Transportation Strategies Beyond the Bottom Line: Navigating Market Cycles with Data
June 5, 2020
Managing a transportation strategy is an ever-evolving, dynamically moving target. The circumstances and economic conditions shippers experience today are more complex, more technologically enabled, and moving at a more rapid pace than ever before. Coupled with unprecedented growth in terms of size, scope, and data accessibility the industry is anticipating solutions for challenges that did not exist a decade ago, a year ago, and sometimes, even a week ago.
The Year 2020 is a Tipping Point for Transportation
When you consider the trends thus far in 2020, it is hard to call them “trends” at all–the year has been driven by stark disruptions to the status quo. Nearly every expectation for the year discussed in 2019 has been dismantled by the spread of the novel coronavirus, extraordinary crude oil price dynamics, social unrest, and more.
As is typical in times of uncertainty, shippers are finding the navigation of this new landscape challenging as they strive to maintain both the productivity and efficiency of their networks amid fluctuating external circumstances. The goals are often the same, but the rules of the game are changing.
While every transportation network has unique challenges, they all have the same goal—to move goods to market by the most efficient and cost-effective means possible. Although on-demand consumer behavior, increased cost-to-serve, and falling shipment volumes are uniquely entwined with today’s global landscape, these challenges are being accelerated and will continue to shape supply chains well into the future.
Navigating A New Landscape with Newfound Collaboration
As the devastating effects of COVID-19 and the rise of racial justice protests have rippled across the United States, we have seen the human side of business emerge. Brands are stepping forward to set aside differences, finding solutions for the greater good.
This alone is signaling an important shift across industries–but it is an especially meaningful trend in the transportation and shipping communities.
Strategic collaborative relationships among stakeholders are becoming not only more apparent but entirely crucial to the long-term success of supply chains.
How Peer Collaboration Can Look for Shippers
What does shipper collaboration look like? It starts among peers and competitors in an effort to architect a more complete view of the industry. Shippers who collectively leverage systemic benchmarking data and experiential analysis will create new opportunities to elevate the success of the transportation industry as a whole.
Collaboration does not need to dilute a competitive advantage; in fact, it can elevate the quality of the competition so that all players operate at a higher level in total. By elevating the playing field, you elevate the competition.
In Q1 and Q2 of 2020, we saw Breakthrough shipper clients tap into each others’ expertise for specialty carriers, share unused capacity as durable goods volumes dipped, and prioritize relationships with key partners. All of this, to demonstrate the value of finding solutions and efficiencies beyond individual strategies.
Fostering Partnerships with Suppliers for Mutually Beneficial Results
Another way we are seeing shippers elevate the transportation industry is by strengthening shipper-carrier relationships. As markets change, the cycle of power has historically demonstrated a never-ending shift from carrier to shipper to carrier and back. One example of this can be seen in capacity relationships. Tight capacity markets favor carriers, excess capacity markets favor shippers, and the pattern has become tiresome.
But shippers and carriers operate within the same ecosystem, though on opposite sides of the coin – they do not compete with each other, so they should not operate at odds with each other. At the end of the day, both parties are seeking the same solution—relationships that work within their network to move goods to market.
Read how some shippers identified crucial carrier partners and are prioritizing their success through the challenges of COVID-19, here.
In the past, opportunistic approaches to shifting economic conditions created opaque contractual conversations. In today’s challenging market it’s time to forge cohesive and forward-thinking strategies that look at the bigger picture and use data to capture value beyond bottom-line pricing. It’s time to break that tired cycle.
A Future Involving Strategic Collaborations Will Change the Narrative
Shippers and carriers that facilitate unbiased relationships founded on data will uncover naturally occurring network efficiencies across the full transportation landscape. An opportune fit for carriers will nearly always be the right fit for shippers.
This shift in focus – from internal supply chain transportation strategies to the overarching efficiency of the industry – is a tipping point. The transportation industry is on the precipice of deep and enduring change. As the market pendulum continues to shift, and shippers recognize their ability to drive pricing in the marketplace, the allegiance of the shipper shifts towards the industry at large.
Changes that benefit the industry will ultimately benefit individual players. This shift in mindset starts with both shippers and carriers having access to the same data. Generally, the transportation industry has been lacking a single accepted source of robust and clean data. Organizations are seeking a baseline from which both shippers and carriers can operate. The growing access to platforms, log-ins, and real-time data feels exciting, but this lack of common understanding and a standard reference point makes driving forward shared efficiencies and quantifiable results nearly impossible. The efforts are disjointed.
Revolutionizing Transportation Strategies for the Future
This creates a strong argument for holistic transportation solutions that redefine the way we approach sourcing and procurement relationships.
While the year 2020 has presented sudden changes and seemingly insurmountable challenges to shippers and carriers alike, this is simply an exaggerated case for revolutionizing the way we think about freight strategies. The transportation industry narrative has been and will continue to shift towards collaboration through data.
Through both volatility and stability, shippers’ best strategies should capitalize on the needs and behavior of the entire network. When the supply chain is collectively optimized, shippers will reduce transportation costs, experience distinguished service levels, and connect products to consumers.
For a more in-depth conversation about the future of transportation and innovative problem-solving, download our transportation leadership journal now!