Change Is Here to Stay in the Supply Chain: Here's How to Manage It
The peaks and valleys we're experiencing in the transportation market are not for the faint of heart, but there are moves you can make to regain some control.
For the past four years, America's freight market charts have most closely resembled a roller coaster ride. The ELD mandate compliance significantly constrained capacity at the end of 2017 as fleets scrambled to comply. Around the same time, Congress overhauled the U.S. tax system and raised spending caps, making way for a fiscal stimulus that raised GDP right at the end of our 10-year-long economic recovery. As usual, more spending meant more demand on the supply chain, and the transportation market took about 16 months to rebalance.
It was not long after that COVID upended life as we know it. This time in 2020, grocery chains and restaurant suppliers were in the throes of figuring out how to merge their supply chains to meet consumers in their homes. They worked together to package their products differently, signed new contracts, shared transportation providers, and adopted each other's logistics best practices. In almost every industry, new relationships were built to heroically meet the moment.
As America reopens, the supply chain is forced to experience another massive, unprecedented shift. The evolution the supply chain underwent last year is still in its early stages, and yet it's forced to pivot once again. The peaks and valleys we're experiencing are not for the faint of heart, but there are still some moves you can make to regain some control.
First, learn from the past: In 2018, shippers gravitated toward larger carriers (using brokers as safety nets on "emergency" loads), and were left scrambling when those carriers left them high and dry to follow the freight in a tight market.
They learned the hard way large carriers have significant driver shortages, and are not to be solely relied upon (most new drivers are gravitating to smaller fleets). Don't let history repeat itself and don't fight the market forces. Talk to your brokers about adding steady capacity as truckers drop lanes. Brokers that specialize in mid-market carriers can add drop trailers and offer full visibility on your loads.
Partner with experts who can watch the market on your behalf. Most shippers have probably already realized the freight market is not unlike Google's algorithm—it's almost impossible to keep up with its ups and downs and outsmart it on your own. For that reason, it's important to find freight experts that have their ears to the ground and can feed you the information and guidance you need to be successful.
You can bet they're paying close attention to every market force—their business depends on it. Push your providers to share their insights as they relate to your business.
Lastly, adopt an attitude of healthy skepticism when it comes to market predictions and dire driver shortage narratives. If your transportation providers are warning you of a driver shortage, you're having the wrong conversation. The information you need is actionable: How does it specifically affect you? What measures can you enact to make sure your lanes, facilities, and procedures are appealing to drivers?
It's impossible to predict the future in this incredibly uncertain transportation market. However, by incorporating flexibility, leveraging your network and harnessing their knowledge, and strengthening partnerships with your transportation partners, you'll be positioned to weather the next storm and beat your competitors to the trucks and store shelves.