At the start of 2021, freight market demand was huge. Companies in supply chain and logistics were making massive hires. There was an average of six loads for every one truck, with load-to-truck ratios as high as 1:12, according to Nick Schrock, founder and CEO of Valoroo.
Now the market has softened. There are more potential sellers than buyers, putting downward pressure on prices. Consumer demand is also slowing due to inflation and the fear of an economic downturn.
FreightWaves SONAR data shows YoY outbound tender volume, USA
With reduced demand, the supply of trucks is in surplus. Because of the earlier hiring binge to meet high demand, these extra resources and high costs are no longer justified, and many companies are being forced to reverse their hiring frenzy.
“This is OK for companies who were forward-thinking and implemented cost mitigation strategies to control overhead costs,” Schrock said. “It is bad for U.S. onshore labor, as layoffs have impacted the U.S. economy.”
According to a Wall Street Journal article, the Bureau of Labor Statistics states that warehousing and storage companies added more than 400,000 jobs throughout 2021. These companies dropped 20,000 jobs in the final months of 2022, and the cuts have continued to rise through the beginning of 2023. Major tech companies like Amazon and Google have also seen mass layoffs in the past few months.
The labor challenges associated with today’s soft market should prompt industry leaders to self-evaluate and consider leveraging outsourcing to improve profitability, segregate tedious work and increase productivity.
Schrock offers freight leaders five ways to scale their company in a down market amid layoffs and a recession:
Improve processes
Process is everything. Since the COVID-19 pandemic, many companies had to take a step back to reevaluate their processes because the old way of doing things no longer worked. Even without the pandemic, times are changing — both the industry and the market have been volatile and will remain that way.
Plus, a buyer’s market is highly competitive — there is no room for error or inefficiencies if the goal is to stay competitive.
Creating and maintaining flexible processes that are seamless and efficient and that flow with market conditions is vital.
“The easiest win and gain is to improve existing processes,” Schrock said. “It is as simple as asking why the processes take so long. For example, if it’s an issue with company policy — why does that policy exist today and should it exist in the future?”
Automation and technology
Another approach many have taken in the past few years is the leveraging of new technologies to improve overall efficiency.
While the optimal means to reduce the amount of work is to automate and leverage technology, this may not always be the quickest win or the best fit for everyone, as technology can be costly and time-consuming to implement.
Still, the job needs to be done, and not everyone is able to do every job efficiently. Outsourcing is recommended for those who want the cost of changing software over the return on investment but still want to improve overall efficiency.
Culture and retention
Schrock added that a positive company culture is one of the first steps to greater productivity.
Research by Deloitte in a WorkHuman article states that “94% of executives and 88% of employees believe a distinct corporate culture is important to business success.”
And Workhuman iQ data shows that “the higher an employee rates their company culture, the lower the chances are they will leave the organization. When organizations put company policies in place that elevate an employee’s experience, such as employee recognition and flexible hours, it allows employees to feel secure and supported in their role.”
Employee training and onboarding are also costly, so keeping retention rates high is important financially as well.
Business partnerships
Partnerships are key. Not everyone is the best at everything so partnering with companies that embody the strengths your company is lacking is ideal to stay competitive and successful.
“When times are tough, how is your company partnering with customers and vendors to improve profitability and service performance?” Schrock said.
Outsourcing talent
“For tedious, redundant tasks — this is the perfect scope for outsourcing talent offshore,” said Schrock. “The high-caliber talent in a company is best utilized in value-added and critical thinking applications.”
Both domestic and offshore outsourcing can reduce overhead costs by over 60%, he added. He also believes that if a company had outsourced prior to the softening of the market, many of the layoffs that have occurred over the past several months could have been avoided.
Valoroo provides these outsourcing solutions specifically for the transportation and logistics industry, partnering with brokers, carriers, shippers and forwarders.
“We build teams for transportation companies to take on the redundant and repetitive tasks such as track-and-trace, carrier sales, operations, accounting … you name it,” Schrock said. “We do this to allow local teams more time to be more strategic.”
The journey forward
The market is not going to stop shifting. Paying attention to market trends and making predictions is important. However, without taking the steps to be prepared no matter the conditions, success will be that much harder to reach.
Although outsourcing is hardly a new concept, Valoroo’s is set apart by a few things, according to Schrock.
“Everyone we hire is coming in with logistics experience,” Schrock said. “There is no industry training required. This way we can focus on training them on the specific logistics company and its products. This puts us way ahead of the game.”
According to Schrock, Valoroo has a robust talent pool pipeline and the recruiting timeline is only two weeks to find qualified, high-quality candidates in logistics.
He added that the company has a high-caliber onboarding team that digitizes a training platform to enable scalability. When new team members are hired or transferred from another function, the training platform provides a quick cadence for learning aptitude.
To learn more about Valoroo, visit its website or email Schrock at nick@valoroo.com.
The post 5 ways to scale your company in a down market appeared first on FreightWaves.
