What will your company do when you encounter supply chain disruptions?
Oct 28, 2020
We’ve been producing these Two Minute Warnings for several years. Based on feedback, we know it's important to continue highlighting issues that can adversely impact your freight costs or supply chain operations.
That said, one challenge is that periodically people may wonder: “Are these issues really that serious?” In other words, is this a “boy crying wolf” thing?
I bring this up because over the last six weeks, we have been talking about how CODE RED conditions could cause supply chain disruptions or result in significantly higher freight rates. If you take nothing else from this Two Minute Warning, please take this: The threats from CODE RED conditions are real.
As if this market wasn’t challenging enough, over the last two weeks, we’ve seen some LTL carriers announce that they’re not going to pick up oversize shipments that are greater than 12 feet in length. The growth in “non traditional” shipments from rising consumer demand for larger items like bikes, new furniture, and outdoor heaters, plus delays in offloading trucks, has strained LTL carriers’ networks and made this necessary. We’ve also seen UPS and FedEx reduce the volume of packages they will handle for shippers. And we're seeing similar restrictions arise from truckload, ocean and intermodal providers. Add it all up and shippers are already starting to experience disruptions and higher costs.
Some of these disruptions have been minor – for now – while others have been more consequential. But the risks of ongoing disruptions into 2021 is something that shippers should be assessing.
What is causing the potential for higher costs and supply chain disruptions?
Throughout the supply chain, and across all transportation modes, we’re seeing signs that the major carriers are operating at, or near, full capacity. To dig into what's happening, last week we hosted our CODE RED Freight Forecast webinar with an outstanding panel of supply chain executives in conjunction with CSCMP and NASSTRAC. Many people told us it was the most valuable webinar they attended all year!
One of the things that caught my attention was when Eric Fuller from U.S. Xpress shared that driver wage increases alone could drive a 6-7% increase, without factoring in things like increased insurance costs or inflation. Avery Vise from FTR trucking illustrated how the struggle to maintain healthy inventory levels from historically low levels and the demands of reverse logistics are some of the underlying reasons why these CODE RED conditions are expected to continue on into 2021.
Mark Your Calendar for the Next Code Red Webinar on November 17
We are excited to announce that in response to many requests, TranzAct, CSCMP and NASSTRAC will be hosting the second CODE RED webinar on November 17 at 11am CST. This sequel will be focused on solutions for the conditions shippers are facing. We'll be featuring the same resources and have asked them to comment on proactive steps for managing in these uncharted waters. Stay tuned – we'll provide the opportunity to register for this important webinar soon.
If you didn’t get a chance to attend the last webinar, you can access the recording here.
How can you deal with a challenging transportation industry right now?
Know the market and your alternatives! If you could use help with this, we encourage you to take advantage of our Rapid Assessment. Our team will take a look at your current practices and help you identify any opportunities that could be an advantage for your company in this market.