Mike Tyson famously said “Everyone has a plan until they get punched in the face.” Logistics professionals who moved freight over the last couple of years know this feeling. There were plans, there were processes — and then there was the pandemic.

In March of 2020, supply chains went into a tailspin. In addition to COVID-19, sources of disruption included natural disasters such as hurricanes and wildfires, the temporary loss of major truck crossings over the Mississippi River in Memphis, and blockage of the Suez Canal by a stuck containership.

Labor was a major issue, affecting the number of truck drivers as well as workers on the docks and in warehouses. At the same time, a surge in demand for consumer goods led to significant delays and increases in the cost to move goods. Truck spot rates increased to more than $2.4 per mile, exceeding their previous peak in the summer of 2018.

The trucking market saw record-high tender rejections, as everyone struggled to find reliable and reasonably priced capacity. The outbound tender reject index (OTRI) hit 20% in August 2020, and remained there or higher for 18 months until February, 2022. 

At the recent Gartner Supply Chain Symposium in Orlando, Florida, an audience of shippers was asked: “What were some of the traditional solutions you turned to?” Many cited the spot market, while others brought carriers back to the table to renegotiate contracts in hopes of achieving higher acceptance rates. A common, shared solution was to run additional requests for proposals (RFPs) to find more capacity, run mini-bids, rework routing guides and outsource (or insource) everything. A few also mentioned exploring new modes and hiring drivers and purchasing vehicles for private fleets.

The overwhelming sentiment was that these solutions were helpful, but, as is often the case in logistics, solutions to one problem can be the cause for the next. Some of the solutions to the capacity crunch caused a time crunch, or a cost spike, or late deliveries. Shippers saw an abundance of the same problems that the spot market has always had: high prices, unreliable carriers and time wasted in booking, rebooking and managing returned loads. Freight procurement teams conducted time-consuming RFPs, only to experience high rejections. Shippers found that recalibrated routing guides were falling apart and failing.

While some shippers were able to find success, many more struggled. Those who were fortunate to have loads moving in a consolidated set lane and had a solid benchmarking strategy — accessing the right data at the right time — tended to fare well. They were able to decrease the amount of miles hauled by shortening the length of their supply chains (through reshoring, for example). But others found themselves hindered by a transportation management system (TMS) that wasn’t customizable, or relying on a less-than-effective system admin. This created a situation where load planners were operating in a dashboard that didn't provide a balance of preferred vendors and optimal price. They were without creative contract strategies with floors and ceilings.

At least one Fortune 100 shipper was in the midst of bringing 100% of its freight transportation sourcing in-house, up from zero, at the time the pandemic hit. The company was seeking improved control and visibility of its logistics function. At the same time, it put instant freight brokerage on auto-tender for its lower-volume lanes.

Others went in the opposite direction. Some shippers outsourced the entirety of their logistics planning and execution, and moved to a managed-transportation model. With support from logistics experts that provide technology and centralized data, they were able to operate with a more proactive and strategic approach. In building the foundation for an agile and resilient transportation network, they optimized their operational costs and created more time to focus on managing their core business.

The conversation at Gartner clearly highlighted two very different logistics tales: those who fared well and those who didn’t. For those who did manage to do well, the reasons came down to the ability to employ the right people and mix of solutions, and execute at the right time. For most, it continues to be about bringing in the right tools into the toolbox — knowing when to use the hammer and when to use the drill.

So what’s next? Over the past two years, trucking has enjoyed the largest number of new entrants in its history. New fleet registrations reached 20,166 in a single month. By comparison, the previous peak in August, 2019 saw the addition of 9,511 trucking fleets — and that was in the middle of one of the weakest freight markets in history. New registrations tend to lag market conditions, so we can expect more fleets to continue to enter the market, even after the market softens. This will make the pending downturn that has already begun that much worse.

One way to deliver rates that offer shippers savings is through the use of dynamic routing guides. These include rates from digital freight brokers, who fared well in the pandemic because of their access to instant capacity.

Moving freight might actually be like a boxing match: it’s a two-sided market in a capitalist world. That said, it’s to our mutual benefit to play fair. You don’t want to see Mike Tyson in a fight with a lightweight. Similar to the referee’s role in boxing, we need parameters, guardrails and equally equipped players on both sides of the equation. Healthy business relationships are key.

We don’t know what will happen in the market in the next three, five or 10 years, but if history is an indicator, we know it will be turbulent. Preparedness and resiliency matter, and will continue to do so, in a future where the pace of activity is faster than anything we’ve ever seen.

Robb Porter is executive vice president with Loadsmart.