6 Ways to Reduce the Impact of COVID-19 on your Transportation Network
While the full financial impact of a global reduction in both supply and demand remains uncertain, there are several proactive steps that can be taken to help mitigate the net impact of COVID-19 on your transportation network. Here are six ways to mitigate the Coronavirus impact on your logistics. As there is no “roadmap” for navigating this unprecedented situation, these suggestions may prove helpful during this time of great uncertainty.
1. Eliminate any unnecessary expedited spend
Most optimized transportation networks have some level of expedited spend (Next Day, 2-Day, etc.). Reducing expedited spend levels temporarily will help to lessen the financial impact of increasing freight costs, especially in areas where less expensive service levels offer comparable transit times. Even the largest shippers are communicating a reduction in service commitment. While not all expedited spend can be eliminated in your network, it is worth assessing what can and cannot be sent via a less expensive service for the time being.
2. Be aware of new carrier surcharges
As carriers are also feeling the impact of this global pandemic, be on the lookout for newly introduced carrier surcharges. These surcharges may or may not be directly related to coronavirus but would likely be aimed at recovering lost revenue. enVista’s freight audit team is already seeing COVID-19 surcharges billed by multiple freight carriers.
Gain insight into strategic vs. tactical sourcing and how placing transportation procurement into these categories can reduce the complexity.
3. Avoidable accessorial charges
Now more than ever, it is important to scrutinize “avoidable accessorial charges” within your network. As freight costs continue to increase, finding any way to reduce overall freight spend will pay large dividends. For this reason, it is important to keep an eye on charges such as: Address Corrections, Saturday Pickup/Delivery, Additional Handling, UPS Shipping Charge Correction Audit Fees, Overmax, Storage, Detention, etc.
4. Focus on essential shipments only
Assess your network for shipments which can be temporarily reduced or eliminated. Examples of these might be marketing materials, store displays, etc. As the full impact of a freight shortage is felt, sticking to shipments which directly impact your bottom line is most important.
5. Identify high priority SKUs
As the effects supply shortages are felt, focusing on your highest volume SKUs can prove beneficial. While certain SKUs may fall below their typical inventory/reorder levels, prioritizing freight for your biggest sellers or most needed product may prove more beneficial in the long run. In the face of limited inbound freight, keeping distribution centers full of fast-moving product is more important than having the proper inventory level of slower moving items.
6. Pay attention to international outbound shipments
Carefully monitor your outbound international spend. Given the current climate with many government restrictions and shutdowns, shipments to an international market may be severely impacted in transit times and cost. If the situation continues to escalate, adapting to the market for international outbound shipments first may be a way to reduce the number of high cost shipments in your network and impact only a small portion of overall business.
Proactively monitor your freight costs
Luckily, all is not lost during this time of uncertainty. It is imperative to make the operational changes outlined above in order to contain your supply chain transportation costs. Freight carriers are already billing surcharges due to COVID-19, and this is just the beginning. Let our team of account analysts help proactively monitor your freight spend and evaluate cost cutting measures to make sure processes are optimal to reduce the COVID-19 impact.
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