Town Hall Survey Shows Mixed Bag for Shipping CostsPosted on June 16, 2020
Recently, Inbound Logistics hosted a virtual Transportation Town Hall featuring leadership from several top technology companies, including Pierbridge, to discuss the impact of COVID-19 on the transportation industry.
Registrants received a survey before the Town Hall to not only guide the conversation, but to provide a more interactive and real-world view of what they are experiencing during this unprecedented time.
A variety of logistics professionals, from the management floor to the C-suite, responded to the survey. They also represented industries from retail to manufacturing to everything in-between. Basically, businesses that ship a lot.
While feedback was given on a range of topics revolving around shipping during the pandemic, one of the survey questions that shined a spotlight on real-world situations sparked a lively conversation: the impact of COVID-19 on transportation costs.
Results from the survey revealed wild swings between increases and decreases in transportation costs, but overall, respondents have seen an average increase of 2 percent.
“On average, those that responded showed growth of plus two percent change in transportation costs,” Scott Moore, VP of Marketing at Pierbridge, told attendees. “The swings were quite dramatic. There was a high of plus 76 percent at the high end of the increases and then decreases dropped as low as 60 percent for some people.”
Shipments of freight by less than truckload (LTL) and full truckload are certainly contributing to the downswing in costs.
“On the LTL and full truckload side, there was a huge decrease in spot market rates,” said Lance Healy, Chief Innovation Officer at Banyan Technology. “We kind of look at the industry as a perfect storm that hit. You’ve got a completely reduced demand and a lot of company shutdowns, so there’s some capacity on the road. Carriers that did take advantage of some of the disruptions and were agile in their pricing certainly fared better than those that were working on pricing that was more etched in stone in their annual contracts.”
While there was consensus that freight costs have decreased and may continue to do so, parcel shippers are seeing a significant upswing in costs, with more yet to come because parcel demand is way up. People are opting for more home deliveries during the COVID-19 crisis.
“As we get into the parcel piece, I think one of the things that is being laid bare is the importance of supply chains more so now than ever,” said Tim Leary, Director of Operations at ConnectShip. “What we’re seeing on the parcel side is what you’d expect for cost increases on labor, health, and safety costs, and expenses related to implementing additional protocols and processes in place.”
While parcels are continuing to flow, there is a divergence from what had been the norm.
“B2C parcel volumes are way up while B2B are way down, and certainly we see that trend on our Transtream shipping platform,” said Bob Malley, Managing Director of Pierbridge. “I’d only add that COVID-19 has just accelerated the types of volume trends that were already well underway over the last few years, which is creating cost pressures for carriers. Those costs will have to somehow be passed on to shippers and we are already seeing that in the form of COVID surcharges”
Watch the on-demand webinar for more about what we are seeing on the front lines, and the role technology will play in businesses overcoming issues arising from this crisis, including:
• The overall impact of COVID-19 on transport modes
• The shift of workforce to home and social distancing
• Impact to same-day local carrier delivery
• Impact on retail
• Carrier mobilization
• Transportation cost impact