Last week I was on a conference call with some CEOs–one of whom listens to our Two Minute Warnings. As we were talking about “pain points” and a list of issues affecting their bottom lines, guess which issue is rapidly zooming up the list? The impact of rising freight costs!
One of the CEOs on the conference call, who listens to our Two Minute Warnings, made a comment after hearing about why capacity in the freight markets may get even tighter in the coming months: “This isn’t a Perfect Storm, it’s a Freight Armageddon!” I assured them they were not alone and that this issue is affecting lots of companies.
When you have CEOs from publicly traded companies like General Mills, John Deere, and Tyson Foods talking about freight issues on their quarterly calls with the finaincial analysts, you start to think that some CEOs are getting an education about how transportation and supply chain issues are a bit more important than they realized. In fact, as we are seeing, it can have a significant impact on your profitability.
What should transportation professionals do in response to this environment?
First understand that the freight Armageddon can also affect many other areas in your company. For example, one large shipper talked about a “freight embargo”. Every one of his core carriers refused to pick up loads for one of their customers. What did he do? He told the sales folks that they had to get with the customer, explain the freight embargo and inform the customer that they were going to have to find carriers. In this environment carriers have lots of options and don’t have to pick up “undesirable” freight.
Another thing that's for certain is you'll want keep everyone informed (e.g. sales, procurement, C-Level executives and others) about what is happening. We have a ton of great resources you can use to brief your team in our Transportation Storm Center, including the slides for our latest transportation webinar. As the capacity crunch continues, it's key to show that you're on top of it.
It’s also interesting to note how large, savvy companies like Walmart are responding to the challenges in today’s transportation marketplace. The company recently announced that they were modifying their On Time–In Full program: Walmart decided to relax by adding a day to their supplier delivery window in response to the driver crunch.
We're on your team, we're here to help, and we're passionate about seeing you be successful. If you have any questions, give us a call at 630-833-0890 or send us an email.
