The latest episode of the Freightvine podcast finds host Chris Caplice chatting with Justin Harness, Chief Revenue Officer at U.S. Xpress, about the radical transformation of the trucking industry and the more immediate changes brought on by the COVID-19 pandemic.
The evolution of the trucking customer
Harness pointed out two primary sources of change in the trucking industry over the past two decades. First among these was the evolution of trucking customers (i.e., shippers) in response to consumer-driven changes in demand and service expectations. The increased growth of e-commerce – and the fast-paced supply chains needed to service the channel – has forced the hands of both shippers and carriers. As a result, carriers have re-invented their operations, adopting new processes and technology. Although the role and responsibilities of drivers remain more or less the same, expectations continue to shift to ever-higher levels of service and communication.
The widespread adoption of technology
The second most impactful evolution from the carrier’s perspective is technology. Technological advancements haven’t been relegated to just cabs and related equipment, although significant improvements were made there. The freight industry has seen an explosion of connectivity and data. The former makes the latter possible. Both are driving an increase in visibility and enhancing the level of cooperation between shippers and carriers like U.S. Xpress. The data is promoting better decisions on the part of both partners, increasing their efficiency. These industry advances help move toward a “frictionless order” by reducing driver touchpoints and back-office needs. Like the rest of us, drivers have become increasingly tech-savvy and grown comfortable with the suite of applications that make meeting their reporting requirements easier to manage. For their part, carriers have invested heavily in analytics, and the Masters and Ph.D.-level data scientists needed to benefit from the avalanche of data. In the early 2000s, you’d have been hard-pressed to find anyone engaged in data analysis at any carrier. Today U.S. Xpress alone employs five Ph.D.-level analysts as the trucking line continues to build its in-house analytical capabilities to increase their understanding of the significance of the various data sets they collect and what they reveal about industry trends.
Facing down the challenge of COVID-19
When asked about the company’s pandemic response, Harness was happy to report that U.S. Xpress had formed a disaster recovery team in the fall of 2019. When the first signs of the coronavirus threat emerged between late January and early February, the group quickly re-convened and put together a plan, giving the company a head start on responding to the COVID-19 pandemic.
The challenges presented by the virus are like nothing the organization had ever experienced. Without considering the supply chain disruptions and their ramifications, U.S. Xpress found itself in the same situation as other employers, having to quickly figure out how employees could work remotely and providing for the health and safety of those working on site. Ramping up IT support for remote workers from a handful pre-pandemic to over 95% of their office staff took just over two weeks. On top of that, creating opportunities for active staff engagement and intentional touchpoints was crucial from a business continuity standpoint. But one of the most substantial changes was in the sales cycle. Going to an entirely virtual sales required the rethinking of the entire customer experience. The expectation is that the virtual model will continue through the year and perhaps longer, and Harness believes that the “road warrior” sales approach may not be as dominant in the future.
Which of the COVID-19 changes are here to stay? The truth is that it’s too soon to tell as events continue to unfold with no definite end in sight. Speaking for himself, Harness is grateful for the stability afforded him and all U.S. Xpress employees at a time when so many Americans are facing uncertainty and economic hardships. His heart goes out to them as he hopes for a rapid recovery.
This episode recap was written by Cindy Bosecker, Director, FMIC at Chainalytics.
Market Update & Forecast: 4 June 2020
Dry Van
Active contract rates were flat, while spot rates were up by 1.5%. Replacement rates were up by 2%.
Temp-Control
Active contract rates were down by 1%, but spot rates were up by 2%. Replacement rates dropped by 3%.
Intermodal
Active contract rates were flat, whereas spot rates decreased by 1%. Replacement rates were off -2%.
Active contract rates are mostly flat over this two-week period. Spot rates are beginning to pick up and replacement rates are also starting to fluctuate. Anecdotally, we are continue to hear from our FMIC members that the bids they are closing right now are still showing rate reductions. The good news is that, with U.S. states opening back up, demand and volumes are starting to increase. Our prediction is that the capacity will remain soft over the summer and early fall 2020.
