Here’s How to Turn the Trials of Commodity Shortages into Positives for your 3PL
As I’m sure you’re aware, there’s a global shortage of a small, yet vital component in so many of the goods we use and buy today — so-called semiconductor chips. These tiny processors are used by manufacturers to produce everything from cars and Class 8 trucks to TVs, laptops, smartphones, medical devices, and even appliances like refrigerators and toasters.
These types of commodity shortages have become a defining factor of the post-COVID economic recovery and the 2021 economy as a whole.
Remember the gasoline shortage after the recent Colonial Pipeline shutdown? How about the lingering chicken wing shortage, as bars and restaurants re-open and try to stock up? Builders have been reporting lumber shortages for months, and prices on 2×4 studs and sheets of plywood have hit all-time highs. The list goes on: diapers, chlorine, furniture, toilet paper (in the early days of the pandemic). And, obviously, a “shortage” of hirees, which our industry is all too familiar with, in its persistent shortage of available truck drivers.
While most of our relationships with shippers remained hearty over the past year, our Michigan-based operation relied heavily on the automakers, both inbound loads of parts for new vehicles and, of course, trailers loaded with finished cars outbound for dealers.
But amidst the microprocessor shortage, new car production, at times, came to a complete standstill as the need for semiconductor chips blocked American automakers like GM, Dodge, and Ford from building new vehicles. With those production stops, our Michigan operation, likewise, came to a standstill; leaving our trucks parked and our staff searching for answers.
Unfortunately, the outlook for that business returning is cloudy, at best. One analyst might say chip capacity will return to normal by the end of the year. Others say this drags on until 2024.
Trying to plan around this uncertainty has been a challenge. But there are a couple key lessons that can be taken from all of this:
First, logistics providers need to diversify. If you rely on one steady stream of business either at large or for one branch of your operation, you’re a sitting duck. A shortage that popped up seemingly overnight derailed that segment of our business and left us suddenly searching for answers. We had been so busy managing our automotive business here in Michigan, we didn’t take the time and effort to find new customers and forge new relationships. In the end, that lapse caught up with us.
Secondly, remember to treat negative events as opportunities to learn and grow, and possibly emerge from them better and stronger than you were before.
When it became clear the auto production setbacks would be long-term, I encouraged our team not to simply sit around and wait for things to change. Instead, we gathered team members and taught them new skills — ones they could use in their own careers and ones that could benefit the company, too.
For example, we looped in members of our team who weren’t hired to do sales, such as those in dispatch and other back-office functions, and we taught them the basics of making sales calls and reaching out to potential new customers. They were all on board to do it.
We flipped around roles and tried to think outside the box. We had dispatchers finding industries and businesses that wouldn’t be impacted by the semiconductor shortage and then making cold calls to try to drum up new lines of business.
If it worked, fantastic — we made something out of nothing. If not, at least we tried, and our employees had opportunities to continue working and to learn new skills.
Ultimately, that could be the biggest takeaway: When things are turned upside down and the world suddenly changes, go back to the basics. Start at the beginning again and figure out how to find business.
These are lessons that can apply broadly across the third-party logistics landscape and ones I would encourage shippers, brokers, and carriers to make sure they heed, too. Do what you can to diversify your lines of business, because you never know when they might suddenly be toppled. And never underestimate your team’s ability to pivot and learn new skills, as that could be the key to pushing through when you find yourself in a rut.
What are the lessons you’ve learned over the past 15 months in your logistics operation? I’d love to hear about them, to learn from your experience, and to share your insights with our team, too: email@example.com
Ryan Kramar is a Vice President of Operations at Circle Logistics. Founded in Fort Wayne in 2011, Circle is one of the fastest-growing transportation companies in the nation, servicing over $250 million in freight spend. Circle combines the dedication of a privately owned asset-based 3PL with the coverage of a public large-scale provider to create a superior modern freight experience. Circle is committed to delivering on three core promises to our customers: No Fail Service, Personalized Communication, and Innovative Solutions, and provides coverage across all modes of transportation in the continental United States and Mexico, including Dry Van, Flatbed, Reefer, LTL, Expedite, Oversize and Air.
For more information, please visit www.circledelivers.com