Facing a perfect storm of new regulations and change factors, 2020 is set to be a difficult year for global supply chains. In a rapidly changing global supply chain industry, the only way forward is to find newer and better ways of coping with that change.
Last week, I discussed these changes, as well as the solutions I see for them, in our latest American Shipper webinar, alongside FreightWaves VP Mary Anne Hensley and my colleague Peter Yost. Here are a few of the themes from our discussion that I wanted to share with you here.
Change and Change and Change Again
A few of the big regulatory changes we discussed during the webinar include the ELD Mandate, IMO 2020 and AB-5. But new regulations are not the only things shaking up today’s global shipping market. Just last week, the deadly coronavirus that’s been ravaging mainland China was declared a global health emergency by the World Health Organization, and that emergency is already starting to affect global supply chains. Hand me a newspaper and I can find half a dozen factors that might threaten or hinder the delicate networks that transport goods across our global economy.
As with many things in business, it all comes down to priorities. Are you spending your time reacting to the changing market and putting out fires, or are you building initiatives that will let you set your own agenda and eliminate those headaches once and for all?
This year may be worse than most, but it’s far from exceptional. And with the right tools, companies can easily succeed where they may otherwise have failed. Greater visibility allows you to act proactively rather than reactively, recognizing threats to your bottom line with enough time on the clock to mitigate or eliminate them altogether.
Level the Playing Field
Better data can shine a light through these murky waters. When costs spike, the first players affected are most often those who are already on the edge, but being able to spot trends through data, rather than just guess at them, can give many of those smaller, more nimble players the edge they need to stay in the game.
Smaller carriers, in particular, are under tremendous pressure right now from all of these regulations and rising costs. There were hundreds of carrier bankruptcies in 2019. This, in turn, means there are fewer carriers in the market, driving capacity costs higher for everyone. In other words, when smaller players lose out in today’s massively interconnected market, we all lose.
But it doesn’t have to be that way; greater availability of data throughout the supply chain allows even small-volume carriers to have a seat at the table like never before. And just as the failure of smaller carriers cranks up prices and hurts everyone, the success of smaller carriers and the greater availability of data opens up opportunities for cross-collaboration, which in turn stands to relieve the pressures caused by an industry in flux – to the benefit of all.
Don’t Dwell on the Past
One of the best examples of this kind of network collaboration is reduced detention time. Drivers are on the road for an average of just seven of the 11 total driving hours permitted each day; the rest of that time is spent sitting around at facilities, waiting to load, waiting to unload, filling out paperwork, etc. Detention is a detriment to everyone involved.
FourKites has the technology to significantly reduce dwell times at major facilities, by giving yard, dock and warehouse personnel up-to-the-minute information on when a load will actually arrive, regardless of its appointment time. This allows them to accurately reroute trucks and reassign their available staff to the places where they’re needed the most, minimizing delays and getting those drivers back on the road as quickly as possible.
The beauty of this solution is that everybody wins. The driver is happy because he’s just freed up time to earn more money. The dock manager is happy because he’s no longer operating in the dark. Shippers are happy because their warehouses and distribution centers now have a greater likelihood of becoming facilities of choice, and they’re not getting hit with detention fines as often as before. Even the end-customer is happier because their products are finding their ways onto their shelves, factory floors or even the next truck in the chain faster and more efficiently than ever before.
A few months ago, we carried out a real-world study with four large shippers and the Trading Partner Alliance to find out just how much of an impact greater visibility can make in driving down detention times. Within the first six weeks of our study, detention had been driven back by 2-4% for the entire operation. Given those early results, imagine what the impact might be over the course of a year!
To me, that’s the greatest message of today’s apprehensive, change-filled transportation industry. Challenges are appearing faster than ever before, but we now have the capabilities to meet and overcome those challenges head-on. The proper response, for all parties involved, is to take advantage of the tools that enable collaboration and surface data-backed insights. We now have the opportunity to build a global transportation industry that is more efficient, more profitable, and just a friendlier place than ever before. Who wouldn’t want a little more of that in their day-to-day?
In case you missed our webinar last week, you can access the full recording here.