Freight pricing continues to change across the globe. According to Darren Dodson of Material Handling & Logistics, the state of e-commerce will drive the majority of freight rate changes as more than 8.6 billion packages will make their way to U.S. customers in 2020. Traditional demands of the supply chain market, including increased visibility, better efficiency, and faster service, will also force the freight pricing 2020 trends into an upswing. However, the recent events surrounding the coronavirus and potential disruption to the supply chain will serve as a check to keep carriers competitive and help shippers maintain freight spend control. Let’s look at the risks that affect freight pricing 2020 trends, what they may mean, and shippers can stay proactive.
Numerous Risks Continue to Threaten the State of Global Freight Pricing
Global freight pricing 2020 trends indicate upcoming volatility in the market will continue. Although the United States is on the verge of a trade deal with China, uncertainty remains. Even assuming a trade deal is agreed to by both parties, it must still endure the grueling process of ratification by Congress. With 2020 being an election year, such ratification needs will likely further polarize the country. Moreover, the changing landscape of consumer demands will force supply chain leaders to rethink basic strategies and logistics ventures to combat the costs and effects of e-commerce. And, SKU proliferation will only continue still. Not all the risks can be listed in a single article, so supply chain leaders must start thinking about radically evolving their technology to meet the changing landscape and add value.
As explained by Mike Short via Logistics Viewpoints:
“Significant investment in technology and transportation platforms continue to accelerate across the industry. Beyond private equity groups, well-respected and established providers like C.H. Robinson are making investments that will reshape logistics. These growing technological investments will continue to create value across the supply chain.
While this opens new options for shippers and carriers alike, you may likely need to spend more time researching which technology option is the best fit for your own organization. After all, the right technology offers tailored, market-leading solutions that work for supply chain professionals and drive supply chain outcomes.”
2020 Strategic Freight Management Trends
Freight Pricing 2020 Trends Foreshadow a Rollercoaster of Changes
Freight pricing in 2020 will involve a return to data-based decision making and the need for a careful balance between both contracted and spot freight rates. These trends include:
- Shippers want more freight bill auditing and accounting processes.
- The cost of data management and application will push the freight pricing 2020 trends to the breaking point.
- Day-to-day data control will become king.
- Accuracy is the new gold-standard of freight pricing.
- The digital supply chain twin will become more mainstream and critical to success.
- Truckload contract rates were expected to rise mid-year, explained William B. Cassidy of JOC.com.
- Spot rates were starting to inch upward, pushing the market back in favor of carriers.
- Coronavirus and new threats will leave the freight pricing 2020 trends up to chance.
- E-commerce will continue its expansion into larger, bulky items, forcing more carriers to adapt and leverage multi-modal shipping to stay competitive.
The Impact of Freight Pricing Trends on Shippers
Now, on to the impact and mitigation strategies shippers can leverage to keep freight spend under control.
- The coming year will bring more visibility through more systems and implementations to boost transparency and traceability. Blockchain will also make a bigger splash in the supply chain this year.
- Price competition between carriers will increase, reports Material Handling and Logistics. Instead of shuddering more carriers, 2020 will see a resurgence of strong carriers capable of meeting demands, especially as more shippers leverage technology to stay proactive.
- Rising operations costs will force shippers to think about logistics strategies. Leveraging technology will not yet mean the full force implementation of robotics and drone delivery. However, these technologies will become more of a focal point for future growth. As a result, shippers will make the improvements needed to future-proof their organizations against them.
- The growth of the gig economy and value-added services, including white glove logistics, will enable faster, more efficient logistics. As the supply chain moves to focus more on last mile, the role of value-added services will rive more decision making and enable competitive advantage through better service.
- Service, not cost, will become the primary force among customers making purchasing decisions. While customers value a bargain, they are quickly becoming ready to spend more for better service and delivery.
- Customer service must now rely on data and facts, not assumptions. Period.
Future-Proof Your Organization With Freight Pricing-Adaptive Processes and Logistics Management Strategy
The freight pricing 2020 trends in the market will see an overall rollercoaster of rates. Spot rates will ebb and flow in response to coronavirus. LTL freight rates may decline as shippers look to tap the value of FT, but they will rebound as more shippers look to use consolidation strategies. It is an endless path of change, and with the right technology and strategy, your organization can and will stay competitive.