Agile Freight Capacity Management Helps Shippers Navigate Volatile Retail Trends
May 19, 2023
Inflation may be slowing down from last year’s peak, but consumers are still experiencing budget strain from higher-than-average retail prices and interest rates. As a result, retail shipments fell 18.5% in March 2023, according to Breakthrough data — and the expectation is consumer purchasing will remain at moderate levels through the end of the year.
With retail sales cooling, shippers are reconfiguring their supply chains and inventory strategies to move goods as cost effectively as possible. The most successful strategy to weather the storm? Establishing strategic carrier partnerships that will enable you to prioritize agile freight capacity management, reducing costs while safeguarding service.
Specifically, your organization will need access to granular network data and regional carrier suggestions to support strategic decision-making when the market shifts unpredictably. That new flexibility will be key to developing successful freight capacity management strategies that make it possible to adjust when consumer demand ebbs and flows.
Suboptimal inventory management impacts the shipper-carrier relationship
Current inventory challenges date to the 2022 holiday season. An influx of retail inventory collided with a sudden drop in consumer spending, resulting in an overabundance of products in warehouses.
Suddenly, pressure to move goods quickly was replaced by pressure to move goods cheaply. As shippers scrambled to offset lost revenue from declining sales, cost replaced capacity and service as transportation leaders’ top priority — a trend that continues in 2023.
Changes in inventory levels and sales impact the flow of goods through the supply chain and consequently, contracts between shippers and carriers. But traditional RFP processes mean shippers and carriers are often locked into fixed annual contracts that don’t account for market fluctuations. That means shippers are unable to reevaluate carrier relationships to find the right balance between cost and service until the next RFP cycle occurs.
Flexible freight capacity management hinges on actionable data
Reliable network partnerships are critical to successful transportation management, especially amid economic downturns and constricted consumer demand. But establishing those relationships is a challenge without the ability to identify and correct network inefficiencies in real time.
Technology like Breakthrough’s Network Intelligence solution supports agile freight capacity management by continuously monitoring network performance. By leveraging an ecosystem of data based on more than $25 billion in transportation spending, the solution enables you to identify opportunities or corrective actions to keep freight moving according to plan. This includes the ability to pinpoint instances where carrier service levels do or do not align with your strategic objectives, so you can take proactive steps to renegotiate the expectations of the relationship.
In particular, the insights provided can augment your current freight capacity management strategy by positioning you to weather future uncertainty. With actionable transportation data and insights, you’ll be better positioned to:
1. Overcome geographic hurdles.
In recent months, geopolitical forces and labor disputes have upended traditional freight routes, relocating a significant portion of shipping activity from the West Coast to the East and Gulf Coasts. This led to regional shifts in inland distribution capacity and pressure to source new carriers to support additional geographic needs.
Network Intelligence’s comprehensive insights make it possible to rapidly pivot as new geographic capacity needs arise. You can quickly identify carriers — including regional carriers in specific geographies — that can provide additional capacity when inventory demands ebb and flow due to their operational density. Paired with data on carrier capabilities, these insights enable you to uncover new partnership opportunities and reward carriers that outperform expectations and benchmarks.
2. Act on market forecasts.
Access to comprehensive network insights makes it possible to proactively prepare for market movements and quickly react to market disruptions.
Breakthrough’s monthly Freight Advisor publication provides updates on recent market behavior and expectations. When paired with your own lane-level and carrier data, these updates enable you to contextualize the trends impacting your network within the broader transportation ecosystem. This allows you to proactively make capacity adjustments and swiftly take corrective action.
3. Prepare for future macroeconomic shifts.
The primary use case for comprehensive, relevant network data is responding to network opportunities and disruptions in real-time. But there’s a secondary application in preparing for long-term macroeconomic changes, especially population shifts.
The Sun Belt — including Arizona, Texas, and Florida — is the fastest-growing region of the U.S., a trend that has intensified in the wake of the pandemic. Elsewhere, city centers are growing quieter as more people move away from major metro areas.
These population changes are already impacting how freight flows and where inventory is stored, and the effects will become more pronounced going forward. Access to comprehensive data and actionable insights enable you to achieve short-term wins while simultaneously preparing for long-term challenges and changes.
Prepare for future uncertainty with resilient freight capacity management
The events of the last four years, from the pandemic to inflation hikes, have rendered the current economic and retail environment almost unrecognizable. During that short span, shippers have been forced to pivot tactics many times. And as near- and long-term macroeconomic trends unfold, the transportation industry will inevitably face new disruptions — and opportunities.
You can successfully overcome future inventory management challenges with access to real-time network data. Armed with insight into what is actually happening across your network in comparison to your plan, you can quickly make adjustments so you’re not leaving money on the table — or exhausting carrier relationships that no longer fit.
Ready to try it? Explore Network Intelligence and schedule a demo.