteková et al., 2015). And by performing
route planning in advance, it will be possible to reduce the uncertainty
that truck drivers face on each journey. Here, the main challenge is that
cybersecurity and data privacy are often subject to being altered by third
parties, which could damage the integrity of companies (Iyer, 2021).

➢ Automated trucks: The use of automated trucks can support the FTS in
seasons where the level of driver shortages is very high, to alleviate the
heavy dependence that carriers have on drivers. However, the challenge
of implementing automated vehicles is the possible unemployment due
to the impersonation of drivers by machines.

4.5. Complementary recommendations

Additionally, to achieve the objectives established above to achieve the efficient

use of the carrier's capacity, the following complementary recommendations
are provided below:

➢ LTL carriers must invest in technology to make the best use of their
resources. Healy (2022) highlights that carrier who engage in improving
their technology infrastructure will be best positioned for long-term
growth.
 ➢ By consolidating freight shipments, it is possible to develop a cost-
effective method of cutting costs while also providing LTL truck
availability. Although a challenge for shipments consolidation could be
the need to have more contact and coordination with customers,
scheduling larger, less frequently loads can be a wise long-term strategy
(Deming, 2022).

➢ The huge, well-known national freight carriers are recognized to most

shippers, but regional carriers can also provide excellent coverage.
Regional carriers have extensive expertise and experience navigating in
local areas. So, they can deal easier with different obstacles such as
traffic patterns or limited access issues (Deming, 2022). However, the
challenge with using regional carriers is that they have limitations in local
areas, so they are not suitable for international shipments.

5. Solutions assessment

It can be stated that the recommendations presented in section 4 are

achievable since several companies are already implementing them within their
operations. However, faced with such a recent problem and in the search for
an immediate solution as is the case with the carrier's capacity problem, some
of the recommendations may not be very realistic in the sense of solving the
problem in the short term. Therefore, the scope that the proposed
recommendations currently have is evaluated.

➢ Both the "improvement of transit times" and "giving more focus on

employees" are realistic solutions, since both actions involve daily tasks
that are already part of the operations of both shippers and carriers, but
that need to be improved. Therefore, although a certain investment is
required, there is a clear certainty of the benefit of the results.

➢ On the other hand, when we talk about the practice of "collaboration

between shippers and carriers", we refer to two independent
organizations. Therefore, its implementation requires the agreement and
predisposition of both parties, since only one cannot implement this
solution on its own. So, we can say that this solution is somewhat
realistic, but not completely if there is no commitment from both parties.
➢ Finally, the Use of AI in fleet management is seen as an unrealistic short-
term solution. As the implementation of new technology can be quite
expensive, and some carriers cannot afford it. Also, the implementation
of new technology means the redesign of some processes, the training
of the whole staff, the reallocation of some operations and the company
need to be willing to take the risk of the positive or negative performance
that the new technology may bring to the company.
6. Reference list

BBC News. (2021, October 15). How serious is the shortage of lorry drivers? - BBC
News. https://www.bbc.co.uk/news/57810729

Convoy. (2020, December 10). What is drop-and-hook freight? Convoy Team.

https://convoy.com/blog/drop-and-hook-freight/

Coppola, D. (2022). Internet share of UK retail sales monthly 2021 | Statista. Statista.
https://www.statista.com/statistics/286384/internet-share-of-retail-sales-monthly-
in-the-united-kingdom-uk/#statisticContainer

Cramer-Flood, E. (2022, February 2). Global Ecommerce Forecast 2022 - Insider

Intelligence Trends, Forecasts & Statistics. EMarketer.
https://www.emarketer.com/content/global-ecommerce-forecast-2022

Davis, F. W., Hagan, F. M., Zertuche, L., & Weiss, M. (2004). Polish up the supply
chain. Glass Magazine, 54(3), 76–85.

Deming, J. (2022, January 18). Overcoming Freight Capacity Challenges. Partner

Ship. https://www.partnership.com/blog/post/6-surefire-ways-you-can-overcome-
freight-capacity-challenges

Estes Express Lines. (2021, April 12). Unprecedented LTL Industry Capacity
Challenges - Hardwood Floors Magazine.
https://hardwoodfloorsmag.com/2021/04/12/unprecedented-ltl-industry-capacity-
challenges/

Fugate, B. S., Davis-Sramek, B., & Goldsby, T. J. (2009). Operational collaboration

between shippers and carriers in the transportation industry. The International
Journal of Logistics Management, 20(3), 425–447.
https://doi.org/10.1108/09574090911002850/FULL/PDF

Garland, M. (2021, July 27). UPS: Peak demand projected to exceed capacity by 5M
packages daily. Supply Chain Dive. https://www.supplychaindive.com/news/ups-
earnings-peak-capacity-volume-carol-tome/603908/

Healy, L. (2022, February 8). How to Beat the Capacity Challenge in LTL Shipping.
Supply Chain Brain. https://www.supplychainbrain.com/articles/34525-how-to-
beat-the-capacity-challenge-in-ltl-shipping
Iyer, L. S. (2021). AI enabled applications towards intelligent transportation.
Transportation Engineering, 5, 1–11.
https://doi.org/10.1016/J.TRENG.2021.100083

Lambert, D. M., Knemeyer, A. M., & Gardner, J. T. (2004). Supply chain partnerships:
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Peckham, C. (2021, October). Transportation Market Report - 2021. Freight Plus.

https://www.freightplus.io/transportation-market-report-october-2021-dl

Petty, W. (2021). Global commercial driver shortages to soar in 2021 - survey. World
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Ronan, D. (2022, January 20). Foreign Truckers Must Be Vaccinated to Enter US

Starting Jan. 22. Transport Topics. https://www.ttnews.com/articles/foreign-
truckers-must-be-vaccinated-enter-us-starting-jan-22

Šusteková, R., Knutelská, R., & Phd, M. (2015). How is the artificial intelligence used
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Transportation Insight. (2021, October 7). Transportation Trends in Q4 2021.

https://www.transportationinsight.com/resources/videos/transportation-trends-
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