Originally published in FreightWaves, June 4, 2020
The logistics industry is built on adaptability and primed for chaos. The market rises and falls alongside economic shifts, natural disasters, trade disruptions and regular seasonality. Nevertheless, every corner of the industry has felt some level of pandemic-fueled whiplash over the last two months.
When the coronavirus pandemic started spreading across the U.S. in March, state governments issued lockdowns. People stayed home to protect themselves and their families. Toilet paper and Tylenol flew off shelves at lightning speed. Essential goods providers — especially food and pharmaceutical companies — felt their supply chains struggle under the weight of surging demand. Nonessential goods providers halted production and fought to stay afloat while a viral enemy ravaged the country’s health and economy.
“I think the biggest challenge in the early days of the pandemic was the level of uncertainty. Depending on what freight vertical a shipper is involved in, demand could have been at an all-time high and then suddenly drop for a few weeks like we saw at the end of March,” Genpro Vice President of Sales Operations and Strategy Russell Bowen said.
Some companies were more prepared to weather the storm than others. Some states are loosening their lockdowns and volumes are climbing, but the most prepared companies will continue to have a distinct advantage even as the market begins to normalize.
“We find that shippers who’ve focused on diversification in their carrier network are the ones best set up to meet challenges for demand fluctuations,” Genpro President Robert Goldstein said. “Food service companies are a good example — the ones we’ve seen successfully pivot to supporting retailers while restaurants, schools and arenas are closed is a result of implementing not only a sound supply chain, but a strong transportation network who can change with them.”
While the transportation market has seen a soft capacity market for the past 18 months, even during this pandemic, Goldstein recommends shippers not put all their efforts into just reducing cost.
“Controlling cost is always an important strategy in any operation and became the number one focus for many shippers after what happened in 2018,” Goldstein said. “However, when a shipper can also focus on leveraging their carrier network for strategies including visibility, efficiency and consistent service levels, that can create an operational advantage for the overall company.”
A good starting point to kick off these initiatives is identifying your core carriers’ capabilities and what their entire service offering looks like. While every shipper and non-asset provider can say they have reach to thousands of carriers in their network, identifying the core carriers that are there for you through every market change is key.
“A lot of shippers and non-asset providers can say they have thousands of carriers to choose from, but really how many in your network are dedicated to your business and supporting your goals and growth?” Goldstein said. “I can tell you for us our core carriers are the most important piece to our service and we make sure those carriers know that, and understand the service required for our customers as well — I think a lot of providers have brushed over this focus as a foundation to their service, even with all the carrier-focused technology that has come out in the last decade.”
As the country continues to slowly open back up and markets stabilize, it will be critical for shippers to look at their logistics network so they can weather any storm that might come.
“Shippers that are diverse in their transportation network and leverage those providers for market insights and implementation of strategies will set themselves apart in this new world we live in,” Bowen commented.