Capacity restraints and inflation concerns are easing in the transportation sector, says John Haber, chief strategy officer at Transportation Insight.
While capacity has been a major issue across the global supply chain — and in all modes — since the onset of the pandemic, that is easing, if only slightly. Rails and ports are still problematic, and some companies have shortages of trailer assets. “But we are seeing some capacity ease up in the trucking sectors as well as in the parcel sectors with the reopening of malls and people going back into stores rather than ordering everything to their homes,” says Haber. “On the parcel side, you're seeing a shift where things at one point were almost 80% residential delivery. It's moving back to closer to 50% to 60%.”
While inflation is top of mind for business and consumers alike, some costs are dropping, Haber says. Container rates are down considerably from their highest levels over the last couple of years. Pricing is easing on full truckload and LTL. On the parcel side, however, costs are escalating. And peak season surcharges have been announced. On the other hand, fuel costs are lowering.
In large part, Haber feels things are moving in the right direction from a capacity and cost standpoint. “Things are looking more positive than at this time last year.”
Best-in-class companies have adjusted to the challenges brought on by the pandemic. They are planning and executing better now. They have risk-management strategies in place, and they have greatly diversified their suppliers. Moreover, they have much better visibility systems in place, giving them real-time information that allows them to react more quickly. “Companies need to be much more nimble, and those companies that have good strategies and can react quickly are creating a competitive advantage for themselves.”
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