Published July 13, 2021
Whether it’s the tight market of 2018, the COVID-19 pandemic, the upcoming wildfire season, or infrastructure incidents resulting from climate change or neglect, we all know that transportation plans are at the mercy of unpredictable events and capacity constraints of the market. In fact, supply chain professionals are more concerned about transportation disruptions in Q3 than at any time in the past five quarters.
How do you prepare for the unpredictable? Traditional annual RFPs can’t help you navigate through market volatility because they remain inflexible to meet your changing needs throughout the year. This is when you may be met with tender rejections that send you scrambling for coverage in the spot market.
Fortunately, the transportation industry has seen an influx of new technologies that offer an alternative to the existing annual RFP for truckload capacity. At Leaf Logistics, we are focused on taking a new approach to freight contracting to help you manage through the layer of uncertainty where your annual RFP falls short.
While the annual RFP functions well for the predictable layer of freight you need to move, it does not account for the swings in your capacity needs throughout the year that come from unexpected constraints. For example, the COVID-19 impact dramatically disrupted the food industry’s supply chain overnight, leading to surreal scenes like Idaho potato farmers destroying their crops by the million, even while one in six Americans struggled with food insecurity.
Meanwhile, as alcohol sales increased by a third over the previous year, the closure of bars and restaurants changed where and how alcohol was consumed. The demand for kegs quickly shifted to cans and bottles as people drank at home instead.
For large brewers, the supply chain for kegged beer is distinct from that of canned or bottled beer, so this change in consumption patterns forced beverage manufacturers to quickly revamp their distribution channels. This impacted their supply chains in a way that their RFPs did not account for, leaving many scrambling for coverage in the spot market.
For one beverage manufacturer, being tasked with delivering new volumes of beer in different lanes than they had accounted for in their annual RFP was only part of the challenge. The acute market capacity constraints at this time resulted in surging tender rejections and forced them to pay premium prices for coverage in the spot market.
Recognizing that they needed a new adaptable transportation planning option beyond their existing backup guide and the spot market, the manufacturer worked with Leaf Logistics to meet the unexpected new demand. Leaf worked with the manufacturer to secure guaranteed coverage to meet the new demand across new lanes. Leaf Flex committed contracts allowed them to lock in favorable rates for months at a time with 100% tender acceptance. This allowed the beverage manufacturer to meet the surging consumer demand at grocery outlets while avoiding the wild fluctuations of the spot market.
For this manufacturer, Leaf Flex committed contracts offered the peace of mind of dedicated assets without the typical long-term commitment. And that’s just one of the ways that shippers can leverage Leaf’s data-based solutions to insulate against market shifts by implementing an adaptable, data-driven approach. That way when the next unexpected market shift happens, you’ll be prepared to adapt.
Want to learn more about adaptable transportation planning? Download the Leaf white paper.