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COVID-19 IMPACT ON INVENTORY MANAGEMENT – WHAT WILL BE THE NEW NORMAL?

As trucking volumes begin to approach normal market levels, we, in the logistics world, can’t help but wonder what the new definition of “normal” will be. Market volumes are hovering right around where they were last year, while capacity has started to tighten. Additionally, it is important to note that a majority of the national volume increase is due to longer haul moves (> 800 miles), which is indicative of warehouse replenishment.

That said, some inventory management questions to consider as we move through the COVID-19 pandemic:

  • Are shipper inventory replenishment practices shifting toward holding more stock on-hand, and away from just-in-time replenishment?
  • If so, how does this change the operating model of companies that pride themselves on a lean supply chain?
  • Yes, we’ve seen a massive spike in imported goods over the last month (specifically from China – up over 200% since April 1st), but to what extent will that spike level out?

As more imported goods enter the Southern California market, we can expect tight outbound capacity, and, therefore, increased market rates out of that region. I foresee this happening for a while as businesses in China continue to reopen. But what about produce season? Will grocery stores restock and position inventory using old methodologies imposed prior to COVID-19? My guess is no. Continue to monitor produce heavy markets in the coming weeks, because one thing that we do know is that this has not been / will not be a typical produce season.

During these unprecedented times, it is very important to practice proactive transparency with your network of business:

  • If you’re a broker, provide proactive market updates to shippers.
  • If you’re a shipper, provide ample lead time to brokers and carriers.
  • If you’re an asset carrier, provide proactive tracking updates to communicate on-time performance statuses

We are all in this together, and it is imperative that we all play our part in revitalizing the U.S. economy through sustaining trustworthy, strategic relationships.

As each week continues to bring light to new market volatility, Traffic Tech is here to make sure that you’re updated with the most relevant information, as well as offer any assistance with moving your freight.

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