Collaboration In Times of Crisis | Shipper Capacity Sharing Opportunity
April 27, 2020
As the global landscape remains uncertain, people across industries and geographies continue to work to ensure our health and safety. Essential workers and frontline healthcare professionals are working tirelessly to ensure families are fed, patients are cared for, and basic needs are met.
Not to be left out of this essential group is the transportation community. From truck drivers to distribution centers, to strategic leaders, the transportation community makes sure that essential services can endure by continuing to deliver products to stock shelves with food and provide medical supplies to hospitals and consumers in need.
The transportation landscape, however, is experiencing ebbs and flows that differ from shipper to shipper.
The Shifting Needs of Consumers Affect Transportation
As essential goods experience, an influx in consumer demand—including things like toilet paper, food products, cleaning supplies, and other non-durables—consumers have shifted to spend much less in other areas. Durable goods—like appliances, cars, building supplies, electronics, toys, and more—experienced a notable decrease since the beginning of COVID-19’s influence in the U.S.
Read more about how COVID-19 influenced the shipping community disproportionately, here.
This shift in consumer demand away from durable goods that were previously performing strongly amid strong market fundamentals and low unemployment rates, toward non-durable goods has left some shippers with unused capacity.
The Impacts of Unused Dedicated & Private Fleet Capacity
Several shippers identified their capacity surplus early and recognized how detrimental leaving it on the table could be. One breakthrough client, one of the world’s largest carpet manufacturers, saw they had significant amounts of private fleet freight capacity that they would not be able to fill.
Beyond the fact that this capacity would be an underutilized line item in their budget, they saw the impact it would have on its workforce. It would leave a lot of their truck drivers out of work.
This client wanted to do something to avoid wasted capacity in a time when many shippers moving essential goods could use it and unemployment has spiked. So, they reached out to their strategic partner, Breakthrough, for help.
Shipper Community Collaboration to Meet Freight Needs
After the initial offer from this client to share their excess capacity, we surveyed our client network to see who else had the additional capacity to share and conversely, who might need additional capacity. Then, we used our robust shipper and carrier dataset to identify the right fit for clients to share capacity based on network flows and freight characteristics. This ensured that new capacity relationships would maintain an optimized transportation ecosystem. This capacity sharing opportunity also helped shipper participants in need of capacity effectively bypass the use of the spot market or brokerage, which often come at a higher price point than contracted freight.
In a circumstance where capacity would go unused and the transportation of essential goods would otherwise incur added costs, Breakthrough bridged the gap and created collaboration among shippers who otherwise would have no visibility into each other’s needs.
Opportunities for Ongoing Optimization in Times of Crisis
This capacity-sharing opportunity was initially Breakthrough client-led, highlighting how our clients think about the transportation landscape differently. They understand that collaboration and collective data analysis can create competitive advantages and necessary optimizations that lead to a more elevated transportation landscape.
These circumstances have illustrated something important—to Breakthrough, our clients, and the industry at large. There is room for collaboration, and in times like those we have experienced and will continue to experience throughout 2020, it will be necessary.
Breakthrough remains committed to bringing new opportunities to the forefront of our clients’ strategies. As we made this capacity sharing opportunity available to our client base, we recognize the greater need experienced throughout the industry. We are committed to bringing this opportunity to any shipper who is in need at this time – whether they have excess capacity to share or need additional capacity to get their products to market.