It’s all over the news, and everybody’s in the logistics industry is talking about, whether it is in the canteen or the boardroom – the industry is under pressure. Not financially, as they too ride the wave of the economic upswing. It’s something else that poses a threat: a shortage of capacity.
Simply put, there’s more cargo and more demand for moving it from A to B than there is capacity available. The situation is not getting better by the dire shortage of drivers. With this scarcity, bottle necks naturally occur and with them significant price hikes.
Add to this new legislation that makes it more difficult to maneuver the regulations for driving, rest, and parking and most recently EU regulation suggesting binding targets for CO2 reductions from heavy transport. And lest we forget, environmental concerns, not made less by a historically hot summer in 2018, as well as global warming in general. In this sense, tighter regulations and demands from the market play a big part. And it can be hard to keep up with it all.
Sustainability has become a point of competition for a lot of businesses. That is the case for both logistics operators, as well as their customers. Even for the end consumers, the fact that a product’s transport and delivery is sustainable has become more important.
So, where for the industry to begin?
Rising transport prices
So it is getting more expensive moving goods from A to B. That makes the space every pallet takes up during transport more valuable than ever before. How do you get as much cargo as possible with every truck? Questions like these are what the industry is trying to answer.
In the fall of 2017, one of the world’s biggest transport- and logistics operators, Danish DSV, warned customers of a coming price increase of 5-7%. Another Danish operator, Blue Water Shipping, later announced an additional “Lack of Capacity”-fee of 5% to be added to all its ground transportation rates.
Global e-commerce on the rise
If you look closer, you will find other reasons for the industry’s capacity woes. Today, 11.5% of all goods being transported are ordered online, and therefore has to be brought from A to B. This number grows by 20% yearly, and retailers now also try to attract customers with offers of free delivery and overnight shipping.
Even if buying locally and sustainability are weighing on consumers’ mind, we still do not hesitate to buy online, if we can find it for cheaper at home in front of our laptop and get it delivered right at our doorstep. We probably also fail to consider that our purchases have to be sent from the other side of world. All of this adds to the increasing capacity demand.
Too few drivers
Another significant cause of the shortage is as mentioned the lack of drivers. The industry is running career marketing campaigns like never before, painting it as an interesting job with great freedom and flexibility and where two days are never the same. Be that as it may, the youth of today struggle to see the attraction in spending hours and days away from friends and family behind the wheel and sleeping at rest stops. What was once attractive to many now attracts few, and the profession’s public image has changed significantly. According to the German transport and logistics association (DSLV), Germany currently faces a shortage of at least 45,000 drivers, a reality mirrored here in Denmark, where we will soon be 2,500 drivers short. Expanding to all of Europe the number climbs to a dizzying 300,000.
Half-empty trucks are climate no-go
Another factor that contributes to the increasing pressure on the entire logistics industry is the climate footprint. Regulation dictates how much CO2 every truck can emit in an effort to reduce collective emissions. Calls for less air pollution, a growing health concern, have also grown in volume.
Many say digitalization and new, advanced and game-changing technology must be the winds of change in modernizing current transport- and supply chains. It makes sense to think this way, so one may optimise and advance planning- and capacity systems. There is a lot to be gained.
But it may be equally important to focus on more hands-on and low-tech solutions. Because there happens to be a solution already on the market that with a small investment can optimise the packing of trucks. This solution significantly optimises capacity, and simultaneously reduces transportation costs significantly.
The latest numbers from the EU show that 24% of every truck kilometer driven happens with an empty hold, and that vehicles on average only transport 57% of the goods they actually have room for. We are simply not making the most of the capacity we have at hand.
Once can easily imagine tighter regulations will be necessary and increase demands for better utilisation of truck capacity to alleviate congestions, emissions and air pollution.
A low-tech, yet disruption-esque solution to some of these capacity challenges is the Danish-invented transportation system SpaceInvader. As the name suggests, the system, which is based on a modular pallet rack, simply “invades” the unused cargo space and the empty space that the vast majority of trucks drive around with.
It happens through double stacking of pallets. SpaceInvader is a lightweight and simple aluminum rack that makes it possible to transport two pallets using the space of one, thereby exploiting the full height and space of the trucks’ holds and making room for more goods on every truck.
Other advantages of the SpaceInvader rack is how it facilitates a more secure and stable stacking of goods, and thereby reduces the amount of breakage during transportation. This is because goods are now stacked to a height of 120 cm., where after the second pallet is stacked on top. Another advantage is what happens when goods arrive at their destination, in retail for example, where goods can now be unpacked much easier and safer by employees, because they now unpack at a height of 120 cm. instead of today’s height of 180 cm.
In terms of efficiency, we are talking about a solution that offers to cut the existing pallet-price in half (minus the costs of renting the rack), while leading to better loaded trucks that will ultimately mean fewer trucks on the road and with that less congestion, fewer emissions and reduced air pollution.
The solution is therefore both capable of solving capacity shortage in the supply chain, but also helps solve some of society’s other great challenges.
The greater potential
According to Denmark’s bureau of statistics, Danish trucks drove 1,577 million kilometers transporting goods in 2015. That translates to 39,000 trips around the globe. Numbers from the EU tell us 24% of those kilometers are with empty holds. If we can load trucks better, the need for those empty truck lessens. That means less congestion, reduced fuel consumption and fewer emissions. .