Change hits the road: Why overland freight strategy is at a turning point

Road freight is the glue that holds global distribution together. Less dramatic than giant container ships, less flashy than rapid air freight, we nevertheless rely on road to be, at the very least, the first and last link of every supply chain. And while challenges in this market can be less visible than, say, a boat stuck in the Suez Canal, the overland infrastructure around us is facing profound changes, from technology evolution, to changing customer demands and driver shortages.

To understand the key factors driving this evolution, we sat down with Michael Starr, Overland Commercial Director at Zencargo on our podcast, Freight to the Point, to discuss how shippers are rethinking the road ahead.

Changing gears 

Road freight operates as the tip of the spear when it comes to implementing any logistics strategy – as such it’s often the first area to be impacted when conditions change. Over the consumer-demand explosion of the pandemic, that meant speed became priority number one. ‘You really had to just accelerate all aspects of your supply chain and road – whether it’s B2B, B2C, the pandemic was all about speed, getting stock to your customers, getting there in the timeframe that they expected. And costs naturally became second nature.’ explains Michael.

This has been exacerbated by recurrent issues in the market, including:

• Capacity shortages or excess capacity as demand fluctuated
• Rising fuel costs as a significant portion of operating expenses
• Reliability issues impacting customer satisfaction and operational efficiency as customs and border issues hamper efficiency
• Data and visibility gaps between road and other modes

At the same time, the industry has faced a crisis of recruitment, as long term gaps in sourcing and training drivers combined with a wave of retirement and individuals leaving the profession – one that demands long hours, variable pay and a life on the road.

For a highly distributed industry – the last figures put the numbers of road freight carriers in Europe at nearly 600,000 – change can create opportunities for more agile carriers to take advantage of new conditions. This can mean significant investment in efforts such as:

• Euro 6-compliant truck fleets
• Cleaner technology
• Driver training and recruitment
• Telematics and tracking, with companies like FourKites and project44

Cost and collaboration in road freight

Like other modes, road freight includes major asset costs for carriers – however, the market dynamics of investing and then recovering those costs are unique to road. ‘Solutions tend to move faster in road freight than they do in other modes of transportation, but rates and capacity tend to not change that much.’ says Michael.

Being a first mover or adjusting pricing does not necessarily guarantee an influx of shipments or the ability to keep drivers consistently busy – even if a company has excess capacity, lowering prices to attract more business does not mean an immediate increase in shipments or utilization of trucks. With fierce competition in the market, if one carrier reduces capacity to a bare minimum, there will always be other competitors striving to fill the void and meet customer demands.

While this means higher prices for shippers, it also puts more pressure on carriers to compete at a service level, rather than price, opening the door to a strategic approach to partnerships, rather than getting caught in the spot market pricing race that has hit the ocean market.

Making a strategic turn

With much of the traditional approach to road in flux, shippers have more scope than ever to rethink their approach and find partners that can support them in their overland vision. However, this first requires a change in how you approach your partnerships within the space.

The goal of working with a reliable road provider should be toeverage their expertise, network, and resources to align your road freight operations with your broader business goals, including collaborating on planning, capacity management, and route implementation. Opportunities include:

• Consolidation and multi-stop shipments to reduce transportation costs, improves efficiency, and minimise environmental impact, including milk run or origin consolidation strategies.
• Technology adoption for improved visibility, tracking, and communication throughout your road freight operations, integrating transportation management systems (TMS),  route optimization software, and real-time tracking tools for proactive decision-making.
• Data analysis for key performance indicators (KPIs) such as on-time delivery, cost per mile, and carrier performance to identify trends, bottlenecks, and opportunities. 
• Customer-focused road strategy to plan delivery schedules, improve communication on lead times  and share visibility into shipment status.

The non-asset advantage

For choosing a route to market for your road freight procurement, shippers have a choice between working with asset holders directly, or working with a non-asset provider such as Zencargo. Given the wide range of networks available for transporting by road, shippers often end up building, and having to maintain, multiple relationships to manage their supply chain, which can be time-consuming if pursued in-depth. 

‘One of the beautiful aspects of working with a non-asset based carrier is you’re able to have the same operational efficiency across your whole supply chain, filling all those different gaps with better solutions from the marketplace,’ says Michael.

Zencargo works with leading road carriers across the world, combining local heroes and international experts to provide the maximum choice and flexibility to our customers. Working closely with supply chain teams, our experts help you create a tailored framework that reflects the changing needs of your business, and then ensure every stakeholder in your supply chain works to a consistent standard when it comes to service, delivery and data, including:

• Flexible freight options, including Full Truckload (FTL) and Less than Truckload (LTL) services
• Real-time tracking and visibility to monitor the progress of your goods and track delays or disruptions, including between modes and countries
• Integrated customs expertise to assist with clearance requirements and handle documentation
• Agile networks to find the best combination of price and lead time for any delivery 

To find out more about how Zencargo can support your road freight strategy, get in touch with our team.