The 2018 capacity crunch has created what many consider one of the most challenging markets we’ve ever seen. Today’s shrinking driver pool faces an upcoming wave of retirements and disinterested millennials, resulting in constrained truck availability. The ELD mandate has also impacted capacity, with restrictions on the amount of hours driven in a day leading to a reduction in productivity.
Meanwhile, demand continues to grow. The improving economy, steady growth of e-commerce and an increase in imports and exports have contributed to rising shipments. As a result, drivers have newfound negotiating power, pushing carriers to raise compensation packages and introduce benefits to better retain or attract them.
While carriers are experiencing the immediate impact of a constrained driver pool, the industry as a whole is bound to feel further effects resonate throughout supply networks, with costs across the board projected to see striking increases. Shippers will not be immune from these far-reaching effects. Pivoting from structuring supply chains around segmented solutions to an end-to-end approach is an excellent way to deal with this new market landscape.
An effective end-to-end strategy can improve supply network flexibility, ensuring you’re able to make the most of your resources while optimizing your ability to react to unexpected market variabilities. With that in mind, here are five tips for refocusing your solution design with an end-to-end mindset:
Become a shipper of choice: Because today’s drivers and carriers have more freedom than ever to decide which business they accept, shippers of choice have a clear advantage. That’s why those hoping to partner with these newly selective carriers need to strive to provide the most value for them and their drivers. This can include streamlining arrival and departure times or providing flexible appointment windows to optimize delivery schedules. A good shipper of choice should also build a close relationship with high-volume carriers to help balance networks, which ultimately improves capacity access.
Streamline empty container flow: Working with carriers on best practices for eliminating deadhead and downtime should always be a priority. Utilizing an effective reverse logistics process, introducing a drop and hook program, optimizing shipment loading processes—all are great ways to eliminate unnecessary costs and inefficiencies. Ensuring goods move as seamlessly as possible with minimum downtime will also reduce equipment expenses while making optimal use of a driver’s time.
Strategic network selection: Optimizing a supply network to ensure shipments take the most efficient route available is paramount to reducing costs and transit times. The successful network selection strategy starts with proper intelligence gathering, leveraging visibility tools, network research and route analysis to build an in-depth look at the supply chain as a whole.
Establish an effective dialogue: Setting up a recurring meeting with a transportation provider can open up a dialogue about how to drive value across a supply chain. This dialogue should also help you understand what market factors are shaping prices and capacity, giving you a better sense of potential pitfalls and pain points as they’re developing.
Strive for continuous improvement: Striving for continuous improvement is perhaps the most important underlying component of an effective end-to-end strategy. Once you’ve established an effective dialogue, you’ll naturally discover opportunities to develop these strategies. As your end-to-end plan evolves, pain points and growth areas will reveal themselves through analysis and discussion. Ideally, you’ll be able to work with your transportation provider to leverage an existing network footprint and solutions portfolio to enhance network synergies, reduce wasted spend and eliminate various inefficiencies.
The capacity crunch has steadily grown to become a major market influencer, creating a ripple effect that will drive up costs across the industry. It’s vital for shippers to pivot towards strategies designed to produce as much value as possible throughout their supply chain. End-to-end solutions can strengthen existing efficiencies while eliminating wasteful costs, on top of making optimal use of the available driver pool. Ultimately, they’re an excellent way to prepare your business for the new shape of the market.