Carriers must diversify product to survive the impact of COVID-19

Article written by Corrie White

The convulsions that COVID-19 has sent through the economy and supply chain have made it imperative for carriers to diversify their customer base, shed weak areas of their business and adapt to changing retailer behavior.

“What COVID-19 is doing is stress testing by default every country’s supply chain and every company supply chain. And some of them are failing because of that stress test. Out of the many companies hauling during this time, even in refrigeration, some have survived and some have not,” said Norm Thomas, senior executive of industry relations at Powerfleet.

(SONAR Tickers: ROTRI.USA, RESLG.FBEV) – Refrigerated tender rejections spiked with the pull forward of retail sales for Food and beverages in March 2020 but have since subsided.

So how do carriers pivot? According to Thomas, coming out of COVID-19, fleets need to take a look at their freight mix and whether they’re hauling the right, essential portfolio of product should another coronavirus shutdown occur. For example, certain fleets are idle because their last-mile delivery for food service to restaurants has stopped.

On May 5, during the FreightWaves LIVE @HOME event, FreightWaves CEO Craig Fuller discussed post-COVID-19 business strategies with Peter Rentschler, the CEO of CarrierDirect, a consulting and technology delivery firm for the transportation industry that serves carriers, freight brokers, shippers, distributors and technology companies. “COVID-19 has put a spotlight on the businesses that are architected to move quickly and make fast decisions,” said Rentschler.

Looking back to before the e-commerce boom, fleets focused their services singularly on long-haul, intermodal or short-haul LTL, for example, but as online shopping incited greater consumer demand for same-day or next-day delivery, the carriers had to pivot toward that last-mile need.

(SONAR Ticker: RESLG.NSTR) – Nonstore retailer sales increased by nearly 10% in March 2020 on a year-over-year basis. 

Just as e-commerce forced trucking fleets to diversify their fleet types, COVID-19 will force them to diversify their customer base, making sure a good proportion of their freight is deemed essential. If a sector or industry goes down due to COVID-19 and a carrier hasn’t diversified, that carrier might be following it.

A telematics company like Powerfleet can benefit a carrier as an external consultant, helping them get equipment moving by servicing customers who need additional truck capacity and don’t currently have it. Some carriers with high demand don’t have the assets to pick product up. And some customers have assets that don’t have a way to connect with the product.

“For one of PowerFleet’s ELD in-cab system customers, 99% of their business was in the restaurant industry,” said Thomas. “All of that stopped when the state started shutting down the restaurants. We were able to identify two or three customers that were essential goods customers that needed additional capacity, and were able to connect these two customers together. For owner-operators that have data actively feeding into this in-cab ELD system, they are able to go from customer to customer and utilize this middle ground to exchange data.”

(SONAR Ticker: RESLG.FSDP) – Total retail sales for food service and drinking places decreased over 20% year-over-year during March 2020.

Carriers may have to prepare for yet another shift in retailer behavior. While large retailers have grown accustomed to dedicated fleet relationships with one hauler, these same retailers now with COVID-19 see that lack of command and control over drivers and fleets as a risk.

“You are starting to see some of those companies seriously consider creating their own fleet and buying trailers and tractors so they can have control over their supply chain,” said Thomas. “In the retail and big box space, you start to realize that you’re as much or more in the logistics business than you are in retail.”

Since the e-commerce boom, trucking companies have had to take a closer look at consumer behavior. With COVID-19, they can see an unprecedented increase in online shopping and grocery delivery. No longer is this consumer choice only about convenience; it’s about health and safety. Carriers must diversify their services by depending on third-party visibility, whether through technology or industry expertise.

Original Source:

Scroll to Top