Cargo Insights: Class of 2020

Experience has always been the best education, and for the freight transportation industry, 2020 has been an experience unlike any other. The impact of the COVID-19 pandemic on the supply chain is still unfolding, and demonstrating the critical importance of staying agile, informed and prepared for change. Now is the time to use the knowledge gained across the industry as we look ahead to the future. [caption id="attachment_93852" align="alignright" width="300"] Brandon Fried, Executive Director of the U.S. Airforwarders Association[/caption] The global economy is recovering from a deep, worldwide recession in 2020 due to supply-and-demand disruptions, inventory swings, operational changes to combat virus spread, and shifts in consumer spending patterns. The good news is that experts are forecasting a recovery in 2021 and hoping for vaccine distribution in the first few months of the year. Despite half the world’s airliners being idled, forwarders and their customers have learned how to manage existing capacity. In addition to a robust cargo aircraft market, airlines are still flying thousands of passenger plane flights with boxes filling seats rather than passengers. We certainly hope that as the vaccine comes to market, these passenger air carriers will step up to play a significant role in delivering the vital serum to recipients worldwide. This has been a challenging period for small businesses as well, creating a drag on the economy while big retailers with optimal delivery services are emerging as success stories. The increase in e-commerce and the need to transport agricultural, construction and perishable items have allowed trucking activity to rebound from May 2020 lows back to pre-pandemic levels. However, a shortage of truck drivers still presents a huge obstacle. Companies are struggling to find qualified operators who can pass drug and alcohol tests, and test negative for COVID-19. The federal law that now requires 50% of drivers to be randomly drug-tested this year has had a significant impact on the workforce. For those still on the road, job satisfaction is a critical factor. A recent survey indicated the average CDL driver only drives six to seven hours per day out of 11 allowable hours due to loading and unloading delays. Drivers say waiting for loads — not actually operating the truck — is their primary reason for job dissatisfaction and is forcing many out of the industry altogether. Freight forwarders continue to be agile partners in assisting shippers with changes in supply chain patterns and mitigating issues that could cause delays. The pandemic has underscored the need to continue a six-year effort to diversify supply chains to encompass a broader array of locations, rather than a single source or region of suppliers. This shift will require significant planning by forwarders for logistics and transportation alternatives, as companies move production out of China to diversify supply chain locations, thanks partially to the ongoing trade dispute and pandemic. A recent survey found that most big businesses claim they would invest more in domestic sourcing in response to new federal policies, creating a shift away from foreign production. While both major U.S. political parties differ in their approach to the issue, we can expect the next presidential administration to keep many of the existing tariffs in place for the foreseeable future, while proposing tax penalties for companies that move abroad. This effort to bring manufacturing back to the United States, or within the USMCA alliance, means forwarders need to start working now to establish more regional transportation options to maintain or increase the pace of delivery. However, in the short term, forwarders and the shippers they work with should be prepared to navigate the complexities of a home-based workforce, a shortage of available labor, sufficient warehousing space, and port delays due to a surge in imports. As the world emerges from the pandemic, airlines and airports will have to find common ground in successfully grappling with airport congestion. Several promising automation solutions are on the horizon, but they won’t have a successful impact on the market without ongoing and sustained communications between all stakeholders, including freight forwarders and cartage providers. While we maintain that experience is the best education, we as an industry can also draw on precise forecasting and relevant analytics to enable success despite the challenges we face today. As e-commerce proliferates and final-mile solutions demand that multiple carriers adapt on a regional and national basis, automation, collaboration and transparency across the industry will be essential. The ongoing pandemic has been tragic, but it has also taught us some critical lessons about the resilience of our industry. Staying ahead of the curve and meeting future demands in a continually changing market will prove the value of this education in the long run.

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