The supply chain’s fragmentation and fragility have been exposed over the past 20 months, leading many shippers to invest in their supply chains in ways they hadn’t before. Historically, and in soft markets, shippers had pricing power over carriers and often placed their transportation networks on the operational back burner, but this pandemic-induced awakening forced many to take action.
While much of the supply chain stress stems from a lack of labor and infrastructure, be it drivers, trailer, chassis or container, a deeper issue at play is the widespread lack of technology, which exacerbates the lack of visibility and control.
Here are three ways in which shippers have taken more control of their supply chains in the last 20 months.
Greater reliance on logistics providers
To secure reliable capacity and ensure timely delivery amid driver shortages, shippers across the supply chain are relying more heavily on third-party logistics providers.
Due to the high demand for household goods, appliance distributor Almo successfully transitioned from LTL to truckload with the help of Convoy’s flexible drop-and-hook service. Director of Transportation Support Keith Granstrom said about Convoy Go: “It’s something that we had been looking for and didn’t know it existed.”
Asset-based carriers like ENERGY Transportation are positioning themselves as an end-to-end boutique provider for customers, offering comprehensive service: reefer, dry van, warehousing, cross-border shipping and even consulting. CEO Shawn Girard told FreightWaves that he spends a lot more of his time lately consulting. “Rather than just growing in volume and acquiring more freight, I can help customers become more efficient. By doing so, we develop a better relationship.”
Rate surges lead to investment in private fleets
Sometimes diversifying transportation partners to avoid delays and source capacity isn’t enough. According to a recently released report from the National Private Truck Council, the protracted tight capacity market is causing further expansion of private fleets.
In 2020, retailer Dollar General moved 20% of its freight to its private fleet to gain more control and avoid the surging transportation costs. Similarly, Pitney Bowes increased its private fleet size by 42% year-over-year. Walmart took this trend to ocean shipping by using private cargo ships to avoid port bottlenecks.
When rates are higher, customer service levels decrease, so greater investment in private fleets makes sense. However, private fleets are not immune to what for-hire carriers face; the report highlighted that private fleet turnover is 14.25% — albeit a rate much lower than that of small and large for-hire truckload fleets, which are 69% and 90% respectively.
Conquering fragmentation with visibility tech
Port bottlenecks and capacity shortages have made supply chain fragmentation more obvious, leading more and more shippers to take advantage of the increased data visibility delivered by telematics systems attached to trailers, chassis, containers and material handling equipment.
Working with a telematics provider with a broad portfolio of solutions like PowerFleet enables shippers to gain actionable insights for improving bumper-to-bumper-to-forklift safety compliance and asset utilization, ultimately reducing inefficiencies and costs. In early 2021, steel manufacturer Nucor deployed PowerFleet’s telematics on its lift trucks and instrument cranes to improve the accuracy of records, safety and visibility. After all, in 2020 alone, forklift-related accidents caused 7,290 nonfatal injuries, causing workers to lose a median of 17 days of work.
Nathan Fraser, Nucor’s vice president and general manager, said automatically sending critical safety and equipment information to its centralized platform allows the team to be more responsive, safe and efficient.
Within the trucking industry at large, more shippers expect the benefits of visibility technology, especially the ability to track shipments for real-time updates. Sensors collecting trillions of data points from the time a shipment exits the warehouse to when it arrives at its destination allow shippers to mitigate risk, make informed decisions and further satisfy their end-customer. A Gartner report predicts that by 2023, real-time visibility solutions will have been adopted by 50% of leading global enterprises.
Trailer tracking technology can provide real-time location, departure and arrival times, as well as serve as a hub for additional data points driven from sensors and freight cameras that tell if a trailer is loaded or empty and by how much. Recently, PowerFleet showcased its patent-pending chassis monitoring system, the LV-300 and LV-750, during the FreightWaves F3 virtual event that provides location, chassis status of container on or off and container status of loaded or empty. Having this kind of information helps fleets and shippers work together to create more velocity in the supply chain.