Pandemic creates peaks and valleys of demand, transportation execs say

Article written by Ben Ames

Echo Global, BluJay say freight networks must adjust to thrive-or-survive conditions.
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The coronavirus pandemic may have hamstrung the nation’s economy, but as opposed to imposing a unilateral recession, its impact has created broad imbalances in freight capacity, transportation sector leaders say.
Even as some sectors are nearly idled by travel restrictions and social distancing—such as tourism, movie theaters, and restaurants—other businesses have seen steep spikes in demand, such as those providing e-commerce, beer and wine, and hygiene products.
As a result, some freight companies are enjoying steady demand and are even increasing their investment in new tractor-trailer trucks, even as industry groups like the National Retail Federation (NRF) warn of looming drop-offs in consumer activity.
“Certain industries have literally shut down and others are booming,” Doug Waggoner, the chairman and CEO of freight broker and third-party logistics provider (3PL) Echo Global Logistics, said. “But right now we’re seeing a resupply bubble, because a lot of small companies were shut down in April, and now they have opened up in the last couple months and their suppliers have opened up.”
For example, inventory is currently low across the food and beverage and the industrial sectors, so businesses are working to stock up again using support from the $2.2 trillion federal stimulus bill called the CARES Act, an acronym for Coronavirus Aid, Relief, and Economic Security.
“Carriers, manufacturers, and shippers seem to be pretty healthy, in part because there’s been a lot of stimulus money pumped in to the economy,” Waggoner said. “The freight economy feels pretty good right now, and we’re hoping it maintains. It may be hard to understand because of everything going on with the pandemic, but the fact of the matter is that freight is moving.”
That uneven distribution has even triggered shortages of capacity in certain areas because networks are out of balance, and many trucks and transportation assets aren’t where they’re “supposed to be” during typical trade patterns, he said. To compensate, Echo has made recent investments in its network, such as obtaining three new ISO certifications and expanding its use of technology to match available truck drivers with loads, including the company’s EchoDrive and EchoShip products, the company says.
The supply chain software provider BluJay Solutions offers a similar assessment of the Covid-era transportation market. “Everybody’s buying everything online now,” Chris Timmer, BluJay’s chief revenue officer, said. “So some components of the marketplace are just looking for survival, at the same time that some components of the marketplace are looking for greater scale.”
For example, businesses in the 3PL sector and the food and beverage industry are “thriving” right now as they see demand for inventory volumes go “through the roof,” Timmer said. To handle those bursts of demand and to prepare for a broader recovery in the long term, BluJay has also made recent technology investments, announcing partnerships with the payment platform TriumphPayrailroad logistics management company Raven, and third-party parcel shipping and LTL solutions NMB.
Providing further metrics on the boom and bust cycles that have whipsawed the market in recent weeks, BluJay cited its “Freight Market Index” report. Each edition compiles key performance indicators (KPIs) from the $18 billion in annualized freight under management transacting within BluJay’s Global Trade Network. The report’s July edition showed that freight volumes initially spiked, then dropped significantly under the impact of Covid-19. Next, fuel prices and consumption rebounded quickly as social restrictions eased in June, leading to a jump in spot market rates and hints of a pending capacity shortage, even as the nation approaches the holiday peak shopping season in November.
Likewise, several other sectors of the transportation economy say they have seen similar challenges in coping with the feast-or-famine impact of the pandemic. Negative signals flashed brightly in the past week when the shipping consulting firm Drewry forecast that container port capacity-expansion plans could contract at least 40% over the next five years and when the International Air Transport Assn. predicted that air passenger traffic may not return to pre-Covid-19 levels until 2024.
However, other transportation groups have reported positive results in the same period, including Ohio’s regional Rickenbacker airport setting June records for freight volumes thanks to a surge in personal protection equipment (PPE) imports and the Logistics Manager’s Index (LMI) reporting a steady climb in its growth ratings for July since sinking to an all-time low in April.
Editor’s note: This article was revised on August 7 to include more information from BluJay.

Original Source: https://www.dcvelocity.com/articles/46750-pandemic-creates-peaks-and-valleys-of-demand-transportation-execs-say

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