The COVID-19 pandemic challenged the global and domestic transportation markets in new and profound ways. The standards used for traditional freight management have revealed significant risks lurking just below the surface of modern supply chain management, and for shippers, time is of the essence. It’s no longer a less-than-truckload shipping versus traditional operational problem. And, failure to recognize the real effects of the pandemic will inevitably lead to problems. But again, the solutions to the problem lie within the use of technology to improve efficiencies and squeeze the last drop of ROI from every supply chain resource. In fact, let’s quickly recap the state of logistics management amid the COVID-19 pandemic and its final impacts on the growing last mile problem.
While the COVID-19 pandemic continues to cause disruption in the supply chain, companies believed its effects could be isolated to a single mode—over-the-road. However, the reality played out to reveal that COVID-19 struck a blow to every mode, and as freight continues moving in all directions, the pandemic effectively stimulated demand for faster, more affordable e-commerce purchases. Thus, the sudden spike in such demand transcended the boundaries between transportation modes, impacting air, ocean, rail, and of course, over-the-road transport. Furthermore, average demand in some states has fluctuated wildly, so more companies are looking to the benefits of an over-the-road TMS to better manage the disaster.
While freight management of the last mile has always been a critical concern and area of lackluster visibility, it is exhibiting added stress during the COVID-19 crisis. With more customers staying home and surging e-commerce demand, the need for more visibility in the final mile is more important than ever. Customers want to know where their orders are, and if the company cannot deliver on time or with even some notification, they will go to your competitors. Additionally, the last mile problem of how to ensure the safety of drivers and customers has come under fire. Companies are trying to find the best solution, but some key services, such as white glove services, are not really in demand now.
In the last week, governors across the U.S. began taking steps to reopen their economies and provide an infusion of brick-and-mortar business activity. Unfortunately, this step comes at a time when the potential use of the Defense Production Act (DPA) could be immediately triggered and effectively cut away available resources for manufacturers and resellers. The uncertainty is likely to remain well through the remainder of the year.
This can be a confusing idea. After all, most companies had already started to implement curbside pickup options before the pandemic was even detected. However, curbside is the new king of business. It adds to the strain felt throughout businesses when reopening with limited brick-and-mortar occupant capacity options. Until stores can return to 100% occupancy, curbside will be a vital aspect of online order fulfillment, as well as call-in orders for businesses that failed to invest in online ordering fulfillment capabilities. Remember that curbside is a form of last mile delivery too, so this yet another last mile problem the industry is facing together.
At the onset of this series, I explained how the current outlook would inevitably lead to a demand shock—a situation where the rising demands of customers would recoil. The recoil is here, and it will cause a massive headache for transportation management.
According to My News 13, “In April, average demand went down by more than 10 percent from early February, according to the Florida Trucking Association (FTA). Activity had spiked the week of March 8 from increased demand for food and paper products, when many people were buying in bulk.”
How much will the real impact be? No one truly knows, but given that the economy remains in turmoil, the likelihood of further furloughs and layoffs in the trucking sector is on the path to increasing.
When the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law, the majority of carriers and available capacity—operating fewer than five trucks—thought the measures in the legislation would protect against the risk of blowback as the demand declines. Unfortunately, the funds within the Act have been disbursed to companies that are both publicly traded and otherwise capable of using existing resources to continue operations. As a result, the businesses that needed the money most may remain waiting for months for relief. Now, hope is on the table with Congress reviewing the next stimulus package. For now, the uncertainty remains a major player. Until then, shippers need to do what they can to optimize all operations from improved communications through loading and unloading management.
It’s too early to see the statistics, but every organization is clamoring for how to beat the disruptions caused by the novel coronavirus. And, the solution for supply chain executives is relatively simple. They need more collaborative resources. They need data to see what’s happening. They need a better supply chain mousetrap that solves the challenges inherent in every mode—in every stage—in every location—in every opportunity to collect, analyze and apply data. It’s not just the last mile problem; it’s the whole supply chain problem. It all goes back to preparation and visibility and how those two aspects of an effective supply chain can overcome all obstacles. Fortunately, Cerasis—now part of GlobalTranz—will be here to help you find the path to more visibility, collaboration, supply chain resilience, and meaningful change in your organizations to drive profitability.
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