The global pandemic has radically impacted the supply chain. Freight rates are soaring, with tight capacity and heightened freight volumes month over month – but will these trends continue?
Mitch Luciano, CEO and President of Trailer Bridge, shared his thoughts in a recent interview. The present state is organized chaos, he says. So what comes next?
“We own 100% of our equipment – our containers and chassis – so that piece hasn’t been an issue for our customers aside from the fact that it’s been so busy. We built a fleet for 92% utilization and we’re now at 100%,” Luciano explained.
Trailer Bridge ordered 250 containers last October and received the containers sporadically since July of this year. “This is usually a six-month window and it’s taken over a year. We received over 60 in July and more recently another 183, but these are the types of supply chain interruptions we’re seeing impact every industry in some way,” he said.
In addition to ongoing supply chain issues, organizations that have begun to reopen their office doors to the workforce must remain nimble. “People need to be able to be flexible and transition quickly,” Luciano said, noting that Trailer Bridge’s original goal of bringing the entire team back into the office in early August had to be postponed due to local Coronavirus outbreaks. “We wanted to see the vaccination rate at 70% or higher for our team, as well as single-digit positivity rates for our local area and we just weren’t there yet.”
The last 60 days brought marked improvement, and we were able to bring everyone back effective October 4th. “But we’re prepared for our people to grab their laptops and head on home, if needed. We’re transitioning to a single, powerful end-to-end transportation management solution that will give our customers complete visibility into shipments that will help in this regard, too,” Luciano said.
Another trend impacting the logistics industry is skyrocketing inland costs. Long-term contracts can challenge transportation companies from adjusting rates in line with these conditions, which can have operational impacts.
“Even the biggest companies are impacted. We are seeing large box retailers charter their own vessels, though the challenge comes when they land thousands of containers at a single port. What’s next?” Luciano said. “It sounds workable. You charter your own vessel, you get to move your freight, but you get it to America and are still faced with the challenges of port congestion, truck driver shortages, equipment shortages, and more.”
Another influencing factor is the difference in port utilization in the US as compared to other countries. Many of the world’s ports are operating at full capacity 24/7, whereas American ports tend to give workers time off. Plus we need extended hours for drivers and warehouses to be open with proper staff to unload the imported containers.
“Expanding hours among supply chain players will eventually result in increased expenses for the consumer. That’s another expense we’re not expecting, and you’re going to feel that in the cost of goods sitting on the shelf. My eggs that used to be $6 for an 18-pack are now $6.79, and that $0.79 is a big difference for American families. It adds up on everything you buy. That capacity crunching and the resulting increased cost of goods is a trend that will continue, unfortunately, for the foreseeable future,” Luciano explained.
The most important thing for the industry now is morale, he said. “We’re expecting an even greater crunch in these next 60 days, in the run-up to the holidays. And so we’re really focused on our Mastery technology implementation, to help our skilled team manage changing conditions and exceptions with the power of AI, ensure we’re operating at 100% for our shippers, to get them the best routes and pricing possible across all methods of transportation, domestically and worldwide.”
Planning shipments over an 18-month horizon may seem impossible right now, and it’s more important than ever that people and companies are agile and positioned to respond to changing conditions. That’s where Trailer Bridge is focused – on having the people, processes, and technology in place to make it happen.