Carriers are grappling with unfavorable market shifts across the board. With prowess and the right partners, however, carriers can remain profitable — and even competitive — in a loosening market.
A carrier’s ability to thrive in a down market is affected by a number of factors. This includes things within a carrier’s control — size, level of service and relationships — as well as things outside a carrier’s control — fuel prices, labor trends and macroeconomic conditions.
“A loosening market can be particularly detrimental to small and mid sized carriers who often depend on spot freight to maximize the profitability of their business,” said Emerge Enterprise Sales Director Brian Honer. “With slowing demand, a soft spot market can lead to a rise in the number of small and mid sized carriers going out of business.”
Large assets are often seen as untouchable. They are, indeed, more likely to weather downturns because they have enough working capital to endure losses. While this scenario is certainly preferable to bankruptcy, simply being a large carrier is not enough to make a company profitable in a challenging environment.
Companies of all sizes can take similar steps to help themselves survive and thrive during a downturn. For most carriers, the secret lies in a combination of strong shipper relationships and advanced technology.
Fostering positive shipper-carrier relationships is work that should have started long before the market started shifting.
“In my experience, the most competitive and profitable carriers in a market like this are the ones who weren’t engaging in price gouging or taking advantage of their shippers prior to the market downturn,” Honer said. “Rather, it is the carriers who demonstrate value through a healthy balance of price and service who are able to endure.”
Shippers are often apt to look positively on carriers who treated them well when the market was not acting in their favor. Additionally, shippers should be willing to meet carriers in the middle when they understand that carrier bankruptcies ultimately hurt them and their own profitability as well. When carriers close their doors, shippers have access to fewer potential partners.
“Given the complexities of an enterprise shipper today and the volatility of market conditions, it is imperative that shippers have access to a wide assortment of providers, both large and small, so they can properly optimize their supply chains,” Honer said. “Technology is a growing asset to help both shippers and carriers navigate turbulent and uncertain market conditions, providing both shippers and carriers access to a wider market.”
When it comes to choosing a technology partner, carriers should prioritize tools that give them new ways to understand both their own data and what is happening in the market as a whole. When companies are armed with this type of information, they tend to make better, more advantageous choices about their operations moving forward.
“Carriers should leverage technology, big data and information to optimize their networks and drive efficiencies with their assets. The more efficiently they understand their network, as well as their costs, the more profitable they can become,” Honer said. “They should explore platforms and marketplaces that help them identify backhauls, healthy contract freight and the right type of freight that fills important gaps in their networks.”
Emerge can offer carriers the information and opportunities they need to keep their fleets up and running, no matter what is happening in the market.
“At our core, Emerge believes that we can empower meaningful logistics relationships in any and all market environments using transformative technology and AI,” Honer said. “Emerge was built to help both shippers and carriers alike optimize their businesses and remain flexible through evolving market conditions.”