The state of the worldwide supply chain reminds me of an old Air Force adage: “Flying is hours of interminable boredom punctuated by moments of terror.” We’ve witnessed as much over the last three years. Off-the-charts demand and decreased capacity generated by the COVID-19 pandemic is just a memory now (only leaving behind some gray hair), but of late, we’ve seen rates plummet and capacity rise.
At the same time, overall demand is down double-digits across the industry, and customers are rightly looking for normalcy in pricing and service.
But wait a minute! While international base rates came down, the cost of doing business domestically just keeps going up with fuel, labor, equipment and insurance costs driving higher expenses and creating margin pressure in a much lower-volume market. Add in the tension of an industry that has been consolidating for years, and new owners dealing with shrinking top lines, and a wildly challenging competitive landscape is the result.
Price negotiation can only take you so far, and with so many factors beyond our control, we will continue to rely on high-touch service, accurate data and constant communication as our guiding principles in our relationships with our customers and partners. Key to executing those principles with our customers involves listening and then offering innovative solutions that might change the dynamic a bit: suggesting alternative or mixed mode routings, leveraging opportunities at origin like consolidation or perhaps the Section 321 import program could change the overall math.
We can and do provide creative insight from boots on the ground in Asia and tested experience with our domestic teams. While chasing costs is important, the real victory is in having a formula that wins and having the confidence to know that the right solutions are in place for both the “boredom” and the “terror.”