SCARCITY OF CAPACITY. WHAT IS IT AND HOW CAN COMPANIES BE PREPARED?
This year has been a challenging one for everyone. Due to the pandemic, all of us were forced to change our habits and ways of thinking. As much as it shook us the COVID-19 has shaken the business world and imposed companies to rethink and transform their ways of operating. Supply chain and transportation industries are/were fully exposed to their vulnerabilities. During this year, many governments have also changed many of their legislations. And as the pandemic someday will fade away, those legislations and fundamental paradigm changes are here to stay.
Regarding the transportation market, Easy4Pro’s vision and experience can tell that indeed in Europe there is a scarcity of capacity or better explained there is a structural part of the carrier capacity that has disappeared and it will take at least weeks if not months to come back to normal, in other words, this situation might continue until the end of this year.
In the figure below we can see a normal month for the average customer of Easy4Pro has approximately 9 offers per shipment.
Looking at April, we can see that the demand shrank and created an over-capacity. Transport companies had to take action to reduce this over-capacity, resulting in a lower vehicle availability.
Coming back from holidays the activity and demand came back to almost normal levels, but the vehicle availability was still reduced, resulting in fewer offers from carriers which leads to scarcity.
In a nutshell: during September, we noticed a decrease in the number of bids and active carriers per shipment even though on the contrary the number of active carriers is increasing. This would validate the fact that these carriers have less available vehicles to propose to the market.
Source: Easy4Pro
The scarcity of capacity is mainly impacted by two factors:
1. The pandemic.
From one side, the industry recovers and gets back into gear after shutdown but on the other side, a lot of small carriers are strongly impacted by the pandemic and current economic situation, so the market transport capacity is reduced.
2. The new EU Legislation “mobility package” limiting “cabotage” and introducing new industry rules of the competition and work/rest time.
France on top is a new special case with its “cabotage law” and chances are that other EU countries could follow.
What are our solutions for all the companies which are using Transport Management Systems:
1. Empower your panel.
The first solution proposed by us would be to enlarge your panel (which we strongly recommend), during the following weeks. Nowadays, thanks to TMS, is easier to manage a very big amount of carriers without any extra effort, so do not be afraid to add carriers. In case you are a partner of Easy4Pro we can provide you with our European trusted carriers.
2. Check with your TMS which are the carriers with a low response ratio.
The carriers who have had a low response rate during the last month should be followed and advised to maintain a good response ratio. Even reward/punishment systems can be put in place. Thanks to the powerful BI, Easy4Pro can detect fair carriers from those who just practice cherry-picking. This way we ensure having trustful and efficient carriers in your private marketplace (Easy4Pro).
3. Enlarge decision time.
Give more time to the carriers to make their offers before they are blocked. If you want your company to have a lot of offers we suggest you enlarge your bidding time.
4. Extreme cases need extreme solutions
If your TMS allows it you may ask your support team to enable the carrier's bidding after your decision time is over. If you can’t or won’t modify the general setting for allowing bidding after decision time, you may request to exceptionally extend the bidding time to obtain more solutions.
Those solutions could be your company’s solutions not only during the scarcity of capacity period but also in the long term.
If you would like to meet with our team to get more information and personalized advice contact us at: info@easy4pro.com and if you would like to become part of our community as a partner or carrier do not hesitate to check our website: www.easy4pro.com.
Easy4Pro - The private marketplace for efficient on-demand transportation.