Many factors led us to the capacity crisis we have today: from driver shortage to the effects of Covid-19. As the crisis shows no signs of weaning down, freight rates are increasing. What are the strategies that you can apply to navigate these challenging times?
How did we get here?
Since 2017, the logistics and transportation industry have been facing a freight capacity crunch. Back then shortage of drivers and increased regulations were the culprits of the problem. Now the COVID-19 pandemic and Brexit have amplified these issues. The worldwide lockdowns in the first quarter of 2020 led to a reduction of the transportation capacity. However, as markets began to recover later in the year, it led to an imbalance in the flow of goods. At similar times, companies have focused on refilling their stocks and the demand for certain products significantly increase or decreased. The pandemic also sparked changes in consumer habits, which reflected in the exponential growth of e-commerce sales.
In the UK, the problem is intensified by the trucker driver shortage due to Brexit. The retail and transport industries joined forces to request that the government review its plans not to grant EU drivers temporary work visas. Furthermore, the pandemic also slowed down driver training, making it difficult to recruit more drivers. As the crisis shows no signs of weaning down, freight rates are increasing. In this article, we’ll discuss strategies that you can apply to navigate these challenging times.
What actions can help you navigate a capacity crisis?
Determinate actual consumer demand
Crisis can affect customer demands, making it sometimes difficult to determine the actual long-term demand. Companies can consider if the immediate demand reflects underlying issues and use analytical tools to assess supply and capacity strategies for the future. Market insights and customer communication channels can also be an effective manner to estimate demand. Another way to prepare for this is by establishing a dynamic forecasting process to prepare for various events. Once the actual consumer demand is determined, the next step is optimizing production and distribution capacity. That’s a future-proof way to try to keep up with the capricious demands.
Secure logistics capabilities
To reduce risks, especially with time-sensitive products, plan and prebook your logistics needs. Moreover, building partnerships with trusted providers can help your operations to run smoothly. For many, such as our family-owned company, building good and long-lasting relationships with clients is of great value. That’s why our motto goes – make a connection!
The capacity crisis also stressed the need for increased visibility in logistics. With increased visibility, it becomes easier to manage issues and develop contingency plans. Don’t get blindsided by delays – access to technologies such as transportation management systems can help companies maintain agility.
Build resilient supply chains
Companies have successfully navigated disruptions by creating resiliency instead of focusing on efficiency (e.g., just-in-time manufacturing). By diversifying your supplier portfolio and building solid partnerships with them, you create a resilient ecosystem around your supply chain. In addition, technologies can give your house the speed and flexibility needed to face disruptions. Technologies help you to anticipate issues, increase visibility, reduce costs, and optimize your supply chain.
Be more efficient
It is always a good idea to take a minute to think if you can make your operations smarter. With 2WIN we aim for increasing the capacity – from 33 euro pallets / 26 industrial pallets to up to 54 euro pallets or 40 industrial pallets. That’s 63% of the capacity increase with the 2WIN trailer concept. Such positive changes help you manage the capacity crisis by being more efficient with transportation, but also support your cost efficiency and sustainability. Check out if the 2WIN concept is a good fit for your business!