Originally posted by Katie Myers on SupplyChain247.
Coronavirus: A Freight Market Perspective
In the face of a slow economy and everything that goes with it, Kevin McMaster, Vice President of Carrier Sales and Operations at Flock Freight, expects shippers and carriers to bounce back from the coronavirus, just not immediately.
Coronavirus is an unpredictable event that has changed life as we knew it.
It has led to outcomes the likes of which we’ve never seen before in global freight markets, supply chains, and the United States trucking industry.
We sat down with Kevin McMaster to understand his perspective on how the pandemic may affect freight markets in the short term and long term.
How Do You Think The Freight Industry And Truck Drivers Will Be Affected In 2020?
McMaster: My thoughts are;
- The number of asset carriers that will cease operations in the near term may increase.
- The generally lower volumes we saw in the first quarter will be magnified.
- Volumes are projected to remain lower than in previous years because of non-essential businesses limiting production.
- Market spikes will occur as customers that suffered from the effects of coronavirus replenish inventories.
- Shippers may be driven to push low quantity purchase orders more frequently on freight volumes that, historically, filled truckload supply.
- Freight demand is anticipated to increase in the partial truckload and LTL sectors.
- The U.S. freight market could struggle to rebound, taking six months to stabilize.
Any Freight or Trucking Trends We Might See Once All Businesses Are Up and Running Again?
McMaster: Here’s the breakdown in my mind;
“Even with a slow economy, shippers and carriers will bounce back from the coronavirus, just not immediately” Kevin McMaster, Vice President of Carrier Sales and Operations at Flock Freight
- Higher freight volumes
- Lower quantities
- Increases in dropshipping
- Margin compression
- More competition
- Fewer players in the trucking industry
What’s Your Take On How The Coronavirus Will Impact Freight and Trucking Logistics In The Next Five, Then 10 Years?
McMaster: Besides the trends in the bulleted list above;
- Consumers will change their buying patterns.
- Shippers will continue building strategic relationships with trusted partners.
- The pandemic will affect truckers the most in the next 12 months.
- Companies will focus on achieving pre-crisis business results, then settle into the new normal thereafter.
- Companies will make more of an effort to create diverse supply chains.
- Smaller businesses with limited manufacturing options more than those with scale and flexibility will be hurt the most by the pandemic.
- Inefficiencies of the traditional freight brokerage have been brought to light.
- Providers that have invested in differentiating their products and technology are poised to gain confidence from the shipper and carrier communities.
Any Insights Trucking Companies Can Draw From Past Crises?
McMaster: We can find parallels in natural disasters and past economic downturns;
- The effects of coronavirus have been similar to those of natural disasters, but they’ve occurred on a global scale instead of regionally.
- Freight companies can look to prior economic slowdowns for clues about the industry outlook.
- A freight recession is possible.
- It’s hard to draw conclusions from past crises since multiple aspects of this emergency are unprecedented.
- Eventually, global economies will stabilize and the overall economic cycles will match what we’ve seen historically.
- We can see what this industry is truly made of: A network of providers that bring calm to our communities with the delivery of essential goods.
As with everything, we will get through this.