Of the major factors that make a logistics operation successful, managing volatility in freight markets is one of the most important. Volatility manifests as fluctuations in supply-side availability, or as customer demand, or as an external event (like a pandemic). It has immediate and substantial impacts on costs, and can be a major source of profit drag.
For logistics managers, mitigation isn’t straightforward. Simply pricing in the risk would make rates unsustainable, so organizations have to adopt more sophisticated strategies that adapt to market conditions. At JetCo, we have built our strategy on three pillars:
When freight demand is strong, redundancy in the supply chain helps smooth spikes in pricing or dips in availability. Also, by actively developing multiple transportation options, opportunities to find efficiency naturally develop as demand eases.
Delivering to highly-secured or difficult-to-access locations demands a high level of trust and respect between companies and logistics partners, but organizations doing business commercially can benefit from developing trusted relationships as well. The freight market has an enormous amount of human capital, companies that recognize that as a place to invest real resources will find that it pays dividends in a volatile market.
Resource diversity is key to active management of market uncertainty, and finding ways to multiply expertise internally and externally is a powerful way to mitigate risk. At JetCo, we utilize a mix of resources, including our own logisticians, brokers, and best-in-class technology platforms together to predict and mitigate market uncertainty.
In the past several years, the freight market has been severely tested by swings in demand due to general shifting industry in the United States, the ongoing pandemic, and technology. Through the application of these strategies JetCo has been able to maintain a 99% on-time rate for shipments. For more information on how we manage through volatility in the freight market, view our capabilities.