In the latest episode of the Freightvine, Bridgestone’s Brad Blizzard joins host Chris Caplice to discuss how the company is dealing with slumping demand by offsetting the cost of their private and dedicated fleets.
Dealing with slumping demand despite being deemed essential
Being designated as “essential” does not make a company immune to reduced demand due to COVID-19. How is the world’s largest tire manufacturer offsetting the fixed costs of their private and dedicated fleet assets during the pandemic?
Brad Blizzard – Executive Director of Logistics and President of Fleet Operations for Bridgestone Americas – and his team developed a strategy that is paying off. They’re sharing their private and dedicated fleet assets and drivers with other shippers. Bridgestone has relied on third-party dedicated providers and driver leasing partners to help pool the risk. Their partners help identify and pair multiple shippers that are complementary (e.g., opposite peak season volumes).
Reaping the benefits of flexible, shared capacity
For example, they have been able to share some of their private fleet capacity with a national retail drugstore chain that was in dire need of the excess capacity to service their spiking demand. Bridgestone and the drug retailer work with the same driver leasing company, which facilitated the exchange of drivers and assets. It’s a win-win-win scenario: Bridgestone’s drivers get to keep working, the company was able to reduce operating expenses, and consumers were able to purchase needed supplies.
Similarly, on an ongoing basis, Bridgestone shares its dedicated fleet capacity with other shippers like The Home Depot and Amazon. Bridgestone adopted this strategy after the 2018 trucking capacity crunch. At the time, their driver turnover rate at Bridgestone doubled as drivers left for larger fleets offering higher-paying jobs with hefty sign-on bonuses. Being able to adapt their fleet capacity to current demand not only helps Bridgestone weather reductions or excesses in capacity, but it has also helped turn some of their fixed transportations costs into variable ones.
Dealing with life and business during a pandemic
Bridgestone has always made an effort to take good care of its drivers. They offer regular freight routes that get drivers home at the end of every day. It also prioritizes initiatives to keep its shipper of choice status. They have break rooms, restrooms, cafeterias, Wi-Fi, and parking in most of their facilities. But, in the interest of driver and dock worker health and safety, the pandemic has made changes necessary. For example, a long-standing paperless bill of lading initiative quickly moved from being a low priority to the front burner. In most locations, Bridgestone has eliminated unnecessary driver interactions and created a touch-free environment.
Blizzard sees some changes brought on by COVID-19, like working from home, as a net positive in the long run. As a Pittsburgh native that grew up around the steel mills, Blizzard was brought up to be the kind of guy who thought that you weren’t productive if you didn’t get up in the morning and go to work, it was just what you did. He said that, after a month of working from home, he finally bought a desk, set up a proper home office, and he feels he has never been more productive. He sees this becoming part of his future work routine.
As a result of changing consumer buying patterns influenced by the pandemic, Blizzard also expects a shift to more regional supply chains to get products closer to the consumer. He anticipates increased focus on automation and scenario modeling. He also foresees shifting inventory strategies, with rising inventories of high-margin items and leaner stock levels of low-margin products. Blizzard also revealed that the company is experimenting with an “install at home/office” retail delivery model similar to the one used by windshield repair services. This mode of delivery, combined with online ordering and purchase, would create a nearly touchless transaction for consumers.
In the end, Blizzard hopes that business leaders, politicians, and the general public remember and value the critical role that truck drivers serve in our society. Truck drivers rarely get the respect they deserve, yet they’ve done an incredible job serving the country during this crisis.
This episode recap was written by Chad Kennedy, Sr. Product Manager, FMIC at Chainalytics.
Market Update & Forecast: 21 May 2020
Dry Van
Active contract rates were flat while spot rates were down 2%. Replacement rates were flat.
Temp-Control
Active contract and spot rates were both down 1.5%. Replacement rates dropped by 1%.
Intermodal
Active contract rates were flat and spot rates decreased by -0.5%. Replacement rates were off -2%.
Spot rates continue to drop from the COVID-19 panic buying highs of late March. Active rates are mostly flat. But replacement rates are turning negative, which will lead to dropping active contract rates. We expect the market to remain soft through the summer and early fall.
