What do you think will be in store for dedicated transportation in 2021?
Until people return to the majority of their workplaces and travel opens up and a vaccine is distributed, we believe the first two quarters of 2021 will look very similar to the Q3 and Q4 that we had in 2020. I think by the middle of next year, if vaccine distribution becomes more realistic, we could hopefully see a much wider opening of activity and a lot of businesses returning to normal. We in the supply chain industry don’t necessarily have the luxury of sitting out and just waiting.
What will transportation capacity look like in 2021?
With the backlog of global imports, there is just right now a delayed catch up going on in the global supply chain. So as imports finally level out in Q1, and we continue to get through this chassis shortage that’s occurring across the country, as inventories get off of containers and get into warehouses, we believe that there will be a more even flow of goods out in the market. That will level off transportation a little bit as well. There’s a shortage of capacity and this higher one-way rate market is obviously driving a lot of change in a dedicated freight market. So at this point, moving into Q3 and Q4 when capacity typically gets tight, we’re going to expect that to blend all the way through. 2021 will definitely be a tight freight market, it will definitely be an expensive freight market, and we will continue to try to support the needs of our customers as their volume requirements remain pretty uncertain going into next year.
What advice would you give shippers in 2021?
My advice to shippers would be to lock in capacity. It’s too uncertain, it’s getting more and more expensive, and just when we think that it has capped, it’s not. I would tell shippers to get that steady equipment underneath your goods so those customer demands are met. I would tell shippers to provide what level of flexibility they can for the future. But at this point, if we’re expecting the next 12 months to be fairly consistent and a tight freight market, I would suggest that they lock in that capacity, both in transportation, as well as warehousing services, and prepare for the immediate near future.
How do you think shippers will adjust their networks in 2021?
The question will become, “do I have enough inventory?” And then, “do I have enough inventory in the right locations so that trailer, that tractor, that driver can make that delivery within what’s required?” I think there’s going to be a lot of network rationalization going on in the market. We as consumers are going to have to decide, “did we still want to order today and deliver today or deliver tomorrow?” We as consumers may be a little bit more patient to wait for two-day delivery if it’s going to come at a cheaper cost. I think that this is going to require a whole lot of disruption in the market. And some products, some verticals, may require a better service than others, so that may never change, but I think the world has changed as we know it. Not only did we find a way not to travel and talk virtually, but all of a sudden found a way to be more patient, be more productive in some ways, and work from home in some cases versus going to our offices. So I think many things have changed and there’s no doubt that transportation will change, too.
How do you think driver demand will impact the dedicated transportation industry in 2021?
I think that the shortage in truck drivers will continue to exist. I think that we as carriers will have to compensate with higher wages, a better quality of life, continuing to follow through with our marketing plan at NFI. This is why we converted to a dedicated fleet environment. Majority of our drivers are home every night. We continue to try to provide some of the most competitive benefits in the industry that we can, and we try to provide consistent work for our drivers running same business, same lane, same operations. We believe we have the best drivers. I think by recruiting new drivers, we will have to do our part as a carrier to make those positions more attractive to the labor pool out in the market. As we operate 4,000 tractors today, we look forward to doubling the size of that division as well in the future, and that’s going to need a lot of drivers.
How can NFI help shippers in 2021?
I think being proactive in our customer engagement, offering solutions to their biggest headaches or their biggest worries. I think NFI coming to the table with innovation is something that is going to be helpful to our customers. Talking about where the market is today and where it’s going, being honest with those shippers and not being shy about putting those suggestions out there, telling them what they could do better. I think having that proactive type of honest relationship is where we are at our best, where our approach is most strategic.
What impact will the new administration have on the transportation industry?
Once the new administration is in office, regardless of which side of that argument you’re on, I think that as the new administration takes their place and we know that there’s a consistent four years in place before the next election, some of this uncertainty will go away. The vaccine will be distributed and I think we’ll see shippers start to be able to be more predictive about what their consumer demand will look like, which has a direct impact on us as a carrier. We need consumers placing orders so that way we have something to deliver.
How will cross-border transportation evolve in 2021?
Manufacturing continues to move to this hemisphere. So it’s not that there’s going to be an elimination of goods being manufactured in Southeast Asia, but there is no doubt that products in manufacturing will continue to grow south of the U.S., and NFI plays a major role in that cross-border Mexico transportation. There are many goods shipping north. This segment of our business, which joined the division when we acquired G&P, is a strategic service offering from NFI and we’ll continue to look to grow it.
What are you most excited for in 2021?
I think what I’m most excited about is during periods of time where capacity is tight and one way rates are high, it provides us an opportunity to grow the dedicated fleet business. I think that it forces customers to start to put more value on service because they know that they need to get it there and they can’t just call anybody at any time and hope that there’s a trailer available. I’m most optimistic about 2021, because 2020 was a record-breaking year for us selling dedicated fleet services. I’m excited that we were able to repeat that next year, and I’m pretty excited about the level of services that NFI continues to sell on the market. It really allows us to grow in a meaningful way. Providing three or four solutions for our top 25 customers is a way that NFI continues to grow, but also double the size of its business in the next 10 years.
bJoining the company in 2001, Bill Mahoney is the EVP, Chief Commercial Officer at NFI. He helps to design comprehensive supply chain solutions for existing and prospective customers.