What type of recovery will we have? And does it matter? The short answer is that the type of recovery we have will impact us all. Unfortunately, until we are looking back on it in our rear-view mirrors, there is no way to know which model the recovery took.
The good news is that there are steps you can take now to get in front of any type of recovery. But, if you wait too long, you could be paying for it (quite literally) for years to come.
On that note, what can you do about it now?
First, avoid common pitfalls that companies often make when managing freight through the end of an economic slowdown.
Avoid these Common pitfalls to managing freight through the end of an economic slowdown.
1) Don’t wait too long before assessing, then making a decision. If you wait to make changes, trying to gather perfect data, you’ll end up losing time. The recent downturn wasn’t a normal circumstance. And let’s be honest, if your logistics data is real time and current, this isn’t an issue for you. However, if you’re waiting for someone to “pull” data from several sources, like many companies are doing, then you risk missing the opportunity to act while it’s still advantageous.
2) Waiting for things to normalize before you’re willing to adapt. Looking back over the last ten years, what 3-year period in the transportation industry (or in your company) would you call normal? Fluctuating freight markets, volatility, mergers and acquisitions and unpredictability will continue to impact even the most solid transportation plans. “Normal” may never come. Don’t miss the opportunity to set a new baseline with your carriers now. Wait too long, and you’ll pay higher freight rates for years to come. Act now to work out fair pricing agreements that both parties can live with for the next year or two.
3) Don’t be stagnant by doing what you’ve always done. If you think what you are doing is working because your rates are lower this year than last year, don’t get too comfortable. Lower rates thus far could simply be a reflection the overall market forces. As market forces shift directions, not having a strategic program in place to help keep transportation spend lower could put your rates at risk. They could increase at a faster pace than for those that have a strong strategy in place.
Don’t make these mistakes. They’ll hold you back in the long run and cost you not only time, but money. Let’s look at some steps you take to control the current situation.
What Else Can You Control Right Now?
Look at what can you control right now—that means even with resource constraints. Regardless of the type of recovery we end up having, you need to act before falling behind.
- Practice adaptability. Have you fallen into one of the pitfalls mentioned? Having a hard time adapting? You’re not alone. But, don’t let that stifle you, because becoming more adaptable is a process worth pursuing. Recognize it, own it, and commit to making at least small improvements. Even small changes build the culture of adaptability and continuous improvement. Both are required to survive in a rapidly changing environment.
- Become more efficient. Assess your overall digitization strategies. How well were you executing compared to the industry leaders prior to CV-19? Transportation management is a key component. If your budget has changed, reassess what you can accomplish. Find effective transportation solutions that require little or no upfront costs and that are self-funding.
- Create a new baseline. Improve your carrier network and carrier contracts. If you don’t tackle it now, you’ll pay for it later when the industry rates increase. Be prepared for rates to increase prior to the normal peak season spikes you may already be anticipating. We will likely see spikes in rates as early as this month.
Be sure to consider these adjustments now to help make your company more profitable for years to come.