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69% of Freight Carriers Say COVID Revamped Their Spending Plans

A new study from DDC FPO uncovers how leaders in the supply chain are reprioritizing for the rest of 2020 and into 2021 due to COVID-19.

The report, “Adapting to a Pandemic: Freight Market Budget & Priority Shifts In 2020,” showcases the findings of the company’s recently conducted market research study, which investigated the changes in business priorities and operational spending throughout the freight landscape in response to the coronavirus pandemic.

More than 75 percent of executives and decision makers who preside over and represent manufacturers, warehousing and distribution centers, motor carriers, 3PLs or brokers, and freight technology providers, said they have significantly shifted their planned spending activity for 2020 from their initial budgets due to the pandemic’s impact on the supply chain.

For more than half of respondents, up to 25 percent of their overall budgets were subject to the consequences of these shifts and 33 percent reported that up to half of their overall budgets were disrupted.

Technology providers, at 84.6 percent, were most likely to report significant changes to budget allocation priorities, while warehousing and distribution center respondents, at 50 percent, were least likely to report significant changes. Near the top of the list were freight carriers and 3PL firms.

The report also noted that the freight industry was already largely designed to adjust quickly to rapidly changing situations. A variety of factors, such as consumer behavior, weather hazards and political climate, require agility, it noted, and to achieve operational dexterity in a way that embraces the dynamic nature of transportation and logistics, professionals focused in these areas already design and leverage systems and processes as part of their job descriptions.

According to respondents, not as many operations employees–warehousing and dock staff, and drivers–were needed due to the drop in freight volumes. Additionally, most hiring efforts were put on hold during this time.

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Many respondents cited a shift from on-site work to a work-from-home/remote work model as a major staffing-related change. Some also reported layoffs, reduced worker hours and department restructuring. Freight carriers were particularly likely, at 69.5 percent, to report an impact on operations spending.

“We will continue to see uncertainty regarding containment of the virus, so labor elasticity and scalability will remain a pivotal part of workforce planning,” Chad Crotty, vice president of sales for North America at DDC FPO, said. “Partnering with someone that specializes in streamlining operations and market fluctuations will help shift resources to stay resilient.”

Donna Kintop, senior vice president of client experience for North America at DDC FPO, said research shows that, as a result of the pandemic, many companies are now pursuing operational efficiency, including moving away from manual processes and looking for ways to increase connectivity and communication with external resources.

Technology adoption is a primary way to achieve this goal, and experts expect to see digital transformation, particularly in the form of AI-powered solutions, continue to happen at a fast rate throughout the industry as companies move away from legacy processes.

DDC FPO specializes in freight back office solutions in North America, including freight billing, rate auditing, customs brokerage and data capture. It is the freight-focused unit of The DDC Group, a worldwide network of business process outsourcing experts.