How a Winning Auto Industry Forecast Relies on a Well-Calculated Expedited Strategy

I recently visited my family in Sante Fe, New Mexico. On one of the days my wife and I decided to take a day trip up to Taos, a 90-minute drive. We needed to rent a car, so I thought, why not rent a Tesla on Turo for the day? I was excited to drive an electric vehicle (EV) for the first time.

We had a great time and the next day I had to recharge before we headed back. We discovered how inconvenient this was with only one charging location in the town. They were also “level two” chargers, which meant we sat for several hours just to get enough miles to make it back to Sante Fe. While this was only a minor setback for us, it opened my eyes to the rapid progression of EVs, and the obstacles the auto industry faces. 

Building a sustainable infrastructure is a huge issue. Add to this the recent legislation and supplier bottlenecks, and no wonder the industry hasn’t been able to meet its net-zero emissions goals.

The 2022 Inflation Reduction Act provided billions in incentives for consumers to buy EVs. This spiked demand and intensified pressure on automotive manufacturers to increase production of EVs to match demand – further creating a scramble to build U.S. factories.

Auto industry suppliers have also been forced to develop and invest in technology and manufacturing necessary to support the rapid growth. Take all of this and then throw in the continuous threat of auto worker strikes. One common challenge OEM manufacturers and other suppliers face is the movement of parts and equipment. This calls for a reliable expedite transportation partner. 

Let’s look at the bigger picture

The global automotive market is predicted to grow from 2022 to 2030 at a substantial growth rate of around 6.9%. A recent report predicts the market to acquire a worth of nearly USD 6,070.4 billion by the end of 2030. The automotive market was valued at USD 3,296.8 billion in 2022. The same research projects the electric vehicle market industry to reach $823.75 billion in 2030, with a compound annual growth rate of 18.2%. This has automakers scratching their heads as they navigate EVs, hybrids, and traditional gas-powered vehicles. 

Key factors these companies continue to struggle with are lingering supply chain delays, semiconductor shortages, increased government regulations, sustainability pledges, high fuel costs, driver shortages, constraints from political unrest, and a continually booming ecommerce environment.

Topping the list are the necessary investments in infrastructure and the necessary logistics of moving parts and equipment. That’s where expedited shipping comes in. 

While “expedited” is often equated with “expensive,” that basic connection misses the bigger picture. Looking at the obvious and hidden benefits of expedited, as well as the opportunity costs associated with leaving expedited out of a transportation plan, makes clear the advantages that lie in properly executing an expedited transportation strategy. 

5 Key Questions Companies Should Ask: 

1. What other costs can companies avoid by using expedited? 
2. What is the cost of haphazard “emergency” shipments? 
3. What is the cost of overstocked inventories? 
4. What is the cost of using unreliable or inexperienced shipping companies?
5. What can a strategy look like? Whether you’re looking to add expedited to your transportation plan or elevate the way you currently handle it – which is most likely a cobbled-together approach instead of a cohesive strategy. 

Seamless integration is key and there are three ways to get there painlessly:

1. Evaluate your less-than-truckload (LTL) and truckload (TL) shipments 

Sometimes, a shipment may appear to be too small for TL, when it really is too large for LTL. As a result, you may be hit with unexpected charges from your carriers, who turn an LTL shipment into a TL shipment without your knowledge. Similarly, you may be sending things via TL where expedited would be a better, safer fit.

In both instances, update your routing guide so these in-between shipments go expedited, ensuring that you can tailor the equipment to the size of the shipment.

2. Who handles your expedited decisions? Does that need to change? 

All too frequently, expedited shipments are made at the discretion of the load planner, plant manager, customer service rep, or sales leader at a manufacturing facility. Most of the time, it’s not a strategic decision, but one that is done piece-meal using the company’s standard pool of carriers.

The person handling the load shouldn’t be the one making these decisions. Instead, there should be a standard operating process, using a corporate-approved expedited company, that is clearly communicated to relevant personnel. This selection should be made at the executive level, by the head of procurement or supply chain or even a company’s CFO.

3. Choose your provider wisely 

Don’t make the mistake of assuming that every carrier knows how to manage expedited shipments. Many reputable carriers that do a fine job with TL and LTL shipments have limited expedited experience. Look for a specialized provider that offers the following:

• Expertise. With an expedited-only company, everyone is a subject-matter expert. Don’t be fooled by general carriers or new entrants to the expedited business without the background to meet service expectations.
• Strong communication. The ability to convey information effectively to all parties throughout the expedited process is crucial.
• The right balance of technology and human interaction. It takes both to properly execute all phases of your shipment.
• Ability to handle niche shipments. Expedited loads are unpredictable. Make sure your provider knows what to do. 

I predict a roller coaster year ahead for EVs. The pressures of balancing cost alongside mass production, building out infrastructure, mapping accessible charging stations, procuring mass quantities of materials, particularly for batteries, all while meeting demand and participating in the race to net-zero emissions is a tall order.

Having the right expedite partner and a carefully thought out plan will make the process that much easier and support rapid growth over the next few years and beyond.