The freight market is currently in a state of flux, with two major events that have rocked the industry: the bankruptcy and subsequent exit of Yellow, a significant LTL provider, and the surprising wind-down of operations by freight broker Convoy. And with the increased cost of capital not retreating anytime soon, some brokers will likely continue to feel the squeeze. In turn, small asset-based carriers that rely on those brokers will be vulnerable.
Let’s unpack the underlying conditions of the market and look at how logistics service providers can survive and potentially thrive now and into the future.
Three pivotal elements are shaping today’s freight market:
However, while the freight market’s current dynamics may seem overwhelming, they’re neither inscrutable nor insurmountable. By adopting proven strategies and staying abreast of industry trends, logistics service providers can build resilience and navigate the chaos with confidence.
Despite these market headwinds, some service providers have positioned themselves for long-term success. I recently sat down with J-Ann Tio, Chief Strategy Officer of Arrive Logistics, and Sarah Barnes Humphrey, founder and host of Let’s Talk Supply Chain, to discuss the current environment. J-Ann shares these tips to help service providers thrive, even in a down market:
1. Make Prudent, Long-Term Investments: The best logistics service providers think in multi-year plans beyond the current market cycle. As you make significant investments, maintain a clear focus on how each partnership and investment will improve operational efficiency and customer satisfaction.
2. Prioritize Process Change Management and Execution: Remaining a provider of choice for your customers requires constant improvement, and your investments can go to waste if they are not executed well. Choosing the right implementation and execution partners is a key component of resilience in a down market that should not be forgotten.
3. Synchronize your Strategies: Ensure that your growth strategy and your technology story are tightly aligned at all times. As you plan for growth and resilience, ensure that every move positions you as the provider of choice for your customers.
While the situation for shippers isn’t as dire as it is for carriers and brokers, many are feeling the pressure of shifting economic conditions, too. Like everyone else, they’re assessing how to preserve margins and reaccelerate growth into the future. This means that improving efficiency and reducing costs are high on the list of priorities for Chief Supply Chain Officers.
And logistics service providers have an opportunity to play a pivotal role in this transformation. By integrating advanced data analytics and sharing actionable insights, they can become indispensable partners in their customers’ growth journey.