Saturday, July 25, 2015

The Game Is Changing….Demographics & Tipping Points

“The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.”
― Malcolm Gladwell, The Tipping Point: How Little Things Can Make a Big Difference

Technology tends to change the game over a relatively short period of time. We can measure the changes in months and years. Demographic changes tend to be measured in decades and generations. However, the IMPACT of changing Demographics tends to hit quickly and significantly once those changes reach a tipping point. My sense is that we have reached “tipping points” on multiple fronts and these “tipping points” will have radical impact on how we produce, distribute and consume goods and services in the future. Technology may indeed be the great “enabler” when it comes to many of these changes, but the motivation is very much human.

So what are some of these changes or tipping points that are impacting transportation and logistics? One that clearly jumps to mind is the shortage of truck drivers. This is the result of a long cycle of changing trends, demographics and regulations. There are literally dozens of reasons why we do not have enough truck drivers. Some are unique to trucking and some are larger issues which also explain why we don’t have enough skilled tradesmen (or tradeswomen for that matter). They include things like fewer kids growing up on farms and having early exposure to equipment and manual labor; or the push for all kids to go to college and the devaluation of “blue collar” careers; or the perception of trucks being bad for the environment; or just considering the pay as being too low for the required time and effort. Tighter regulations which the society has chosen to impose for safety reasons have an impact. Lower birth rates within the traditional truck driver demographic have an impact. The list could go on forever. Bottom-line, there have a been a multitude of fundamental changes which have resulted in a critical shortage of truck drivers.

Another example of a major tipping point is the growth in e-commerce retail. What Amazon is doing to retail is a game-changer for transportation and logistics service providers. Products are suddenly purchased and distributed much differently. If your business is built around DC to store delivery, and if the product can be effectively sold and delivered via e-commerce, your business is in trouble. On the other hand, if you are in the final mile B to C delivery space, opportunity abounds. But so does risk depending on how you’ve built your business.

Changing demographics tend to drive changes in politics which in turn create major changes for businesses. For transportation companies, a political environment that tends to be pro-union and anti-independent contractor is bad news. If we continue down this path through a couple of more election cycles, the transportation system as we know it will be completely changed. We could well end up paying more money for poorer service. There will be winners and losers and if you are not prepared to play the “new game” you will lose.

And whatever your business model, you will need some people involved. Which again brings us back to changing demographics. I’ve commented about this before in discussing Millennials in the workforce. You simply cannot manage people the way you did twenty years ago. It doesn’t mean that this New Generation Employee is bad. In many ways, they are better and given all of the other changes going on in the world, very likely to be more productive over the long run. But they are different. They think about work-life balance differently. They think about employee-company loyalty differently. They think about rewards differently. They think about communication and feedback differently.

The game has changed. Learn to play the new game or cash in your chips.

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