Pandemic Effects on the Supply Chain—and How to Make a Difference
Estimated reading time: 3 minutes
COVID-19 continues to bear down on carriers, shippers, and retailers, with repercussions that seem to grow by the day. Despite relief efforts by the government, private lenders, and individuals, businesses across the supply chain are struggling. As we move into the next phase of the pandemic, businesses are beginning to re-open, but how that will play out remains one of the biggest questions of all. For now, shippers, carriers, and individuals can make a difference by taking steps to help businesses survive.
Across the country, fleet managers, dispatchers, and drivers are working longer hours to keep the supply chain moving. Some have hailed truck drivers as heroes for going above and beyond to keep food and critical medical supplies moving through the supply chain, moving in and out of “hot spots” with high rates of COVID-19 infection. Because some owner-operators have limited or no access to personal protective equipment (PPE) and testing, these drivers are understandably concerned about risks to their health (CNBC).
Other small carriers that normally transport goods such as restaurant supplies have struggled to find work. Freight volumes are down overall, putting downward pressure on rates. By early April, available loads decreased by nearly 38 percent and trucks seeking loads rose by 12.7 percent (Forbes).
For drivers who do have work, long dwell times are destroying profits. Drivers report waiting several hours on both the pickup and delivery sides. Some of the wait is due to COVID-19 requirements, including temperature checks and completing forms, as well as labor shortfalls due to COVID-19 illness. But much of the problem stems from a lack of efficiency and collaboration efforts from some shippers, who are less motivated to work with carriers when tender rejection rates drop (FreightWaves).
To address these issues, shippers and brokers can make a difference in the following ways:
- Pay fair market prices to help keep small carriers in business.
- Keep drivers moving to reduce dwell time and carrier expenses. When truckers are not moving, they are not earning.
- Offer drivers safe places to park to build rapport with drivers who struggle to find available spots.
- Donate PPE and hand sanitizer to protect drivers on the road.
- Pay quickly to help carriers maintain healthy cash flow. Learn about Capstone’s one-day carrier payment program, QuickPay+ , which enables carriers to receive payments based on invoiced earnings in just 24 hours and without fees.
Working to become a more desirable shipper now will help keep reliable carriers in your corner when the capacity market shifts.
Foodservice distribution is driven by expected, consistent demand for products from restaurants, schools, hospitals, and other large institutions. But this demand has dramatically decreased during the pandemic, dropping by 23 percent in the week ending May 10. The International Foodservice Distributors Association (IFDA) has estimated that the foodservice industry will suffer $24 billion in losses the second quarter of 2020, and many companies will go out of business. If restaurants close, the effects will ripple quickly through the supply chain, affecting distributors and shippers too.
To combat this problem and make a difference, shippers, drivers, and consumers alike can support local restaurants by ordering delivery and takeout meals. .
Demand for essential goods remains high across the U.S., but demand is weaker for niche retailers. Overall, demand for general merchandise declined by 2 percent year-over-year. With soaring unemployment and continued uncertainty, people are making fewer luxury purchases. It’s likely that several retailers will close their doors in the coming months. Others will face challenges due to already thin margins and operating models that don’t easily translate to e-commerce or social distancing requirements.
Online shopping will continue to grow, but consumers can play a key role in keeping brick-and-mortar retailers in business. As brick-and-mortar stores re-open, consumers should respect COVID-19 in-store policies, such as wearing masks, physical distancing, and exclusive hours for seniors and other high-risk individuals. Shopping at local and small businesses, as well as those that sell non-essential goods when possible, can also make a difference.
Looking to the Future
As the Coronavirus pandemic continues to force change upon the entire supply chain, shippers, carriers, and individuals can adjust to improve the situation. And taking steps now will continue to make a difference long after the pandemic is a memory.
Need expert support during the COVID-19 pandemic? Capstone is uniquely positioned to help shippers shorten dwell times, improve supply chain efficiency, and reduce costs. Contact us to learn more.