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Transportation’s Perfect Storm

Posted by Mike Pallo

While every logistics industry sector has been affected by the COVID-19 pandemic's shutdowns and economic downturn, transportation has felt exponential impacts due to preexisting volatility across the market. In the years before the pandemic, rate volatility, scarce capacity, and carriers leaving the industry due to bankruptcy were already serving as transportation management's biggest pain points. Combined with today's unpredictable, first-of-their-kind global disruptions, these trends have created what can only be described as the transportation industry's perfect storm.


Runaway Rates

Today's rising spot market rates continue to stack the deck in favor of carriers, keeping shippers' transportation managers on high alert as they work to secure reasonable prices for their loads. It had been a shipper's market for some time, but increases in nationwide product volumes and demand – amplified by shifts to eCommerce channels due to the pandemic – have dramatically increased spot prices and put carriers in the driver's seat, holding pricing power over shippers.

While spot markets typically offer shippers more flexibility to capitalize on preferable rates for a given day, looking to the spot markets without contracted rates can force shippers to lock in exorbitant prices. A 3PL partner like Kenco has access to advanced technology and databases – integrated into Kenco STARR, our transportation management systems (TMS) solution – unlocking tailored insights into preferable market rates based on individual load characteristics.


Rejected Tenders and Scarce Capacity

Gaining access to available capacity has arguably been a shipper's biggest concern during much of 2020. Suppliers increasingly moving products domestically to quickly respond to future market disruptions have increased demand and prices. As a result, shippers are simply trying to ensure adequate servicing to deliver their loads on time, often causing them to use more expensive modes.

Most shippers do not have the resources or time to spend searching for capacity, amplifying the need for added support so they can focus on delivering their products. Kenco's 70 years of managing logistics networks have netted us thousands of quality vetted contract carrier relationships, all centralized through our TMS – relationships no single shipper will have on their own – offering vast options for locking in the capacity needed to get the job done right and on time.


Reduced Capacity as Carriers Leave the Market

Having established relationships with multiple quality carriers can be an invaluable resource to shippers, particularly as countless carriers, big and small, shut their doors due to the pandemic and their inability to handle increased market demands.

Kenco's scale provides its shipper partners with unparalleled service levels from its carrier network. Our relationships operate on a national level with executives, rather than local account representatives. These local managers do great work in their territories, but the greatest benefits come from sourcing for a company's entire shipping network. We're able to elevate issues quickly while getting granular with carriers to not only ensure we have a pulse on the market but to provide deep visibility into our shippers' loads every step of the way. As big-box stores increase fines for late shipments to ensure they are meeting consumer demands, having reliable, communicative carriers delivering your goods can help you dramatically save on costs, not to mention protect your reputation.


In the words of Franklin D. Roosevelt, "a smooth sea never made a skilled sailor," and transportation's perfect storm requires a trusted captain who has seen them all. By leveraging a 3PL's scale, relationships, and technology, shippers can equip themselves with the tools and insights needed to compete in volatile markets. Click here to learn more about Kenco's comprehensive transportation services or to speak with a professional today.

Topics: Transportation
Mike Pallo

Written by Mike Pallo

Mike Pallo serves as the Vice President of Transportation Sales at Kenco.


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Kenco provides integrated logistics solutions that include distribution and fulfillment, comprehensive transportation management, material handling services, real estate management, and information technology—all engineered for Operational Excellence. 

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