Be prepared: Strategies for transportation and logistics executives to mitigate disruptions in 2025

2024 has been a year of transformation for logistics and supply chain management. On the supply side, there have been many challenges including inflation, labor disruptions, global friction, and unpredictable demand. Downstream, warehouse space rates and availability have loosened, while transportation market costs remain at historically low levels.   

Logistics costs should be top-of-mind for supply chain executives—low transportation costs will likely come to an end over the next year as more carriers leave the market and transportation demand increases.. Additionally, destructive weather events are expected to introduce new challenges that will likely impact carrier capacity, both regionally and nationally, in the coming year. This poses significant risk to budgets and customer service.

If we look at supply chain professional sentiment, prior to the post-COVID transportation market recession, about 70% of logistics and supply chain professionals stated that capacity constraints would remain a big concern leading up to 2030. This goes to show how quickly the industry changes and how likely it is to shift away from a recessionary approach once there is more capital investment to accompany consumer demand.

Executives must be prepared and stay flexible over the next year to mitigate risks that will likely come from increasing logistics costs and decreasing service. Here are a few approaches and mitigation strategies that will help: 

Monitor KPIs 

Ensure that the right KPIs are monitored to keep a close eye on cost and service, both nationally and regionally. The key is to choose KPIs that both align to the business goals and provide enough detail for accurate monitoring. Establish specific thresholds with specific actions as part of a monitoring plan. Being proactive with carriers will go a long way to maintaining low rates.

Adjust transportation procurement strategies 

In an inflationary market, carrier procurement strategies should be adjusted. Consider reviewing areas such as overall go-to-market strategy, new carrier RFP implementation, carrier contract terms, low-volume lane strategy, and new lane strategy. When freight markets are low, procurement is easy, but more robust procurement approaches need to be considered as the markets tighten. Shifting away from cumbersome, error-prone spreadsheets and toward easy-to-use procurement tools such as Uber Freight Exchange: Contract to quickly set up and run contract bids can help. Getting additional support or hiring staff to provide hypercare to new customers can be helpful when implementing new RFPs—even on mini-bids—to ensure a smooth onboarding experience and keep customers happy. 

Review spot market and route guide strategies 

While it is a bit tactical, ensuring that transportation teams have the right strategies for covering freight is critical when freight costs are rising. The route guide and spot market usage dictate which carriers receive freight and under what criteria, which directly impacts the costs. Basic strategies enable a back-stop approach, ensure the tender strategies are working in your favor, and allow spot loads to utilize freight auctions. Also consider more advanced approaches to real-time freight procurement with programs such as Uber Freight Market Access that allow you to set load priority and load pricing (including max price) controls on a per-load basis, then monitor cost and service performance relative to market rates. 

Create visibility across functional departments 

Leaders need to be aligned on common goals across departments to balance customer demand with supply chain outcomes. For example, inventory strategies, fill rate decisions, order timeliness, network design, and capital deployment should all be considered and will impact things such as trailer and truck utilization downstream. In addition to trailer fill, other impacts of upstream decisions can be evaluated through loss analysis techniques in order to identify, quantify, and mitigate losses within the supply chain. Some loss analysis techniques used by Uber Freight consulting services include:

• Root Cause Analysis (RCA): to identify the underlying causes of inefficiencies, such as delays in shipping, damaged goods, or underutilized trailers.
• Failure Modes and Effects Analysis (FMEA): to identify any failure points in your logistics operations and evaluate their impact.
• Value Stream Mapping (VSM): to analyze the flow of materials and information through the logistics process in order to identify where waste occurs, such as excess inventory waiting times.

Workforce development 

Over the past several years, there has been significant turnover amongst supply chain and logistics professionals. While we are operating on a “new normal” of low transportation costs, it’s relatively easy to keep logistics costs in-line.  Many of these newer logistics professionals may not be equipped to make decisions in the near future. Providing basic logistics and supply chain management training to those front-line workers and managers can enable them to better understand the impact of their work and help them make more informed decisions.

Fully leverage logistics technology and services 

Having a robust Transportation Management System (TMS) in place enables shippers to seamlessly coordinate their supply chain activities such as order management, shipment optimization, tracking, and overall performance. In addition to execution, TMS technology can enable better visibility and insights—cutting-edge TMS and managed services providers are now beginning to incorporate AI to generate easy-to-access data and insights for executives. 

Challenges and disruptions within the supply chain are a reality for shippers. While logistics risk is often ignored, it can and should be included in a wider risk management and scenario planning framework.  By staying ahead of the curve with a strategic action plan, leaders can maintain momentum with long-term initiatives, and strike a  balance with mitigating disruption across their businesses in 2025 and beyond.