In late July, Amazon revealed it would be suspending its pilot program that served to deliver packages to consumers from third-party vendors that do not ship through fulfillment centers. The program had been focused on companies with warehouses in cities including Los Angeles, New York, and Chicago.
The program, which Amazon launched in 2018, was developed to consider a very different set of needs than are present today, according to John Kearney, chief executive officer of Advanced Training Systems, the company that designs and manufactures virtual simulators for driver training. “It is now a very different world; the pandemic and the accompanying surge in e-commerce retail have redirected attention from last-mile delivery to the more basic needs of the overall supply chain,” said Kearney.
While online orders have soared during the pandemic, Amazon has needed to shift focus to logistics of its long-haul brokerage operation. According to Advanced Training Systems, the move underscores the need for more trained long-haul truck drivers.
“The supply of goods that are sold to the ultimate user, particularly in retail trade, move for some part of the delivery process in long haul trucks,” said Kearney. “If 70 percent of all goods move by long-haul trucks, we can look at what would happen if we failed to move 10 percent of them. We do not have another method of moving large supplies of goods to their location in the process of getting to the ultimate user. Long-haul trucking is essential to everything we do for some part of what is sold in the United States.”
Further, Kearney said, without long-haul trucking, even a small reduction in the capacity of trucking companies to deliver goods could cause the economy to slow to a deeper recession. At the same time, as e-commerce has grown there have also had to be adjustments to the overall process of delivering goods.
“In a relatively short time we have gone from delivering most goods to the retailer who would maintain an inventory of goods for the buyer to delivery to the end user at home,” said Kearney. “E-commerce has made a significant change in the process. Now an order for a product is made at the web site of a seller of goods or a reseller and then the goods must be delivered to the end user at home. We skip the process of the store holding large amounts of inventory for sale to the customer and a delivery service such as FedEx or Amazon now delivers the product to the home of the user.”
Notably, the recent suspension of Amazon Shipping’s third-party pilot program could be beneficial to UPS and FedEx, which stand to take over at least some of the delivery for third-party vendors.
“What have companies done to adapt to the newer process?” said Kearney. “The retailer may not be able to maintain a retail establishment at a profit, so the web site becomes the selling point. Now the long haul trucker delivers the goods to the ultimate delivery service who wants to deliver the goods almost immediately to the buyer. The new world of end user sales is not the retail store in most instances but the web site that is best at managing the marketing process and the ease of use of the web site.”
Concurrently, the shipping process is subject to getting the goods to the delivery company. “The trucker delivers to the final delivery service so the company must contract with that service to make sure products are delivered,” said Kearney.
“The trucking companies continue to haul directly to companies like Family Dollar and Dollar Tree warehouses and those companies that fit the retail sale at the store but now they need to contract to have the final mile delivery handled,” said Kearney. “This is be done by contracting with the trucking company that carries their inventory to the retail outlet but also to the final mile delivery service through Amazon, FedEx, USPS and UPS.”
The new needs of the supply chain also mean a need for more trained long-haul truck drivers, and data from Advanced Training Systems shows the market responding, with some commercial driver’s license schools reporting an increase of new students. But obstacles remain.
“Hiring a new driver involves the risk that the new driver will not have, as a group, an accident rate and cost that is as high or higher than the existing accident rate of the existing driver pool,” said Kearney. “To solve that issue we need to see that the person has the proper training. The solution is the use of the more advanced methods and tools that are available to train. Additionally, the perception of what a professional driver is to a potential driver is not what the reality is. There is an upward path for the driver to grow in the management structure of the trucking company and many drivers start to grow by adding additional trucks until they become the owner of a trucking company.”
According to Kearney, this is largely a marketing issue. Those who choose to have a career as a driver can have significant rewards when they choose to stay loyal to one company. “There is a much better experience as a driver than much of the public understands it to be. This is a marketing issue that must be solved by the industry to publicize what the real future can represent for a driver.
“The driver is an essential element for our economy to work,” said Kearney. “Without the driver we would come to a standstill with the movement of goods in this country.”
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