Amazon’s addition of a fleet services division to its already-vast logistics empire will be highly disruptive to many aspects of the trucking industry. In this exclusive HDT interview, Richard Scott, vice president of transportation for logistic solutions provider Kenco, weighs in on what Amazon’s new venture will mean for the future of last-mile delivery operations and e-commerce at large.
HDT: What does the entry of Amazon into the fleet delivery service space mean for the current state of last-mile delivery techniques and the growth commerce?
Scott: For speed, it’s a great concept. High-speed delivery services are inherently expensive. Putting high-speed and low-cost together can have some problems, namely the quality of the delivering agent for the end customer. The consumer may not know who or what agency is going to pull up to their front door with their package. The vehicles are inconsistent and the drivers can be inconsistent, which can put off some consumers. The larger delivery agencies (FedEx, UPS and USPS) have consistency in their hiring and delivery practices, and known names and brands that rely on their reputations for quality service. It will have an effect on volumes through traditional services, but how much will need to be seen.
HDT: General transportation pain-points are apparent, and become especially visible as we lead into the holiday season. Will Amazon bring changes that improve efficiencies year ‘round and during peak holiday periods?
Scott: This holiday season is going to prove to be interesting. Driver capacity is at an all-time low and getting worse, with little relief in sight. Baby boomers (the largest driving generation) are retiring with few new drivers entering the field. Regulation and hiring restrictions are further pressuring the market. Add that to the amount of equipment sidelined due to the Texas and Florida hurricanes, and we have a mess. Rates are going to go up which will have a direct effect on shippers and consumers. Carriers should be looking hard at retention of their existing workforce. An interesting side effect of the looming holiday season is that the parcel carriers are pushing their larger retail customers to run promotions much earlier in November to encourage a longer buying season versus a major spike last minute.
HDT: What other steps are trucking companies and logistics providers taking to get ahead of the holiday rush?
Scott: For our operations, the holiday season has already begun. A decade ago, there was a major push in late November through Christmas. Shippers and distributors have gotten smarter and are getting inventory to where it’s needed much earlier. The holiday season will have the greatest effect on the parcel/LTL markets. To combat the holiday rush, UPS has announced that they plan to hire 95,000 temporary workers, and FedEx will hire 50,000 as well. Many shippers have indicated that they are targeting college students, retirees, and boosting overtime bonuses.
HDT: How do you see the future of trucking shaping up with baby boomers retiring and a lack of younger drivers entering the industry?
Scott: The baby boomers are the largest segment of truck drivers. Many of them were about to retire before the Great Recession, so they had to continue to work in order to rebuild their retirement savings. They have now recovered and are starting to retire. There’s also some rumors of many of independent contractors, especially the baby boomers, leaving the market due to the ELD mandate. The larger carriers are conducting research studies to determine how to recruit and motivate the new millennial workforce – they are finding that unlike common misconception, they are willing to work hard, but they must be tech-enabled, connected and motivated by comfortable and “cool” equipment. This shift may just drive a new level of investment in equipment from traditional carriers in the near future.
HDT: What role do you see in terms of advanced and new technology transforming the industry going forward (e.g. drones, electric vehicles, autonomous vehicles, connected vehicles and V2I)?
Scott: Autonomous vehicles and platooning are the only short- to mid-term solution to the driver shortage because of the issues you mentioned. A lot of effort is being put in by OEMs and regulatory agencies to pave the way for these technologies to advance. The main obstacle, in my opinion, is the public perception of a driverless vehicle. It will be necessary for the industry to take a phased approach to this concept – platooning, where the leading vehicle is manned and the others are unmanned but connected, open road experiments with drivers present in case of emergency, eventually moving to unmanned interstate non-urban driving etc. This approach can ease the social concerns and prove the technology over time.