There are three areas that are impacting our client’s business that we will be focused on in 2018: truck capacity; the instability in the ocean freight market; and exceeding the On-Time, In-Full (OTIF) policies with retailers.
Demand for over-the-road trucks is high and capacity is very tight. We see this continuing well into 2018, with carriers having to comply with the new electronic logging device (ELD) regulations, an aging driver workforce, and strong economic fundamentals. Carriers will need higher rates to attract and retain drivers and invest in equipment.
The ocean freight market remains unstable and the rates volatile. The impact of the newly formed alliances is still not entirely known, but we can expect to see continued sailing schedule changes and more rate changes as carriers try to reach desired levels of profitability. Carrier consolidation continues and makes locking in long-term rates a real challenge for shippers. To mitigate risk, we have contracted with numerous carriers across the alliances and have both fixed and variable rates.
In our retail consolidation business, we are hyper-focused on the retailers’ tightened On-Time, In-Full requirements. OTIF means that all products ordered must arrive correctly and completely, on the must-arrive-by-date. This also means that even early shipments are considered noncomplaint, along with improperly packed or missing items.
To meet these new requirements, it starts with good planning, requires consistent execution, and continues with ongoing analysis of performance to identify areas for improvement and avoid unnecessary costs or penalties. Suppliers will also need to closely evaluate the carriers and logistics providers they partner with to make sure they have a proven on-time performance and the experience delivering to/working with the retailer.