Sal Campos, Managed Transportation Operations Leader at Ruan, was recently featured in an "Ask the Experts" panel with Supply Chain Xchange. He was asked to share his thoughts on important issues facing the transportation industry as we enter 2025 under a new administration.
The past two years have been sluggish for transportation companies. What do you expect for 2025?
There have been expectations for a rise in rates for the past two years that haven’t materialized. Capacity in the industry has remained resilient in the face of these low rates, and trucks are leaving the market more slowly than anyone had anticipated. We are reasonably comfortable that rates have hit bottom and will not go any lower, but any rebound may be more gradual than carriers would like.
How will the new administration affect trade and logistics policy?
We expect change. The new administration has made it clear they are planning to increase the tariffs levied on companies importing into the United States. There is a commitment to impose 10-20% tariffs on imports regardless of the country they come from and 60% or higher on goods originating from China, or Chinese companies manufacturing abroad. At the same time, there is a commitment to reducing the regulatory impact on US-based production, making it much easier for companies to near-shore their production. There are a lot of moving parts here, and the full impact remains to be seen. All that being said, manufacturing drives the transportation sector like nothing else, so even small increases in US manufacturing output could have an outside impact on the supply chain and the transportation economy.
A lot of government funds have been spent on improving infrastructure over the past several years. Has that made a difference in our transportation networks?
There are projects we are seeing firsthand here in Iowa, including the $68.6 million Mixmaster interchange reconstruction project that will make a difference to safety and traffic flow here locally. Unfortunately, most of the allocated funds are there to simply catch up on repairs of our current infrastructure that are decades past due. While these are needed repairs and improvements, and they will certainly decrease the chances of catastrophic failures, they do little to impact congestion and traffic flow for our drivers. Only a small percentage of the overall funding will go to road expansion and new highway infrastructures.
Aside from smaller players exiting the market, is there anything that can be done to reduce the current over-capacity?
As we’ve attended several large transportation conferences recently, I’ve been struck by the continued optimism about a turnaround in the second half of 2025. Many large carriers expressed optimism and said they were well positioned with excess capacity to quickly take advantage of an improving freight market. While that commentary was from a small sample of the overall trucking market, I believe it gives us a window into why this freight recession has hung around for so long. Carriers are really clinging to their assets tightly, so they don’t miss the rebound when it finally comes. The best way to see the market rebound is to see the pie get bigger, so everyone isn’t fighting over the same piece.
Will lowered interest rates help to increase transportation-related investments?
I don’t see that having a major impact for most companies. Transportation companies invest in trucks, trailers, and drivers. Our rolling assets have a finite life cycle, and while we can delay purchases for a while, eventually, you must replenish this rolling stock. It was unfortunate that during Covid, when we all needed assets and interest rates were low, the manufacturers could not keep up with the demand. Now that interest rates are high they can build more trucks and trailers than carriers need.
Have you introduced artificial intelligence into any of your operational functions? In what areas and how has it made an impact?
As this technology begins to mature, we’ve found two areas show a potential for promising returns. We’ve been using RPA for a while in our workflow automations and AI has allowed us to pick up some nice efficiency gains, especially in the FP&A areas. On the safety and compliance side, companies have begun to use AI to help us parse through enormous amounts of data available to help predict areas of risk so that we can work upstream to prevent them.
Do you expect fuel costs to decline or rise in the coming year and how will that affect the industry?
I tell our procurement team all the time that if trucking companies could accurately predict fuel prices, we would sell all of our trucks and just invest in the commodities market. We’d make a lot more money without all the hassle of operating trucks! There are so many factors that drive the supply and demand of diesel that even the most sophisticated experts are often wrong. Our focus is to have fair fuel programs with our suppliers and customers that allow us to hedge against cost changes so that they don’t materially impact us either way. I believe most trucking companies take the same approach.
What do you think is the future of electric-powered vehicles and has your opinion shifted with current conditions?
We have adopted electric trucks on a very limited scale and only where it is economically viable for both Ruan and our customers. We believe the yard tractor is the right application to continue electrification/decarbonization efforts. It is a creative, reliable, sustainable transportation solution that improves driver satisfaction and can be lower cost versus diesel deployment. I believe we are not even remotely close to having the technology or infrastructure for wider adoption, especially in heavy-duty Class 8 applications. We would probably need to increase our truck and driver fleets by 50% to accommodate the lowered payload (EVs are much heavier) and long charging times (it only takes 15 minutes to fuel a diesel). Those extra costs would ultimately be passed on to the consumer. We are currently piloting/testing other solutions, including renewable diesel, renewable natural gas, hydrogen fuel cell, etc.
How can distributors better prepare their shipments to help carriers?
The two most important factors are to provide ample advance notice of pickup and delivery dates/times and to be ready for the pickup and/or the delivery when the driver arrives. Drivers are scheduled days in advance, so a delay of even a few hours can cause a carrier to rework planning across multiple drivers and trips to account for the cascading effect of the delay.