We sat down with David Hoppens, Vice President of Sales and Marketing; Becky Scott, Director Key Accounts; and Eric Morton, Key Account Manager at Momentum Transportation to look back on the roller coaster of the last two years and get their predictions for what they think will be important for transportation and logistics in the coming year, 2022.
Key insights from 2020-2021
Perhaps nothing was more unexpected than 2021’s roaring economy emerging from the tragedy and challenges of a global pandemic in 2020. Becky Scott says, “It was clear that in difficult and turbulent times, supply chain and transportation are essential services. It’s important to have a diversified supply chain, especially with key vendors and products sourced overseas.”
One of the major takeaways was the vital nature of carrier-supplier relationships. Companies like Momentum, who have invested in building these relationships over many years, saw that it had a real impact when the pandemic hit. Eric Morton explains, “The mutual respect and trust that had been cultivated over the long-term resulted in top service and preferred capacity during the supply chain capacity shortage. Companies without those relationships struggled.”
Nowhere was the impact of the driver shortage clearer. “I believe that this crisis really highlighted the importance of drivers, from recruiting to showing them our appreciation—we can’t keep our country supplied with the everyday necessities without them,” Morton tells us.
Looking ahead to 2022
We asked our experts to look into their crystal balls and predict what we’ll look back on as the biggest trend or lesson from the coming year. David Hoppens replies that the whole “new normal” of COVID-19 will continue and even expand. “We’re getting used to managing vaccines, mandates and masks. I would expect more variants are coming, so I don’t see the work from home trend, which has driven the increase in consumer demand, going away anytime soon.”
Managing day-to-day business operations during a pandemic spurs ongoing change as well—applying lessons learned from the pandemic and finding new ways to rebound. Scott lists a few of these lessons, “I think shippers will focus on better planning. One way is to focus on improving load consolidation to help reduce capacity requirements. This entire situation is pushing transportation companies to be more technologically advanced and offer a wider array of services. Momentum has always used technology to ensure the highest levels of efficiency.” Hoppens adds, “I also see manufacturers beginning to distribute their relationships across more suppliers to reduce risk. Their emphasis is going to shift to regional suppliers and North America transportation networks versus a high reliance on international suppliers.”
Labor and capacity challenges aren’t over yet
In 2021, we ended the year with an industry-wide labor shortage in every aspect of logistics, not to mention other market conditions leading to widespread supply chain disruptions. All three of our experts agree that qualified labor will continue to be a challenge. Hiring will continue to be an issue, particularly for jobs that have no work from home option such as drivers and dock workers. “Employees are no longer limited by their location—they can look more widely for jobs than in the past,” says Hoppens. He explains, “Certainly, at least through mid-year it will remain a driver’s market. And the labor shortage pressure will extend to operational personnel who support our drivers, and who work best and most efficiently in an office environment.”
The correlation between labor shortages and capacity cannot be ignored. “We’ve already seen labor cost increases. These will continue to drive overall transportation costs higher and cause lingering capacity shortages,” explains Morton, “One new challenge for capacity is future Covid variations—and whether we can contain them. I don’t see that letting up until Q3 at the earliest, but it is likely to be early 2023. If Covid continues to flare, particularly overseas, and vessels are delayed, there will continue to be disruptions.”
There are indicators to look for that will indicate if capacity shortages are easing. Morton lists a few, “When the rental trailer market softens and prices go down, more balanced truck-to-load ratios, decreasing truck utilization percentages—these are some of the things Momentum is keeping a close eye on.”
Scott adds, “It’s not completely intuitive, but production must decrease slightly. If there are stored commodities waiting to be shipped, like steel for example, it’s a drivers’ market. They have a built-in incentive to take the higher paying commodities that people are desperate for—and that drives prices up.”
Momentum Transportation — addressing today’s challenges, planning for tomorrow’s success
In response to the unprecedented shortage of labor and capacity, Momentum is taking a multi-pronged approach to helping customers navigate it successfully. One critical strategy is to invest in developing our leaders internally. “We’re putting even more emphasis on training and leadership development, as well as building an excellent work environment. We believe in building a culture that attracts and retains happy team members for the long term,” says Hoppens.
Scott brings up an important aspect of that culture. “Driving efficiency through project management allows us to take work off our customers’ plates. We give them time back to focus on their customers and job requirements—that is a real value add.” Morton agrees and adds, “I think open, ongoing communication and visibility is one of the most important ways we address our customer needs—whether that is daily communication, project management, or the ability to see everything they need through our customer portal.”
Looking ahead and planning for what’s next is a major part of the value Momentum delivers. Hoppens says, “Strategic planning is core to our business. We are constantly planning and forecasting for future projects. That level of expertise ensures we can lock in capacity as soon as possible, so we can avoid market-driven or spot rates. We coordinate with our clients’ vendors and suppliers in advance and advise them on what we recommend.”
Looking ahead to a bright future for transportation and logistics
Despite the chaos that the world has been faced with, Momentum continues to plan for the road ahead. We asked our experts to share what they want to accomplish this year. “My first priority is to hire strong talent across all departments—employees who are interested in reaching long-term goals and are committed to service,” says Hoppens.
Scott adds, “For 2022, we are keenly focused on adding even more cutting-edge technology, tools and processes that will significantly increase customer productivity and service reliability. We work with some of the most technical companies in the world. We strongly believe that in the current business environment, the right technology can have a huge impact.”
“What’s more, we see our business growing by leaps and bounds in some key areas where we have real strengths, like heavy haul, mission critical truckload, as well as international,” says Scott, “We think we bring a lot of value to the table for customers needing these services.”
Conclusion
In summary, Momentum experts acknowledge the challenges, but believe these can be overcome by addressing three key points:
- Plan ahead. The current market is not conducive or kind to last minute decision-making. If you don’t consistently look and plan for what is coming, you will either pay a much higher price or be left to make do with the limited capacity that remains after others have picked over it.
- Make your loads attractive. Carriers and drivers can pick and choose their freight so, to get the best, pay a price in line with the current market. Take care of the things that make their lives easier and more comfortable. Ensure your shippers and receivers can load and unload in a timely fashion—and create a driver-friendly site that has a clean, well-stocked driver lounge or waiting area, as well as clean bathrooms.
- Build trust with your supply chain partners. Invest the time and effort to communicate effectively. In a volatile, ever-changing environment, it is more important than ever to collaborate and share ideas and knowledge to build a true partnership with all of your supply chain partners.
Happy New Year and we hope you have a healthy and prosperous 2022!