Aaron Thrift

By: Aaron Thrift on April 23rd, 2020

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Covid-19 and The Impact on Supply Chain and Transportation

Freight/Shipping Trends | Industry News | Business Advice | Logistics | Transportation

Transportation and Logistics as an industry is no stranger to change and disruption. Historically, these issues have been related to weather events or even changes in legislation. 

There are usually some things the transportation industry can count on: tight capacity out of California and Florida during the spring produce season, fuel rates spiking in the summer, and a slowdown of shipping in December each year. 

For the first time in a long time, maybe ever, it's safe to say we don't know what's coming next. 

The coronavirus pandemic has caused the nonessential business to shut down throughout most of the United States, and millions are sheltering in place. 

For the first time in Armstrong's 13-year history, our entire staff is working from home, and we don't know when that is going to change. What does this mean for the industry going forward? 

Logistics/Transportation As An Essential Business

Transportation is deemed an essential business, and that has allowed trucking and logistics companies to keep working. Getting goods and supplies to the grocery stores, pharmacies, and the medical industry is a top priority throughout the country. The biggest question has been when we will see toilet paper on store shelves again?

Brokerages: Adjusting to Remote Work 

There are a variety of brokerages in the marketplace. Up until Covid-19, most would require their employees to be in the office each day to encourage the trading floor atmosphere. In an agent based model, the sales and operations teams typically work out of their own offices or home office, an advantage in this new ‘normal’ 

Having infrastructure in place to support remote work is important. A few popular tools are: 

  • Web based transportation management system
  • Voice over IP phones
  • Conference services like Zoom to keep face to face engagements
  • Chat Services like Slack to keep teams connected

When an organization relies on face-to-face communication, paper invoices, printing and mailing checks and technology that has limited support for outside users, remote work becomes more complicated. 

Some companies were just not prepared to adjust to a total shift in the way they do things. This has caused some brokerages to close their doors or reduce staff. 

Carriers: On the Front Lines

Truck drivers don’t have the luxury of being able to work remotely. This historically underappreciated group of workers are doing their best to stay safe and get the job done under difficult conditions. 

While initially some rest stops and truck stops were closed, most are open or have reopened to service long haul drivers. Some rest stops are even allowing food trucks to give the drivers options and the vendors a place to make sales. 

There has also been an outpouring of support in both food and monetary donations for drivers. The St. Christopher Trucker Relief Fund has seen an increase in donations as awareness and appreciation for drivers skyrockets. 

Other considerations in this volatile market are:  

  • Medical checkpoints are popping up between some states, adding time and additional complications to routes.
  • Candadian and Mexican borders remain open for trucking, but freight has been dropping.
  • FMSCA has suspended hours of service for as long as the COVID-19 crisis continues. Carriers now have more leniency when it comes to hours on the road, but should continue to use good judgement and avoid driving when tired or fatigued. 
  • Fuel prices have continued to drop-one possible bright spot in all of this.  
  • Overall rates are getting pushed down. A flood of carriers and drivers have made themselves available while at the same time non essential business has shut down,. These two factors are lowering the overall demand and pushing down rates. 
  • Essential supplies are finally getting back on shelves and non essential businesses are still closed in most states. We are already seeing a steady decline in freight volumes.
  • Some states like Georgia, Tennessee and South Carolina will begin opening stores and businesses over the next week, with additional states sure to follow.  

Shippers and Receivers

Shippers and receivers are adjusting their requirements to add to the safety of their staff and drivers. Some basic adjustments are being made like: 

  • No-touch deliveries 
  • Electronic paperwork
  • No signature required (For example, Armstrong billing teams are performing phone verifications with the consignees to prevent payment delays for carriers.) 

Shippers and receivers are doing their best to quickly get drivers unloaded and on their way. However, business closures, social distancing and a reduction in staff can cause increased wait times. 

Drivers report overall good treatment and even some tokens of appreciation while on the job. 

May truckers report a few changes like:  little to no personal interaction, being asked to have their temperature taken at facilities and in some cases long wait times due to reduced staffing. 

As this epidemic continues around the world, requirements in businesses will adjust to slow the spread of the disease, while allowing people to get back to work. 

How Has The Supply Chain Been Affected by the Pandemic?

COVID-19 has created many bottlenecks within the supply chain. As countries close borders, exports slow or stop, shippers are low on getting essential items needed to manufacture their final products. 

Due to this, many manufacturers and shippers are stopping or slowing production. Nonessential personnel are being sent home or furloughed on an unprecedented scale. 

The ramp-down of regular shipping lanes is causing upheaval in the market. Trucking companies may not be running their regular routes as they have to adapt to the current market. 

Trucks being out of route can cause delays as dispatchers and drivers search for backhauls on lanes that are new to them. This impact is felt by shippers that can no longer rely on their regular carriers and need to start looking for further alternatives. 

Receivers are not immune to the pain either. As priority is continuing to be focused on essential goods and services, not all items are being shipped in a timely manner. Receivers may be out of finished products to bring to market, and this has a large impact on their future. 

Communication Is Key

What are the best ways to communicate with customers and carriers during this time?

It seems that every business is sending out their COVID-19 updates, in some cases on a daily basis. This can be overwhelming as shippers, carriers and brokers struggle to determine what is important for each business. 

The amount of information being dispersed via social media, internet, smart devices, TV and radio is overwhelming. While most people are  working from home they may be missing social interaction. Customers and carriers may welcome a quick phone call or chance to jump on a video conference.  Phone calls can sometimes be viewed as a distraction in the office, now  they may be viewed as a welcome break from the work from home dilemma. 

Financial Considerations

During this tumultuous time, like all industries, it is imperative to have a close eye on the bottom line. Corporate leaders in transportation are monitoring load count, margins, revenue, days to pay and making adjustments in the moment. 

Carrier partners are anxious about being paid, so now more than ever is the time to provide excellent customer service and timely payment. If your business has the liquidity available,  consider pushing up ACH payments and offering quick pay options to carriers and vendors.  

If this is not possible for your organization, maintain open and honest communications with your critical carriers and vendors. Keep them up to date on the timing of payment and in dire circumstances, consider requesting extended payment terms or a payment plan. 

Smaller brokers and carriers may be struggling to keep their heads above the water. Several seasoned logistics companies have already had to lay off a large percentage of their staff or close completely. Stay connected with your established customers and offer them solutions in a chaotic market. Now is the time to be open to working in new verticals, lanes or modes. 

Is There a Bright Side?

Networking and problem solving has created synergy between companies in new and interesting ways. 

  • Brokers with asset based customers are now onboarding these customers as carriers to keep them moving. A benefit if their production or supply chain is slow. 
  • Shippers have opened the door to let in new carriers.  In large organizations, the carrier network is reviewed only on an annual or quarterly basis. 
  • Manufacturers are changing what they manufacture to assist with high demand items. These manufacturers are ordering products previously not ordered creating new revenue streams for vendors. 
  • Tech companies are getting new clients as demand for work from home equipment increases. Tech services providers are bringing on more clients as demand for “information now” grows. 

It’s safe to say that 2020 is not the year that anyone expected, but (working together) .  Logistics and transportation providers are used to working 365 days a year, at night, and on the weekends to fulfill the needs of their customers and the public. This pandemic has elicited the same response. As essential workers transportation professionals have seen the entire industry step up to keep the supplies rolling. 

Through this unprecedented time, people of the transportation industry are stepping up to keep the supply chain moving. What logistics and supply chain professionals are moving may be changing, but the drivers keep rolling to get the goods where they need to be.  

External Resources On COVID-19 Updates

Keep Rolling, Through COVID-19 and Beyond

Through this unprecedented time, people of the transportation industry are stepping up to keep the supply chain moving. What logistics and supply chain professionals are moving may be changing, but the drivers keep rolling to get the goods where they need to be.  

Brian Mann, CEO of Armstrong Transport Group says, “There will be financial hardships throughout the economy, especially within our industry, as freight volumes have begun to fall rapidly with "stay at home orders" being extended nationwide. I have full confidence in our team being able to navigate, what I believe to be, the quickest downturn in the last 100 years.”

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About Aaron Thrift

Aaron joined Armstrong in 2016, bringing 17 years of experience in transportation logistics. As Vice President of Operations, Aaron is responsible for developing and executing strategies that drive growth among Armstrong’s 130-plus agent offices.