Supply chain disruption is easing as demand slows. Still, chokepoints persist and costs keep soaring. From labor shortages to downstream congestion, higher parcel and LTL rates, sanctions on Russia, COVID-19 regulations in China and green initiatives, shippers need help with forecasting, strategy and carrier relationships just to stay afloat. Here are five key transportation concerns keeping them up at night.

 With workers and equipment in short supply, relationships matter.

Inflationary pressures and uncertainty about a pending recession have put consumers in a defensive crouch, ending a two-year spending spree from pent-up COVID-19-related demand. For shippers, the lull offers breathing room to process order backlogs, replenish inventories and retrieve stranded freight. Still, transportation challenges are far from over.

Across modes, carriers are discounting rates to keep assets and equipment utilized, even as downstream capacity remains tight in places and warehouses and store locations face ongoing worker shortages and limited receiving hours. Drivers wait longer to load and unload, while freight backs up at warehouses and loading docks waiting for delivery. That added dwell time costs money.

There’s no easy solution, but gridlock can be managed through strong relationships with asset-based carriers. That requires close communication, finding areas of mutual benefit and keeping rates stable. “We want to stick with them in good times and bad and work with them through it all,” explains Doug Frank, senior vice president of logistics, shared services and procurement for third-party logistics (3PL) provider GEODIS. “If they grow with us, we’ll have a relationship that keeps freight moving when times are tough.”

 Who pays for saving the planet?

Manufacturers and retailers face growing pressure from customers, shareholders and regulators to support environmental, social and governance (ESG) goals, and they in turn lean on transportation providers to reduce vehicle fuel consumption and emissions. Failing grades can mean reputational damage and lost business. There’s a potential competitive advantage for carriers and 3PLs who take part in green initiatives, but it isn’t simple.

Limited electric vehicle range and a lack of adequate charging station networks over large distances mostly restrict EVs and clean-fuel vehicles to last-mile. Even there, it takes extensive planning to locate and incorporate more refueling stops into a typical route, burdening transportation-management systems and adding costs for carriers providing the vehicles. Load and route optimization can eliminate truck trips, but that requires significant volumes over time to move the ESG needle.

 Elephants in the room: FedEx and UPS.

The rise in B2C omnichannel e-commerce has increased many shippers’ reliance on leading parcel carriers FedEx and UPS. The higher cost of time-definite delivery, as well as dealing with more and smaller orders, has at times overwhelmed the two carriers as much as it has their customers.

Dimensional-weight (DIM) zone pricing adds cost and complexity to pricing. Rate increases have escalated during COVID-19: 4.9% in 2021, 5.9% this year, and a FedEx announcement of 6.9% in 2023 that will likely be matched by UPS. Tight space has led to capacity allocation, customer and peak surcharges if allocations are exceeded.

Worker shortages contribute to peak service issues for the two carriers, while higher wages drive up rates. Cobbling together reliable parcel alternatives using the U.S. Postal Service and local delivery services remains a challenge.

 Global supply chain disruption is still a thing.

Port congestion is easing, but numbers can be deceptive. Only 27 ships sat at anchor off Los Angeles-Long Beach in October, but cargo diverted to the East Coast in anticipation of a longshore strike now strains capacity at the ports of Savannah, New York-New Jersey and Houston. According to Drewry Shipping Consultants, congestion still ties up 15% of effective capacity on North America trade lanes.

Uncertainty from the war in Ukraine and Russia sanctions, the possibility of winter COVID-19 outbreaks at Chinese ports, and the outcome of West Coast longshore labor negotiations further complicate matters.

“Customers need to be very proactive right now to make sure they have the product they want when they want it,” Frank says. “That’s why long-term forecasting is critical. As an industry, we need to be more aware, plan further ahead and have contingency plans in place.”

 LTL trucking costs keep going up.

Less-than-truckload (LTL) occupies a sweet spot in the trucking market. Originally catering to smaller, palletized loads of industrial freight, LTL’s nimble model of centralized consolidation and deconsolidation of loads from multiple shippers has also served less time-sensitive e-commerce needs well during COVID-19.

LTL carriers have been disciplined in balancing their cargo mix between higher-value industrial moves and B2C business with low inventory volatility, for a stable revenue stream. Market share is highly concentrated in the top eight carriers; the capital-intensive network structure of drivers, trucks and consolidation facilities keeps out new market entrants. Truck and labor shortages, along with M&A and bankruptcies, have further tightened capacity. The result: steadily rising rates, on the order of 5%-8% annually.

 GEODIS Helps Shippers Navigate Disruption

GEODIS is a third-party transportation and logistics provider, a unit of French state-owned railroad company SNCF. Its origins trace back to 1904 and a rail freight company in Le Havre, transporting passengers and luggage to train stations and final destinations. It was merged with SNCF consolidation business SCETA, rebranded as GEODIS in 1995 and taken private in 1996.

The company has expanded its service offering and geographic reach since 2006 with acquisitions, notably of Ozburn-Hessey Logistics in the U.S. in 2015, PEKAES in Poland in 2021 and Keppel Logistics in Singapore in 2022. Its most recent acquisition, of the New Jersey-based omnichannel, last-mile and contract logistics delivery firm Need It Now Delivers, adds 65 locations and 300 interconnected distribution points nationwide.

GEODIS today has a direct presence in more than 60 countries, with network coverage in nearly 170. Its five business lines — supply chain optimization, freight forwarding, contract logistics, distribution and express, and road transport — offer clients end-to-end transportation and logistics services, with dedicated support teams. It also provides transportation-management solutions, from network design and optimization to cost and service analysis, transportation visibility and analytics, route and load planning, and carrier management and selection.

With a North America workforce of 17,000, GEODIS operates more than 200 locations totaling 53 million square feet of warehousing, distribution and fulfillment space. Its longstanding relationships with 450 carrier partners build agility and resilience for customers by securing space, adding leased capacity, diversifying modes and gateways, and supporting nearshoring, ESG and other strategies.

Resource Link: https://geodis.com/us/activity/transportation-management-solutions-us-en