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XPO’s Wilkerson: Look for 2020 shipping trends to stick around in 2021

Speaking on a recent webinar, the president of XPO’s North American transportation business reflects on the year that was, and looks ahead to next year

2020’s supply chain changes because of COVID will likely stick around in 2021, and could become permanent fixtures of the modern supply chain, XPO’s Drew Wilkerson said. (Photo: Jim Allen/FreightWaves)

A capacity crunch, rising freight rates and inventory disruptions are just a few of the 2020 supply chain impacts from COVID-19. None, though, are likely to disappear anytime soon, and that means carriers and shippers are searching for partners that have the right mix of technology, scale and history of innovation to guide them through a fundamentally changed supply chain.

“E-commerce was a boom,” said Drew Wilkerson, president of North American transportation business for XPO Logistics. “We expected e-commerce to grow over the next three years, and everything we thought we were going to get over the next three years, we got overnight with COVID. With e-commerce, we’re still in the early innings of growth and we’re going to see more going forward.”

E-commerce was just one of the topics Wilkerson and George Abernathy, president of FreightWaves, touched on during a special webinar on Dec. 2.

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Wilkerson told Abernathy that XPO saw food-and-beverage and consumer goods freight increase dramatically. But there was another boom that XPO wasn’t expecting. 

“One of the shipping trends we’ve seen is that people are no longer going to gyms,” Wilkerson said. “People are ordering fitness equipment and building their own home gyms — I’ve done that — and I think that will continue in 2021.”

E-commerce is here to stay

Wilkerson cited a survey XPO conducted where more than 90% of consumers said they will continue to buy online and have goods shipped to their homes, even after the pandemic ends.

“People are used to having goods come to their house quickly,” he said.

For carriers and shippers, though, the sudden acceleration of e-commerce came with a price: capacity constraints. Wilkerson said that XPO helps its customers navigate by using technology, specifically its XPO Connect platform.

Launched in 2018, XPO Connect is used by shippers to track and trace their shipments, request quotes, and manage their spend with XPO. The platform provides virtual access to the company’s multimodal range of transportation services and uses machine learning to analyze data histories and market conditions in seconds, becoming continually smarter at helping shippers and carriers buy and sell capacity. In late 2019, XPO added last-mile deliveries to the platform. For carriers, XPO Connect helps locate the right load for their operation, bid on it or select it. Tracking allows managers to locate individual trucks in their fleet, and the carrier scoring provides metrics to measure performance.

Vaccine impact on supply chain

Moving into 2021, Wilkerson said XPO will continue to work on speed and transparency in the spot market. Next year will continue to see tight capacity, Wilkerson said, driven by several factors, including the introduction of the COVID vaccine into the supply chain.

“It could cause some disruption as the vaccine comes out, particularly on the automotive side as  [capacity on ] some of the planes gets sucked up. Some of what was previously going on planes will now shift to the over-the-road market,” he said, adding that intermodal will also benefit. “We’ve definitely seen some of the truck markets shift to intermodal, especially [along] the long-haul, both inbound and outbound, of California — you’ve seen a massive shift from truck to intermodal just because capacity has gotten so tight.”

That trend will continue, he said. If another stimulus bill is approved, that could also drive more freight and contribute to a tight capacity market.

“We saw two stimuluses passed this year and capacity tightened. We expect to see the same thing next year as people continue to [work on] do-it-yourself projects at home,” Wilkerson said.

Shippers shifted strategies in 2020 to more mini bids, he said, but carriers also benefited in more ways than one.

“We saw a lot more mini bids, almost on a daily basis, from some of our largest customers. So, I absolutely think that will carry into 2021,” Wilkerson said. “But the second thing we saw was in the spot market business — what we saw customers do is they took [spot market] loads and rewarded the people hauling the contract with the spot market opportunities.”

Tight capacity continues

Both of these trends should continue in 2021 as capacity remains tight and shippers scramble to secure capacity. In fact, in an instant poll conducted of webinar attendees, 69.9% cited capacity constraints as one of the “areas of the supply chain keeping you up at night as you think about the future.” Employee availability and readiness (53.88%) and volatile demand (50.5%) also garnered a majority of concern. Voters could select as many concerns as they wished.

Wilkerson and Abernathy touched on several other topics in the hour-long conversation, which included nearly 20 minutes of questions from the audience. These included investment in  freight technology, truck driver concerns, the impact near-shoring will have on length of haul, automated trucks, and growth opportunities for XPO.

Wilkerson began the session noting the impact the pandemic had on businesses, including XPO.

“For me, transportation companies responding the way we did was nothing new, but obviously with the pandemic, that was new to all of us. We are agile and adapted quickly for our customers, our vendors and our employees,” he said.

Wilkerson said XPO focused on three goals during the pandemic:

  1. Keeping employees safe and continuing to help them be more efficient as they go about their day-to-day tasks.
  2. Making sure vendors were taken care of, specifically making it easier for contract carriers to do business with XPO through the Connect platform.
  3. Creating custom solutions for customers, including  reporting, analysis and optimization within the network.

“We created  a COVID dashboard for our shippers and carriers so they could see in real time if their shipment was delayed,” he said, noting the dashboard tracked that shipment and identified the delay and how XPO would navigate around that delay. “It’s about how much data you can put at your customers’ fingertips to set yourself apart using technology.”

That data piece is part of the transparency puzzle Wilkerson noted as being critical to building long-term partnerships, especially in times of tight capacity.

“If you are not servicing your customers on a daily basis, and you are not having daily conversations with your customers and transparent about where you are in your network for capacity and what you can actually do on a daily basis, you’re not setting yourself up for a long-term partnership,” he said. “It comes down to partnership and what you are looking for. What I’ve heard from customers is they are looking for carriers that are financially stable, are going to be there for the long term, and who have strong technology.”

Neither Abernathy nor Wilkerson was prepared to predict a percentage increase for rates in 2021, with Wilkerson noting it is on a customer-by-customer basis and not “putting them in a box,” but he’s heard everything from 3% to 12% at this point.

Success, though, relies on transparency and having a conversation with the customer, Wilkerson summed up.

“Nobody should be surprised on either side when you walk in that door,” he concluded.

Click for more FreightWaves articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]