The Logistics Market: What To Expect Into 2020

Posted by Land Link on Jul 17, 2019 9:16:44 AM

Today's Logistics managers have been dealing with the most challenging freight landscape in recent memory. Innovation, technology applications and improved carrier relations have helped ease the turbulence in a market of rising prices and tightening capacity. There is little evidence to suggest this trend will end anytime soon. 2018 was among the most challenging of years for shippers. 2019 has seen similar challenges. Tight capacity led to significant, and in some cases, multiple rate increases in order to continue to secure capacity. Shippers struggled to manage their logistics spend.  Looking ahead it would benefit shippers to make every attempt to guarantee their capacity for the near future, particularly their busy seasons.  

Why Are Supply Chain Costs On The Rise

  • There are several factors impacting supply chain costs today. 

  • Most retailers have had to spend massive amounts to meet the e-commerce demand. The e-commerce industry has had a major impact on equipment availability. Increasing demand for equipment translates to increased costs for the supply chain.
  • Government regulation had priced some smaller carriers out of the business. There has been little in the way of new carriers entering the market. Existing carriers are adding capacity at a calculated rate.
  • A tight U.S. labor market and higher wages for truck drivers and warehouse workers remains challenging for transportation and logistics companies. These increased costs translate to higher freight rates. 

The next-generation supply chain will enhance fulfillment capabilities and drive efficiencies through technologies ranging from big data and predictive analytics to artificial intelligence and robotics. Inevitably, winners and losers will emerge as companies that make the right technology investments and strategic choices outperform others. The industry must also reckon with the social cost of rapid technological evolution as automation tempers employment growth or eliminates hundreds of thousands of traditional jobs in warehouses, trucking, and other sectors. Adoption of technology will be vital for existence in the coming years, as will improved carrier relations.

Some of the technologies being designed now are;

  • Silicon Valley has devoted time, energy and resources to automation and robotics with inventions like automated trucks and automated warehouses.
  • Electric power units will lead the way to a more sustainable transportation network.
  • The upgrade to a 5G communications network is on the horizon, which will improve logistics operation execution, planning and management as well as high-security encryption.

Improving Carrier Relations

There are several options for shippers to maintain a preferred shipper status and help to ensure equipment availability and timely service. Shipper-carrier collaboration can be very beneficial when needs from both sides are identified and protocols are developed to ensure those needs are met. Try to be proactive rather than reactive when addressing carrier and driver needs. Being a true partner means you understand one another's business and both have a heightened degree of flexibility when it comes to making everyone successful. Being a preferred shipper provides a measure of security in your vendor relationship that will provide value for future growth. There are several specific areas that shippers may want to concentrate on to improve relations with their carriers.  

Pay Your Freight Bills As Agreed 

Running a trucking company is cash flow dependent. It takes a considerable cash on hand to meet weekly payroll and monthly vendor obligations. A late paying customer can force borrowing which deteriorates the carrier’s profit. Most carriers don't have a collections department. Those efforts take personnel away from other duties. Establish you payment terms and meet them regularly. 

Be Predictable      

Load planning can sometimes be a real guessing game for carriers. To some degree, being able to anticipate shippers’ daily or weekly needs is very helpful in labor planning and equipment positioning. Shippers who can schedule repeat and repetitive shipments on specific days and at predictable weight breaks will help load planners with both equipment availability and lane balance expectations.

Treat The Drivers Well 

Drivers greatly appreciate others’ appreciation of their time and comfort. In addition to a relaxing driver waiting area, here are some worthwhile tips for improving driver experience, published by the US-based Truckload Carriers Association (TCA) and National Industrial Transportation League (NITL):

  1. Maintain reasonable hours for loading and unloading according to the volume of shipments
  2. Tender cargo with all paperwork in order and promptly load and unload trucks that arrive within the scheduled time
  3. Make reasonable efforts to be flexible in loading/unloading trucks that arrive early, or late, or without an appointment
  4. If dock space is unavailable, don’t make drivers wait in line; contact them when space will free up
  5. Have a guard station in the yard so that information is readily available.
  6. If using a drop and hook program, ensure that empty trailers are available as needed

The current logistics environment is largely positive but there are potential hazards ahead. Now may be a wise time to talk to us at Land Link Traffic Systems to help you navigate what's ahead. We can help insure availability at competitive rates.