As the novel coronavirus COVID-19 wreaks havoc with every facet of life in America and around the globe, small-to-medium-sized business (SMB) operators search for stability wherever they can find it. Health and supply chain issues are always on their plates, but not at the level they are today. In some parts of the country, entire metropolitan areas, such as the San Francisco Bay area, are on virtual lockdown, as people have been instructed to “shelter in place.” For SMB shippers, Third Party Logistics providers (3PLs) like FreightCenter offer a lifeline of stability when it’s needed most.
To understand why 3PLs are uniquely prepared to provide stability to SMB shippers, let’s take a quick look at the situation we’re in and how we got here.
The Rosy Promise of 2020
In February 2020, there was still plenty of available shipping capacity and the trade wars that rocked 2019 were cooling off, if not coming to an end altogether. The new United States Mexico Canada Agreement (USMCA) was approved and signed by Mexico and the USA, needing only a nod from Canada to take effect as the replacement for the North American Free Trade Agreement (NAFTA).
The first phase of a new trade agreement with China substantially reduced tariffs on many goods and raw materials. According to Foreign Policy, the phase one agreement should be considered a truce more than a true trade deal. The agreement leaves in place substantial tariffs on each country’s exports and does not attempt to tackle the underlying causes of the trade war to begin with, but the agreement has at least stopped the escalation of the trade war and established a baseline for the next two years.
Regardless of their imperfections, these agreements promised to make international and domestic shipping more stable. That was all good news for SMB shippers. Then, COVID-19 hit.
The Harsh Reality of COVID-19
When COVID-19 hit China, the first effects in the USA were felt by sellers of technology products, medicines and medical equipment as well as automobile manufacturers. Supply chains were impacted, and the lack of goods to move hurt domestic freight carriers to some degree.
With COVID-19 now a global pandemic, the lack of demand for physical goods hit carriers hard. Some carriers may offer sweet deals now, but a carrier that offers you an unbelievable deal today may find themselves unable to deliver for you tomorrow due to driver shortages or unavailable depots.
Looming even larger, as noted by JOC, the problems we experience today due to COVID-19 are temporary. When they subside, there will be a great deal of pent up demand to be met. That demand is expected to reduce capacity severely. You just might experience sticker shock when your once-budget carrier quotes you their new rate.
As the COVID-19 crisis cools down and the benefits of the new China agreement and USMCA begin to manifest themselves, capacity will go down and rates will go up. But SMB shippers don’t have to get stuck paying soaring rates.
The Stable Advantages of a 3PL Partnership
To avoid unreliable service and unpredictable spikes in pricing, SMB shippers should partner with a 3PL. When you partner with a 3PL, you enjoy these advantages:
- Instead of dealing with wildly fluctuating prices, you benefit from the deep discounts earned by the 3PL. So, whether times are good or bad, you still pay a fair price
- Instead of having to rely on one carrier, the 3PL’s relationships with many carriers puts you in control. Even if your carrier has to cancel, you simply choose another from the 3PL’s roster of high-quality carriers.
- Instead of having to work through complex shipping issues on your own, you rely on your 3PL as a trusted resource to help you find the shipping solutions that best matches your needs.
For SMB shippers, the journey to stability begins when you form a relationship with a reliable, experienced and trustworthy 3PL.
The Bottom Line
With over 20 years in the business and relationships with hundreds of freight carriers, FreightCenter has been the 3PL of choice for many SMB shippers. If you’re an SMB shipper looking for a 3PL to partner with for your Truckload or LTL shipments, we’d love to speak with you. Give us a call at 800.716.7608.
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