Getting In Front Of the Capacity Crunch
Capacity. It’s a word that’s constantly on the minds of shippers. Is there enough capacity available to handle my freight? When will capacity become tight? What strategies can we implement now to prepare for a capacity shortage?
This past winter left shipments frozen in their tracks, and you didn’t have to be in the Midwest or Northeast to experience the effects. Companies everywhere were left scrambling to secure available capacity to move their backlog of freight and many were unable to receive and make deliveries on time. While things have gone back to normal since the Polar Vortex, shippers know that capacity will once again become tight and will impact their supply chains.
Between 2004 through 2008, we experienced a significant capacity crunch as the economic downturn drove many trucking companies out of business while a shortage remained of over-the-road (OTR) truck drivers. Some relief came from the housing recession, which decreased the amount of freight being moved around the country as well as allowed a small conversion of skilled workers to become drivers do to the lack of available work in the housing industry.
While there is currently an adequate amount of capacity to handle the amount of freight moving today, what must be realized is that weather disruptions or an uptick in the economy can quickly cause severe capacity shortages. Shippers must be proactive in implementing strategies that create an agile supply chain that can adapt to changes in the market and maintain efficient operations during future capacity shortages.
Here are a 5 tips to get ahead of the capacity crunch!
- Expand Your Mode Mix– Look to alternate modes for shipping, such as intermodal, as to not be so reliant on over-the-road (OTR) trucks. Enhancements in rail infrastructure in the eastern part of the U.S. has improved moving freight in that area of the country.
- Examine Your Supply Chain Network Design – Evaluate the locations of your distribution centers and other facilities in relation to each other, your suppliers and your customers to identify if changes should be made in order to optimize your supply chain network.
- Create Collaborative Shipping Partnerships – Look for opportunities to co-load freight with other shippers in order to share capacity and maximize the cube and weight utilization of a trailer or railcar, while also reducing transportation costs.
- Optimize Your Shipping Structures – Examine your products and how they’re shipped to identify areas for improvement, whether that’s changing how they’re loaded or redesigning your packaging in order to fit more product onto the trailer.
- Establish Carrier-Friendly Best Practices – By establishing carrier-friendly practices that promote driver efficiency and productivity, shippers can become a preferred shipper for carriers and be rewarded with capacity.
With all of the unpredictable factors that can impact transportation, capacity shortages are a matter of when, not if. What efforts have you taken to create an agile supply chain that can adapt to capacity challenges?
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