Navigating the Transportation Capacity Crunch

capacity crunchJust this week, forecasters warned that the 2018 hurricane season could be more active than usual, unfortunately as busy as the stormy 2017 season that brought unprecedented damage to many areas. What does this have to do with the supply chain? Shippers know all too well that the strain on truck capacity and supply chain resources continues to have an impact, and the overall capacity issue will remain for the long-haul. A wait-and-see approach by many seems to have given way to a realization that this is the new normal.

While weather-related events and other uncontrollable factors took an already tight market and applied a vice grip to it, the government-mandated Electronic Logging Devices (ELD) for commercial trucks are also having an impact. Hard enforcement began April 1, 2018, requiring non-compliant carriers and drivers to be placed out of service for violating the ELD rules. The jury is still out on whether the change in detention is having a meaningful impact, however many analysts have previously indicated the ELD mandate could have a four- to seven-percent impact on capacity and a five- to 15-percent impact on carrier rates.

So what can be done to best navigate this new normal? There is no magic bullet to overcome the challenges associated with the capacity crunch. The supply chain has proven to be the competitive battleground of the future, and organizations that act proactively by implementing flexible, adaptable supply chain solutions will be the ones in the best position to pass through the storms.

Network power and visibility

One of the first steps in the right direction is to join a network. Operating on a static, closed, on-premise transportation solution offers no flexibility to adapt to sudden natural disasters, market forces, or mandates such as the ELD. These systems truly limit an organization’s ability to react to changing conditions. On the other hand, the power of a network brings clarity and certainty to a volatile situation, while offering “on-demand” connections to thousands of potential carriers. Forming connections, streamlining processes, and identifying new capacity can be accomplished faster than ever, while joining the right network can strengthen supply chain performance. Advantages of network collaboration include:

  • Flexibility is valued above the certainty of the status quo. Supply chain managers cannot afford to sit still with static supply chains and think they’re prepared. Those that make the extra effort to prepare for multiple scenarios will be able to satisfy their customers in times of trouble.
  • Cross-border trade, simplified. The use of a more resilient network allows a business to sell across borders and trade zones like it’s right next door. Systems can be updated easily as new customs requirements are put into effect.
  • Insight to supply and demand. Market data combined with a deep network can help the best rates and protect budgets. For example, with a global-trade-network view of the market, Logistics as a Service (LaaS) customers have the potential to keep rates lower than with a limited view of providers.
  • Best-practice solutions. These solutions provide the capability to capture and identify successful new processes, ideas, and technologies so they can be learned and implemented based on proven results. Once identified, they can be put into practice faster than the competition.

Joining a global trade network is the base from which collaboration, flexibility, and operational creativity will be born. Moving from static old systems and processes, and embracing a network model will help organizations find and access new capacity faster and more efficiently than ever.

Jeff Potts is Vice President of Client Services at BluJay Solutions, leading the company’s client services group in North America.

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