Many states have reported a leveling-off of new Covid-19 cases. Clearly a good sign but we are by no means out of the woods yet. It is unlikely anyone alive today remembers the Spanish flu of 1918, but we may be able to learn some things to expect as we hope to return to some normalcy in the coming months. The administration is already talking about target dates to reopen the country in stages. The fallout from Covid -19 is painfully clear for many people. Let’s try to anticipate what challenges are ahead.
From a logistics and supply chain perspective, while things are still very early, it stands to reason that the impact on all things trade, shipping, and moving freight is already quite significant. There is also, of course, a high level of uncertainty that comes with a pandemic such as this one, in the form of how long it may last for, what should or could businesses be doing to get through this period, and what happens now or next? And what they all have in common is that they are all valid questions that come with a shortage of valid answers, at least so far, for the most part. The impact on supply chains more broadly will be a function of (a) how long businesses remain closed (b) the extent to which there’s an impact on downstream supply chains and (c) the extent to which precautionary measures are taken by corporations including logistics firms. We may be able to glean some information on what to expect during the recovery period by looking at the post Spanish flu recovery.
What Can We Learn From the Spanish Flu Recovery
The immediate effects of the pandemic; postponed weddings, canceled vacations, empty supermarket shelves, sinking housing prices, salary cuts, and layoffs suggest no one will come out of this period without losing something but we are only at the beginning. Predicting how bad things will get economically is difficult. A viral outbreak of this scale has only happened once before in the industrialized world: the 1918 influenza pandemic that hit the world in two seasonal waves, killing 50 million people worldwide and 675,000 in the US. That pandemic occurred during World War I, which makes it hard to compare to now, even setting aside all the other changes in the past century but we may be able to draw some loose parallels.
Many businesses, especially those in the service and entertainment industries, suffered double-digit losses in revenue. Society as a whole recovered from the 1918 influenza quickly, but individuals who were affected by the influenza had their lives changed forever. Given our highly mobile and connected society, any future influenza pandemic is likely to be more severe in its reach, and perhaps in its virulence.
Two months into this current outbreak, massive layoffs have started, American industries have demanded bailouts, and unemployment rates have surged. Economists at the Federal Reserve Bank of St. Louis are projecting total employment reductions of 47 million — an unemployment rate of 32.1%.
According to Forbes, every sector of the American economy is shrinking: Hotel chain Marriott International is furloughing tens of thousands of workers, Landry’s, the parent company of Del Frisco’s and Bubba Gump Shrimp, laid off 40,000 workers. Air Canada plans to lay off 5,100 members of its cabin crew. Shoe retailer DSW put 80% of its workers on a temporary unpaid leave of absence. This early carnage is understandable. How fast we recover will make all the difference to the U.S. economy. Is this perhaps a wakeup call for domestic industry revitalization? There is a strong call to bring back the industrial revolution but are we too late?
What’s Ahead is Uncertain
As we look ahead, more information about corona virus will be learned about, to be sure, but things understandably are moving slowly. Freight transportation activity, processes and volumes are likely to be impacted to varying degrees, of course. For now, we assess and move forward as best as possible. Events like this on a global level can make for trying and difficult times, but, as has been the case before, one can expect supply chain networks to adapt and adjust and do what needs to be done to keep economies and freight flows moving forward. Land Link Traffic Systems is available for your supply chain needs.
Data is the new precious metal and it is becoming more essential than ever before. Technological leaps like blockchain, artificial intelligence and machine learning run on data. They’re already beginning to transform supply chain operations across many sectors.
Is your supply chain organization prepared to adopt these emerging technologies and generate the operational improvements to deliver the anticipated ROI? As we’re seeing, digital technology in the supply chain enables end-to-end decision-making, visibility into supply-demand information across the network and supports the operational level response in plants, DCs and retail stores.
Sometimes it takes an outsider to ask the obvious questions about processes that employees no longer question. Whether the questions have to do with routing guides, packaging practices or distribution center locations, it is often helpful to get an independent perspective. One of the main benefits of sharing data with a third party is an objective perspective that can cut through the culture and the “We’ve always done it that way” syndrome. A trusted Enterprise Logistics Provider with deep technology and operational experience can provide that objective view of the data and make recommendations without regard to internal influences.
Careful and Regular Data Collection is Critical
Data management is not a “set it and forget it” activity. A culture of continuous learning will be the key. Your enterprise must continually evaluate the integrity of your data collection and management programs not only against your internal requirements but also external developments. Are there gaps or inconsistencies in your data? Will it be available in the formats necessary to support adoption of relevant technology? For example, inventory optimization relies on a body of robust, accurate data. Without it, the results will be skewed and potentially damaging to your supply chain. Is your enterprise able to ensure your data is accurate and up to date? Garbage in will get you garbage out.
Look to Industry Professionals for Guidance
Rather than investing in technology tools directly, a trusted Enterprise Logistics Provider with deep technological expertise can support data management and analysis capabilities as a value-add in the partnership. As a solutions provider, the Enterprise Logistics Provider can stay up to date on the latest developments and evolution, reducing the need for ongoing investments in IT infrastructure.
Creating a comprehensive plan to clean and structure existing data and capture as much data as possible going forward will deliver benefits across the enterprise. As the digitization of the supply chain continues, those who aren’t able to ask the right questions could be left behind. For help determining if your data is ready to support the next level of technology, contact us today.
This month industry analysts are reporting significant upticks in spot rates and demand due to restocking demand from grocery and home good retailers. Spot market load volumes and rates for van and reefer equipment saw mostly significant gains in March due to the ongoing corona-virus pandemic, according to data issued by Portland, Oregon-based freight marketplace platform and information provider DAT.
For the week of March 16-March 22, DAT reported the following annual differences:
The FMCSA is showing a united front with the White House’s emergency declaration regarding Coronavirus. The declaration will cease enforcement of some HOS rules and ease enforcement on others for truckers. FMCSA officials said that this marks the first time the organization has issued nationwide HOS relief. There are many first-time events happening during COVID-19 and these efforts are clearly necessary to keep food and critical supplies moving.
“Because of the decisive leadership of President Trump and Secretary Chao, this declaration will help America’s commercial drivers get these critical goods to impacted areas faster and more efficiently,” said FMCSA Acting Administrator Jim Mullen in a statement. “FMCSA is continuing to closely monitor the coronavirus outbreak and stands ready to use its authority to protect the health and safety of the American people.”
FMCSA officials said that this declaration provides for regulatory relief for commercial motor vehicle operations providing direct assistance supporting emergency relief efforts intended to meet immediate needs for:
In January 2020, the World Health Organization (WHO) declared the outbreak of a new coronavirus disease in Hubei Province, China to be a Public Health Emergency of International Concern. WHO stated there is a high risk of the 2019 coronavirus disease (COVID-19) spreading to other countries around the world. WHO and public health authorities around the world are taking action to contain the COVID-19 outbreak. However, long term success cannot be taken for granted. All sections of our society, including businesses and employers, must play a role if we are to stop the spread of this disease.
How COVID-19 Spreads
When someone who has COVID-19 coughs or exhales, they release droplets of infected fluid. Most of these droplets fall on nearby surfaces and objects - such as desks, tables or telephones. People could catch COVID-19 by touching contaminated surfaces or objects and then touching their eyes, nose or mouth. If they are standing within one meter of a person with COVID-19, they can catch it by breathing in droplets coughed out or exhaled by them. In other words, COVID-19 spreads in a similar way to flu. Most persons infected with COVID-19 experience mild symptoms and recover. However, some go on to experience more serious illness and may require hospital care. Risk of serious illness rises with age. People over 40 seem to be more vulnerable than those under 40. People with weakened immune systems and people with conditions such as diabetes, heart and lung disease are also more vulnerable to serious illness.
Keeping Transportation Professionals Safe at Work
The Transportation Intermediaries Association has created a reference guide for its members to share with their customers to limit and prevent the likelihood of being exposed to this virus. Shippers, receivers, and truck drivers that are in personal contact (as they facilitate the movement of freight) need to be aware of – and take – necessary steps in order to minimize and prevent the spread of COVID-19. As an industry, we are in this together and we all need to look out for one another. If you are a shipper or receiver, consider providing truck drivers with a bottle of hand sanitizer or alcohol wipes to keep them healthy (and keep our nation’s freight moving).
The Centers for Disease & Prevention (CDC) also recommends following 6 key steps to help prevent the spread of COVID-19, which TIA has summarized in a downloadable PDF.
Land Link Traffic Services will continue our 24 hour service throughout this crisis. Please feel free to contact us 732.899.4242 or through this website.
The debate over whether density-based pricing will succeed in toppling the traditional National Motor Freight Classification’s (NMFC) based pricing in the LTL industry is an ongoing debate. Carriers are pushing for dimensional pricing to combat the profitability of lightweight shipments. This is the basis of the argument. Under the NMFC classification density was taken into consideration as was packaging and commodity but it was largely based upon weight. Back in the day, carriers in a battle over business after deregulation, were offering FAK (Freight All Kinds ) tariffs to get the business. This strategy ultimately led to unprofitable operation ratios, subpar delivery performance and ultimately the bankruptcy of some major carriers. Jevic Transportation of Delanco, NJ is the first one that comes to my mind. Interestingly New Century transport, which was founded by Jevic‘s founder, adopted a similar strategy ending in the exact same fate. Considering this history and the recent high-profile bankruptcies of other major national freight carriers in recent years, one would have to conclude the days of beating up the carrier on rates is over. Unlike in the past, the LTL industry today has a massive volume of smaller shipments. There is also the challenge of completing same-day deliveries or time definite deliveries. Likewise, these shipments are not always of consistent size and density, making it difficult for LTL shippers to sustain profitability.
Today, if you want dependable service, you’re going to have to pay for it. Let’s see if we can help you avoid some of the pitfalls to come.
There is no secret to dimensional pricing. It’s really a simple equation; L x W x H / 139. It could be argued that the ecommerce boom started all this controversy overweight vs size. Ecommerce shippers have millions of items in inventory and a finite amount of box sizes. I’ve been personally amazed at the box size of some items I’ve received. It didn’t take long for the parcel carriers to figure that their trucks were dimming out before weighing out. This may have been the catalyst for dimensional pricing. It wasn’t long before the LTL carriers arrived at the same conclusion. They were charging by pound through diluted tariffs, not by the room the pallet actually occupied.
FedEx Freight, XPO Logistics, and other LTL carriers have been installing equipment that can scan a palletized shipment and, combined with scales, provide the cubic dimensions and weight needed to check the shipment classification. The consensus among LTL industry executives is that the current classification system is on its way out. The reality is that LTL carriers sell space in a trailer. Using the dimensions of a pallet identifies precisely how much space that shipment will require, thereby providing accurate real estate pricing.
Many shippers believe dimensional pricing amounts to a rate increase, and the number of shipments, they say, are re-billed once they go through a dimensioner, supporting their contention. It can also be argued the shippers are finally being charged an accurate rate. Shippers who are not prepared to invest in equipment to measure their shipments’ dimensional weight will have to adopt strict packaging protocols to package their freight in a uniform method as to avoid a dimensional pricing situation.
The ability to double stack pallets is a prime example. Under dimensional pricing a pallet that cannot be double stacked will be billed at 2 pallet spaces since the pallet will essentially occupy the air above it. To date, much of the use of dimensional pricing has been limited to W & I procedures at truck terminals. However, by capturing more and more dimensional shipment data, LTL carriers are laying the data foundation needed for the expanded use of dimensional pricing.
Our supply chain managers at Land Link Traffic Services can help with packaging strategies, supply chain management techniques to maximize lane and weight balancing strategies and overall shipment planning protocols to maximize your freight spend in this more expensive environment. Finally, the Coronavirus will certainly cause some challenging strain on the supply chain. Don’t wander through this uncharted territory alone. Contact us today for a supply chain consultation.
The recent effects of Tariffs on the supply chain may pale in comparison to the potential aftermath of SARS-CoV-2. This virus has the potential to cause an economic shock unlike those that led to recessions in the recent past; the oil spike in 1991 that hit consumer wallets or the credit crunch in 2008 that seized up lending markets. The coronavirus has severely disrupted nearly every link in the global supply chain, from raw materials to components to finished goods, which could lead to curtailed production, product shortages, and financial stress across a range of industries. How manufacturing delays ripple through the economy isn’t so straightforward, however. The multi-level nature of raw material procurement for any large manufacturer creates a potentially large field of collateral damage in the event of supply chain disruption. One missing part for the widget from that line halts production and delays everything behind it for unknown time period. This may be an excellent opportunity to consider contingency planning.
It’s no secret, in any business relationship, that the easier the relationship between customer and provider the more smoothly things run. In a shipper/provider relationship this is particularly important. The intricacies of logistics can be very challenging given the nature of all the moving parts; desirability of lanes, pickup and delivery restrictions, equipment availability and all the issues that can happen on the way to a 1000 mile delivery. We have discussed the importance of becoming a preferred shipper in previous blogs. The impact of carrier relations on your supply chain is more important now than ever. Several factors are putting pressure on carrier/shipper relationships and performance. Fluctuating fuel costs, capacity issues, driver shortages, and carriers that abruptly go out of business can all take a toll on a shipper’s ability to get the right products to the right customer within the right time frame. Take the time to make some manageable changes to your supply chain protocols to improve operations, moral and overall supply chain efficiency.
Some Easy Fixes
There needs to be a culture shift in vendor relations, particularly when it comes to carriers. Historically, truckers have been treated as second-class citizens when it comes to, for example, driver accommodation and respect for one’s time. A reasonably comfortable waiting area for the driver is an inexpensive and easily implemented enhancement to the driver experience. Minimizing loading time is also an easy, low cost, improvement to loading and unloading dock protocol.