K-RATIO MARKETS NEWSLETTER | MARCH 2020

Welcome back to marKets, K-Ratio’s monthly, “State of Freight”, newsletter. K-Ratio provides market research, strategy, business intelligence, and risk management services inside of the freight industry. In last month’s edition, we took a glance at holiday market conditions with a peek ahead at 2020. If you did not receive last month’s marKets update or would like more information regarding K-Ratio, please reach out to your main point of contact. This month, we’ll see if the first month can tell us anything about what remains for the new year.

ARE YOU PREPARED?

You need to adapt. You, individually, and your business, collectively, need to change the way you’re conducting yourselves and you need to do this swiftly. If you do not, and this warning comes with no disrespect, you will be reading this newsletter for personal pleasure and not business, very soon.

The freight market has its own characteristics but it’s still an industry of business which means the same rules and principles hold true as they do across all types of businesses: supply and demand, profit and loss, revenues and expenses, to name a few. One aspect of business adaptation in particular, however, will completely change this industry and that change has already begun: optimization.

That can be a wide-ranging and vague term, so we’ll get specific. In freight, optimization most commonly occurs by way of automation of tasks, reduction of redundancies, and increased efficiencies, all brought upon by implementation of new technologies.

BETTER FASTER SMARTER

Carriers are running leaner and smarter through real-time monitoring and better deployment of assets. Data analytics and onboard technology allow companies to keep the wheels moving while avoiding downtime and areas of lower RPMs.

Brokerages have faster and greater access to more available capacity, and when coupled with new data metrics like those provided by FreightWaves’ SONAR, they’re able to quote rates quicker and more competitively than ever before.

Add in the ability to reduce manpower costs by digital load booking and nearshoring back office positions, and you have intermediaries operating on margins significantly tighter than historical averages. .

THOSE LEFT BEHIND

Now, for every successful adopter of this new freight world, there are countless others not doing the same.

They’re stale and stagnant, ignorantly or indifferently resisting the change. They’re also the businesses losing their market share. For all intents and purposes, freight is a zero-sum game. There is a finite amount of goods transported throughout the United States every year and every Carrier and 3PL is in direct competition for every piece of it.

When companies can offer greater service at a cheaper rate than you can, your business suffers.

Suffer too long or too much and your business expires. This situation is even more dire for the 3PL as the intermediaries in any industry undergoing a dramatic transformation are always the first ones out.

Disagree? Ask your travel agent or stockbroker how they feel.

TAKE IT OR LEAVE IT

Remember, this was an article of advice, so that was just the wakeup call. Now is when you take a step back from your desk in order to self-reflect and gain perspective.

Do you have a proper strategy in place and currently under execution for 2020? Are you tracking performance with the right metrics and with accurate data? Do you know the risks, both internal and external, to your bottom line? Have you taken the necessary measures to protect against those risks?

Are you comfortable where you’re at with your business?

Should you be?

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