Freight Cycles, Loyalty and The Future – A Couple Things To Look For

Implications: There will be both trucking company and logistics’ provider failures yet to come. The landscape of shippers versus logistics providers versus trucking companies (carriers) in some senses are like déjà vu all over again. This time around we will have a few added twists that we should be aware of.

Analysis: Freight-swing cycles and fuel price surges result in a cleaning out of unprofitable carriers. That is the case again today. Major fleets have pulled out capacity, too.

The key shipper criterion for a successful relationship in most cases is providing service at a fair price - all the time. In general, competition keeps us honest and when someone employs rate-cutting we look at who is doing it and wonder why. Overall loyalty is the cornerstone to relationships in good time and bad.

A group that is being looked at more closely today are logistics providers - all flavors - and their value proposition. A subset of logistics providers are freight brokers. Of course, some of these are one in the same. While their business models are similar to asset-light ones today, they again need capacity. Logistics-providers / brokers tend to suffer first from the draw-down in capacity and start their own trucking operations. This is occurring, too. Loyalty is less an issue with this group than with carriers.

One of the areas where there is opportunity that we will see another number of changes is in productivity software. The last sea change was around the Y2K upgrades. Many major shippers however desire more transparency in the selection of the best “equipment” to address their moves from their core carriers - and some software providers are giving just that. What we will end up seeing is a squeezing of traditional logistic providers and more towards those with assets (trucks & warehousing) and ones that shippers can utilize. I have seen some of them - and they are being implemented! This will be good for the marketplace - and for costs and planning purposes. Similar smaller systems will make it to smaller carriers.

As freight demand picks up however, so will the numbers of carriers and carriers per shipper again - albeit with better planning technology. Loyalty and service will reign - again, too!