2021 was a year full of uncertainty for everyone across the globe, but those uncertainties hit supply chains particularly hard. As we look forward to 2022, we’ve got to wonder how many more extremes the world will throw at the logistics industry. Is this the new normal or do we have something resembling the ‘old normal’ in store for this year?
1. Crazy Consumer Demand
The pandemic changed the way consumers spend their money. When experiences are out of the question due to lockdowns or the need to be cautious, consumer spending is bound to focus more on material goods. When you combine that with stimulus funding, the result was explosive consumer demand.
As we roll into 2022, demand in some sectors has peaked and is likely to begin a descent, albeit slowly, to more normal levels. However, industries like the automotive industry and some consumer electronics where supply chain issues have created shortages are likely to continue to see high demand.
Parade Tip: High levels of demand, though they can be stressful, present a wealth of business opportunities for brokerages. It’s the perfect time to start picking up business in new lanes, branching out your carrier network to accommodate freight in new areas, or even new types of freight altogether.
While many brokerages struggle to find capacity for their current workload, now is a great time to begin expanding out your network to cover new lanes. Seek out relationships with new shippers and dynamic carriers; then, begin building a rapport now so the opportunity to scale isn’t wasted. Employ tech tools like Parade to support the scale-up.
2. Labor Shortages
Labor shortages abounded in 2021 (and even pre-pandemic across the supply chain), and we’ll see more of the same in 2022. The issues that have caused the truck driver shortage are here to stay, with expectations being that the shortage will stay at about the same level or get even worse this year. Talent shortages for freight brokerages themselves and other parts of the supply chain will play a big role in the challenges brokerages will face in 2022, as well.
The bare fact is that trucking capacity will continue to be very tight throughout 2022. Freight brokerages and asset carriers will have to have some tricks up their sleeves to cover the loads they have coming in, and they’ll need a solid strategy and the tools to carry it out to grow in 2022.
Parade Tip: Digital freight matching will go a long way towards helping brokerages find the capacity they need to succeed in 2022. Platforms like Parade can help brokerages find new carrier partners and build relationships with new and current carriers alike.
Companies can turn to technology like AI and machine learning-enabled software to support carrier relationships and speed up the booking process can help brokerages scale their operations for the new year.
3. Rising Costs
The problems that have led to high transportation costs (high volume, port congestion, high fuel prices, inflation of equipment costs, etc.) aren’t going anywhere any time soon. While the wild rise in costs of the past of couple years is (hopefully) behind us, high transportation costs are still something they’ll have to contend with.
Based on most expert opinions, relief is in sight for logistics companies battling with high costs. However, that relief isn’t likely to kick in any time in the first couple quarters of 2022. The logistics market still needs time to recover from the wild swings of the pandemic, and new waves of Covid-19 make costs as unpredictable as ever.
Parade Tip: Once again, this tip is about network-building. By building a broader, deeper network of carriers, companies can give themselves room to negotiate load rates. By having more carriers vetted and approved for each of their shipping lanes, they’ve got a little more room to shop around.
This not only serves to help brokerages achieve higher margins but also to help shippers access better rates. Shippers are more likely to turn to brokerages who work hard to save them money, building rapport and loyalty with those shippers, and keeping rates acceptable for carrier partners.
4. Extreme Weather
Extreme weather events have been on the rise over the past 10-15 years. Countless severe weather events over the past few years have disrupted supply chains and shown us just how fragile they can be. We’ve seen wildfires, hurricanes, flooding, winter weather, and tornadoes impact
Already in 2022, we’ve seen the I-95 closure impacting transportation and disrupting supply chains, costing companies millions of dollars. All the science points to these extreme weather events being the new normal, leaving many companies seeking out solutions to avoid disruption.
Parade Tip: While the impacts of these weather events are difficult to plan for, some measures can be taken to mitigate the impacts and shore up supply chains in advance. Book loads ahead of time, fewer same-day ships mean you can avoid the weather a little and still get loads where they need to go on time
5. Ever-Changing Regulations Due to the Pandemic
Mask mandates, vaccine mandates, travel restrictions. All these things have made trucking more complicated. They make things more complicated for shippers, 3PLs, and carriers, too.
With case counts surging across the country and around the world, more relaxed pandemic rules are giving way to stern regulations that vary from one town to the next. When your job requires you to pass through multiple states in a day, it can make things complicated.
It’s important to keep in mind that people are sometimes very touchy regarding these regulations when they don’t agree with them. The last thing any brokerage needs to do is step on the toes of a carrier or driver that has strong feelings in this arena. It’s best if they can avoid these potential confrontations altogether.
Parade Tip: Smart rules can help you keep straight the rules in specific lanes and your carrier preferences surrounding where they’re okay going and where they’re not, plus you can exclude shippers or facilities that don’t work for specific carriers.
For instance, say you have a carrier who refuses to go to California due to the vaccine mandates there. No problem. You can exclude all loads to California so that carrier doesn’t even see them.
Wondering how Parade can help your freight brokerage navigate the challenges 2022 is sure to bring? Reach out to schedule a demo.