The 2:00 Minute Warning

This current freight recession has been around a lot longer than the experts predicted. Back in January, most experts predicted that by the fourth quarter we’d see a return to normal – whatever normal looks like.

Here we are heading into November and there are troubling signs that not only is this freight recession longer and more severe than most people predicted, but it may continue well into 2024.

These conditions have been especially tough for some companies. For example, Yellow shut its doors in August and created disruptions in the LTL sector. While other factors were at play, the market didn't help. In the aftermath of that event, LTL carriers have gained some leverage in selectively issuing targeted rate increases. And then last week Convoy announced it was going out of business.

Convoy came into the market about eight years ago with huge financial backers and recently had a valuation of over $3 billion. They were basically an automated load matching service that was going to revolutionize the brokerage business, but various articles highlighted some significant flaws in their business model. Their efforts to expand quickly coincided with a downturn that lasted longer than they were able to withstand.

Their closure has also raised concerns about the viability of other “high profile” logistics and technology PE backed companies that promised to revolutionize the industry.

Some logistics professionals see events like these and view the freight recession as a problem that could lead to sudden changes and limit their choices. Others have adopted a transactional mindset and moved aggressively to lock in lower truckload rates and control their LTL rates.

But we are also seeing some shippers view this recession as an opportunity to implement a strategic approach in fostering a genuine, collaborative relationship with their carriers. This involves identifying and reducing wasteful practices in order to lower overall costs. These shippers recognize that rates are just one part of the overall freight cost equation. Overall, they believe that forming a more collaborative relationship will help them secure capacity at a reasonable price when this recession ends.

We have also been having several conversations with C-Level executives from some of the largest transportation companies in the country to understand their perspectives. And one thing we keep hearing is that shippers with a strategic and collaborative approach will always do better. The carriers also have a long memory and know which shippers operate in a transactional way versus shippers who work in a collaborative and strategic manner. That is why we are recommending that shippers and carriers see this time as an opportunity on the strategic side to forge that relationship.

If you are wondering “How do you do that?” or “What would that look like?” I have some great news. We have many resources we can share with you and one of the most effective tools is our LTL and Truckload Strategic Assessment. When you look at the ways your company is managing freight, there are often opportunities to improve your operations and relationships AND even lower your costs. This strategic assessment can provide you with ideas to include in your 2024 plans.

To get in touch, simply give us a call at 630-833-0890, send us an email or schedule a time to meet.

Last but not least, thanks to those of you who have commented on the pink apparel that I’ve been wearing this month. As many of you know, October is Breast Cancer Awareness Month, and we want to celebrate and honor all those who have fought this challenging battle.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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