As the Transportation Industry Struggles, Shippers Turn to Diversification

The recent UPS/Yellow/Teamsters agreement served as a wake-up call for shippers reliant on a single carrier - they narrowly sidestepped disaster and are acutely aware of it. This near-miss underscores the danger of carrier reliance and issues an urgent call to action - diversify or risk severe disruption. It harkens back to the 1997 UPS strike, a grim reminder of how labor disputes can create supply chain chaos. If a similar event occurred today, it would wreak a staggering $7 billion worth of economic damage. This narrowly averted crisis, compounded by ongoing transportation challenges, should serve as a crucial alert to an industry beset with its own demons. 

The Need for Diversification is Clear

The freight and shipping industry's challenges highlight the crucial need for carrier diversification. Retailers particularly must acknowledge the risks of single-carrier reliance, a lesson underscored by recent turmoil at UPS and Yellow Corporation.

The Hypothetical Consequences of a UPS and Yellow Strike

The threatened strike involving 362,000 combined UPS and Yellow drivers would have catastrophically disrupted the US supply chain. If these critical carriers, UPS - the country's largest delivery firm, and Yellow - holding 10% of the national less-than-truckload volume, had gone on strike, shippers would have faced soaring costs, delays, delivery disruptions, and a frantic search for scarce alternatives in an already strained economy and supply chain.

Too Little Too Late: Yellow’s Shutdown  

Narrowly avoiding the strike was nothing but a band-aid for carriers like Yellow. Yellow faced bankruptcy risks for months as its $100 million cash reserves dwindled amid warnings of imminent insolvency. As it desperately pleaded for lender leniency and significant clients like Walmart and Home Depot abandoned it, it was too much for the company to overcome. Despite its nearly century-long track record and 30,000-person workforce, Yellow ended up abruptly ceasing its operations, further straining an already uncertain supply chain. So ask yourself amidst this crisis- is the risk of single sourcing worth it?

The Hidden Dangers of Single-Sourcing Carriers

Relying solely on one carrier is a high-risk dice roll, leaving you vulnerable to potentially devastating challenges. Consider the following:  

  • Skyrocketing Price Fluctuations: Without competition, a sole carrier can lead to surges in shipping costs. In the post-pandemic era, these leaps accounted for up to 5.87% of annual import price inflation.
  • Limited Geographic Coverage: Single carriers often have limited reach, prolonging deliveries and even making some regions inaccessible. Diversified shipping strategies have proven more cost-effective, saving customers 36% in total.
  • Unpredictable Service Interruptions: A single logistical mishap, like those experienced during the COVID-19 pandemic, can disrupt entire supply chains, causing significant delays. It doesn’t matter whether it’s a strike, technical issue, or global event.
  • Concentrated Risk: Single-carrier dependency escalates risk. Imagine your sole carrier fails to match the forecasted 7.5% rise in global container fleet capacity - the disruption to your operations could be substantial. 

As Carrier Chaos Consumes the Industry, A Diverse Carrier Network Ensures Optimized Operations

In the chaotic seas of carrier uncertainty, employing a diverse network of providers fuels operational optimization through the following key benefits:

Bolster Resilience

Amidst today's challenges, supply chain executives are turning to carrier network diversification to bolster resilience. A striking 76% of them, as per a Gartner survey, experience more disruptions now than they did three years ago. By utilizing multiple carriers, they rapidly offset disruptions, ensuring continuous service amidst global supply chain complexities.

Extended Coverage

Employing a diverse carrier network ensures comprehensive geographic coverage and secures your supply chain against region-specific disruptions. By tapping into the distinct strengths of various carriers - from regional LTLs known for their dense networks to multi-regional LTLs servicing expansive areas - shipments remain on schedule, undeterred by potential hurdles.

Capacity Management

As we gear up for peak season 2023 amidst trends like rising e-commerce growth and ongoing carrier complexities, the importance of robust capacity management is undeniable. Harnessing a diverse carrier network meets escalating capacity needs, navigates transportation constraints, and ensures supply chain resilience amid economic uncertainties and persistent inflation

Business Continuity

Unforeseen events can disrupt business operations, from pandemics to natural disasters to strikes. The antidote? A diversified carrier network. Businesses can ensure continuity by reducing reliance on single carriers and managing capacity constraints. Given the lessons from the pandemic, such as port congestion and capacity shortages, having proactive contingency plans involving multiple carriers is crucial for maintaining operations despite significant upheavals.

3 Strategies for Building an Effective Carrier Network

It’s clear that today’s shippers need a diverse carrier network, but building one is easier said than done. Here are three strategies you can look at to do so:

1) Prioritize Visibility

Prioritizing visibility breathes life into an effective carrier network. With real-time tracking, you stay in control and unearth strategic insights across carriers. Think of it as the engine powering proactive decision-making and the anchor for a robust, responsive carrier network.

2) Optimize, Optimize, Optimize

Building an effective carrier network hinges on logistics network optimization. Guided by data-driven insights, strategic network design can enhance customer experience and reduce transportation costs by 12-18% in some cases.  

3) Take the Pain out of Payment

Lastly, the union of secure payments and carrier diversification helps build a successful carrier network. Streamlined, secure payments simplify operational complexities, ensuring smooth transactions, while carrier diversification diminishes risk and enhances network resilience. This combination simplifies the payment process, fostering efficient freight audit and payment best practices.

Fostering Carrier Diversification with Intelligent Audit

The recent crisis with UPS, Yellow, and the Teamsters highlighted the stark perils of carrier reliance. Amidst the industry’s turbulence, it has become crystal clear that carrier diversification is a non-negotiable necessity for sustainable operations.

Intelligent Audit, one of the market’s top freight audit service providers, offers solutions tailored for resilience in volatile environments. Advocating for diverse carrier networks and prioritizing visibility provides businesses with vital tools for success. By streamlining complex payment processes and promoting best practices, Intelligent Audit optimizes logistics networks, ensuring seamless operations. 

Don't get blindsided by carrier chaos. Equip yourself with Intelligent Audit’s services, foster an efficient carrier network, and secure your operations against unforeseen disruptions. Begin the process with Intelligent Audit today.

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