Executives Discuss Long-Term Effects of Pandemic on Supply Chain
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Executives from C.R. England and XPO Logistics said their customers are looking for stable, nimble and innovative partners to help them navigate an economic environment that remains uncertain several months into the COVID-19 pandemic.
“What we’re hearing from our customers — especially the large retail customers — is they’re looking to de-risk their supply chains, as well as the transportation that they’re providing across the country,” said Drew Wilkerson, president of North American transportation at XPO Logistics, during the Future of Freight and Supply Chain Management virtual summit, co-hosted Oct. 8 by Transport Topics and CQ Roll Call. “The pandemic has shown them that they’re looking for large scale, financially stable companies that they know are going to be here after the pandemic.”
C.R. England CEO Chad England added he sees a push toward supply chain diversification as another long-term outcome of the pandemic, depending on how consumers respond long-term to the moment.
“It will be interesting to see how much this time frame permanently changes consumer behavior,” he said. “For example, will people go back to restaurants as often as before? Will they stay at home or consume more food from grocery stores?”
Going forward, Wilkerson noted that trucking companies must ensure their customers have access to massive amounts of capacity, and listed four main areas where his customers are currently focused: safety, service, fulfillment speed and transportation visibility.
“Customers want capacity. They want to be able to deal in multiple modes of transportation, have automation, real estate options, labor pools, and then, obviously, robust technology is a huge deal for customers, he said. “We’ve really been focused on helping some of our brick and mortar customers in the retail sector shift more from omnichannel into the e-commerce growth,”
Wilkerson added, “Customers, both retail and nonretail, are looking for providers that can flex capacity up and down as the market goes.”
England noted that the pandemic has revealed some of the strengths and weaknesses of the supply chain.
“I think the fragility of the modern supply chain has been exposed a little bit,” he said. “In some ways we’ve seen it’s fragile, and in other ways we’ve seen how resilient it is. The people are resilient, [but] some of the processes may be a little bit fragile.”
He pointed to finding drivers as an example.
“We’re a big company and bring in a lot of drivers,” he said. “And we have seen how it’s so much more challenging to train and license new drivers.”
For new entrants, he noted the process just to get an appointment for a CDL test can take months in many states, and also said classroom and group learning can be challenging with social distancing. He warned that these challenges are creating an unprecedented shortage of new drivers entering the industry.
“While some of these pressures will soften over the long term, the driver recruiting and training and licensing and hiring processes, I think, are going to be permanently tighter than in the past,” England said. “We’ve all talked about driver shortages for years. I think the real driver shortage is here now and here for a long time.”
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England also noted it’s becoming more difficult and expensive to provide expedited team-driver service, and believes the industry will experience reduced team capacity and a correlating increase in costs for team drivers.
Wilkerson and England both expect more near-shoring of manufacturing in the future, including an increase in cross-border freight out of Mexico. They also both expect the jump in online purchasing compelled this year by the pandemic will accelerate existing growth of e-commerce going forward.
“We were the first ones to fill that e-commerce growth in our final-mile business,” Wilkerson said. “You know, we’re going into 10 million homes every single year and we’re seeing that tick up this year through the pandemic. And I believe we’re in the early innings of the acceleration of what you’re seeing on e-commerce growth.”
C.R. England ranks No. 26 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
XPO Logistics ranks No. 1 on the Transport Topics Top 50 list of the largest logistics companies in North America. It also ranks No. 3 on the TT Top 100 list of the largest for-hire carriers in North America.
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