COVID-19-Induced Shipper Divide Affects the Future of the Supply Chain Industry
Due to COVID-19 shippers around the world have experienced one of two things, either massive growth or painful loss. A gap that was clear from the start of the pandemic, it is a dangerous split that has left many organizations struggling to adjust.
Let’s take a look at the shipper divide, exploring how it will impact the future of the supply chain industry.
Where is the divide?
It will most likely come with little surprise that the divide is between organizations and what they produce. For those experiencing growth, it is overwhelmingly in the goods industry like paper products, snacks, and supplies. For those experiencing downturn, it is those that produce furniture, clothing, and non-essential items. Unfortunately, for both sides, there is great danger in this split that comes when we look at the future of the supply chain.
What’s the future?
As the Journal of Commerce explains, “Each shipper camp is following distinct strategies as they navigate the recession and pandemic, the Council of Supply Chain Management Professionals (CSCMP) said. Those still growing are more likely to be ‘future-proofing for sustainability,’ while those seeing business shrink are interested in rapidly reducing short-term logistics costs. There is common ground: fear of an eventual capacity crunch once the recession ends.”
With both sides focused on survival, trends have shown more and more backlash in trucking rates. As shippers start re-bidding for lower rates to survive profit-loss in the short term, this can actually lead to higher rates in the future. As rate growth happens, and the economy goes back to normal, the next cycle for the supply chain could lead to many carriers going bankrupt.
Technology can help flatten the curve
Instead of a short-term focus, those in the industry should shift objectives to long-term management for the next cycle of supply chain rates. Experts urge that, “by launching sourcing programs to diversify your supply base, reevaluating your carrier and mode strategy, and optimizing your routing capabilities to get the most out of your resources,” shippers can better manage in the future. A huge undertaking, the use of technology to automate and digitize can make this possible.
To best manage the uncertainty and the divide, having a reliable partner to help you navigate the way is a must. ClearFreight is here to help. Contact us today!