Key Business Considerations For Developing Your 2021 Transportation Strategy

2020 has been an unusual year for every industry including transportation, requiring creative solutions to many unexpected challenges. In our recent webinar, “Developing Your 2021 Transportation Strategy”,  I discussed with our Executive Vice President of operations, Dave Geyer key business considerations for developing your 2021 transportation strategy.

Freight volumes have been at unprecedented levels since earlier this year. These volumes are higher than 2017/2018 volumes, but unlike 2017/2018 they ramped up in a much shorter time frame due to the COVID-19 pandemic. This graph from FreightWaves shows that current outbound volumes are 46% higher than in 2019 and 56% higher than in 2018.

Source: FreightWaves 12/14/20

We believe marked demand outpacing aggregate industry supply is a durable condition that will last multiple quarters. Since demand grew so quickly, inventory-to-sales ratios are at all-time record lows. There is a recovery period that will be needed and lead to strong demand in 2021.

Professional driver availability. Compounding the pressure on driver availability, the number of long-haul drivers in the market has been drastically decreasing, unlike past demand cycles. There are numerous reasons for this including: a growing number of drivers reaching retirement age, limited availability of private and public school slots to train new entrants into the industry.

Here are strategies that shippers can deploy to meet capacity needs:

Plan for the unplannable. We don’t have a crystal ball, but there are numerous disruptions that threaten constraints on capacity and increase costs. Generous unemployment relief has slowed the re-entry of drivers into the market. In addition, misplaced public policy against small business owners relating to owner operator misclassification that could limit industry capacity options.

Work with carriers that are taking actions to meet shipper capacity needs. As a carrier, Schneider is taking numerous actions, including:

• Evaluating driver pay structures.
• Investing in technology, like Schneider FreightPower, to increase efficiency.

Discuss with your carriers how you can meet capacity and customer needs.

• Consider diversifying your transportation strategy with Dedicated configurations, Intermodal conversion or Schneider’s FreightPower capacity options.
• Consider supply chain consulting and engineering services to optimize your network
•  Ensure a positive driver experience and keep existing capacity moving.

Now more than ever, it’s important to anticipate your long-term transportation strategy to keep your supply chain on track through – and beyond – disruptions. For more information on the current market and how to plan your 2021 transportation strategy, watch the replay of the webinar.