- Through a survey of 89 transportation leaders, we’ve identified the industry’s trends, challenges, and opportunities in 2022.
- Our research indicates that industry players are focused on two key areas: (1) building data and technology capabilities and (2) optimizing talent for transformation.
- To capture these opportunities, transportation leaders should:
- Establish a robust digital core to prime the organization for growth.
- Prioritize regular reskilling and upskilling.
- Boost adoption with effective change management.
- Ensure the workforce is aligned to the operating model.
- Apply scenario thinking to workforce planning.
- Consider an adaptive workforce solution with a Managed Service.
In December 2021, North Highland surveyed more than 500 business leaders across industries, exploring their thoughts on the trends and challenges expected in 2022. While each industry had specific focuses, one takeaway was consistent across the board: The future is very much in flux, and business leaders must learn to be flexible. This blog series explores the insights from the study, offering the advice you need to capitalize on the trends and build agility for a fast-paced, quickly changing future.
Empowering and optimizing the workforce for transformation in 2022
At the beginning of the COVID-19 pandemic, countries across the globe quickly placed extensive restrictions on transportation and travel to help curtail the spread of the virus. Those restrictions, along with stay-at-home mandates, caused massive disruption in the transportation industry. All modes of transport, from cars to public transit to trains and planes, were impacted internationally. Two years in, the global economy is finally making a comeback. With the exception of public transit, we’re seeing demand for freight and passenger transportation return in earnest.
Despite the forward progress, the transportation industry remains on the road to recovery. We surveyed 89 transportation leaders in December 2021 on transformation trends and challenges. Thirty-five percent of those leaders say business performance is a top factor driving transformation strategies in 2022. Business performance and profitability in this industry are being impacted by four major challenges:
- Global supply chain disruptions: Lockdowns created lower consumer demand that quickly pivoted once lifted, leaving industrial activity struggling to catch up. Supply chain congestion creates challenges for transportation, particularly freight and rail.
- Workforce shortages: Labor challenges are deeply intertwined with supply chain struggles. A shortage of truckers is impacting the movement of goods worldwide.
- Changing customer behavior: The pandemic and related uncertainty have permanently changed how customers interact with businesses.
- Digital disruption: COVID-19 accelerated digital transformation by years, and as each new generation of technology emerges, it brings change to the competitive landscape.
Overcoming these challenges will require transportation leaders to transform and respond to change faster as an organization. Based on our research, we recommend focusing on two key areas: (1) building data and tech capabilities and (2) optimizing talent for transformation.
Building out data and tech capability
Inadequate internal capabilities in the transportation industry remain an obstacle to executing transformation successfully. The leaders surveyed are focused on empowering the workforce by enhancing digital capabilities (33 percent) and data and analytics (D&A, 31 percent). Almost two-thirds of transportation leaders say digital/tech is a signal of change for their transformation, and 37 percent say the introduction of new analytics capabilities is a top factor promoting their transformation strategy.
Current digital and D&A capabilities are holding the industry back, according to 31 percent (digital) and 44 percent (D&A) of leaders. Limited analytics skills are cited by 22 percent of leaders as an obstacle to executing transformation strategy. Building digital and D&A capabilities is integral to enhancing the passenger experience in a time when customers are empowered by choice. Forty percent of transportation leaders say they are hoping to address changing customer preferences with their transformation strategy in the year ahead, and 51 percent expect digital capabilities to play the biggest role in customer experience. Strong data capabilities will allow companies to respond to customer behavior with improved, personalized experiences.
Digital and data capabilities also present significant opportunities to improve operations and drive efficiencies. Think smart ticketing enabling hassle-free travel, and data capture driving service improvements. In fact, transportation leaders say they will measure the success of transformations by operational efficiency/operating cost (40 percent). These leaders are also hoping to better enable employees to use data and digital as dynamic assets by strengthening workforce capabilities.
ACT ON THE TRENDS
To elevate workforce skillsets to deliver transformation through data and technology, focus on building a digital core and reskilling:
- Establish a robust digital core to prime your organization for growth. A digital core encompasses data and technology architecture and supports organizational capabilities. With a strong digital core, a business can sense change through data and respond to it effectively through capabilities—ranging from technology and operations to people.
- Prioritize regular reskilling and upskilling. Continuously building digital and data literacy is key. Your workforce must possess the skills to use data effectively and securely. To build the necessary expertise, prioritize regular reskilling and upskilling.
- Boost adoption with effective change management. About one-third (34 percent) of transportation leaders identify effective change management/adoption as an obstacle to successfully executing transformation strategies. To harness data and technology as differentiated assets, adopt a people-centric approach that engages employees, addresses ways of working, nurtures adoption, and protects against change saturation.
Optimize talent for transformation
Of all the sectors in transportation, trucking has one of the fastest-growing labor shortages. The American Trucking Associations estimated that in 2021 the truck driver shortage would hit a high of just over 80,000 drivers. What's driving the shortage? Here's one key reason: Baby boomers are retiring, and millennials aren’t rushing to fill these difficult jobs. However, the trucker labor shortage reflects a bigger issue. Competition for top talent is cited by 35 percent of transportation leaders across industry sub-sectors as an obstacle to executing transformation successfully. Further, 35 percent of leaders in transportation expect talent development and retention to be the biggest workforce challenge they face in 2022.
With demand for transportation once again on the rise, and available labor at historic lows, it’s no surprise that the industry is focused on optimizing talent in the year ahead. Thirty-seven percent of leaders cited talent as a key objective for transformation, making it the top transformation objective for 2022. Leaders are working to attract new talent to fill the gaps, and 40 percent say they’ll measure the success of transformation by employee referral rate. They're also working to enhance workforce skills to drive productivity and increase organizational alignment.
Twenty-six percent of leaders say aligning cross-functional teams is an obstacle to successfully executing transformation strategies. More specifically, they point to leadership alignment as a hurdle: It was cited as a barrier to adaptability (29 percent) and to speed to market (30 percent). Alignment matters as it creates a clear definition of transformation vision and purpose (cited by 29 percent as an obstacle to executing transformation). Similarly, clear articulation of intended outcomes was cited by 47 percent as a key component impacting their ability to deliver transformation value.
ACT ON THE TRENDS
Transportation leaders can optimize talent in the year ahead by focusing on alignment and adaptation:
- Align the workforce to your operating model. It will be critical for industry leaders to set clear business strategies and be intentional about determining the people, skills, and capabilities required to deliver results.
- Apply scenario thinking to workforce planning. It’s hard to see around the corner these days, and that makes it tough to build a workforce strategy. Plan for multiple plausible scenarios to determine potential future workforce needs.
- Consider an adaptive workforce solution (Managed Service). In today’s complex workforce climate, transportation players should embrace an adaptive workforce solution to building capability and capacity. That's where a Managed Service comes into play. Our Managed Services solution brings in a team of experts that will help build long-term capability, while ensuring immediate transformation progress. It infuses flexibility into a workforce strategy by providing the expertise needed, exactly when and how it’s required.
The future is truly in flux for the transportation industry, and it’s difficult to forecast where we’ll be by the end of 2022. However, by focusing on building digital capability and optimizing the workforce, transportation leaders can create resiliency in their organizations and continue to navigate the bumpy road ahead.