Shippers Adjust Strategies for Decreasing Demand and Potential Recession

As shipping rates continue to increase and inflation is the highest in decades, decreasing demand is the writing on the walls of Wall Street. Economists predict that the U.S. is heading for a recession, and the global economy must adjust accordingly. While shippers cannot solve an impending recession, they can adapt their strategies to increase shipping rates and decrease demand.

Is demand decreasing?

According to Bloomberg, American consumer spending began falling in May for the first time in months, another indicator of a potential economic recession. This trend started after a sharp rise in prices for American gas, housing, groceries, and other necessities. In June, Congress passed legislation to reduce the effects of inflation, but demand isn’t expected to spike again soon. Shippers are responding by strengthening carrier networks, adjusting stopgaps, and promoting overall supply chain agility in the face of ongoing global challenges.

Strengthening carrier networks

Supply chains must become shorter and more flexible in the wake of a potential economic recession. Flexibility requires shippers to nurture relationships with localized carriers accustomed to a fluctuating market. It’s also crucial for shippers to have access to carrier networks that can adjust to sudden and less predictable spikes in demand. 

Long-term carrier relationships and routes are not always reliable in a potential economic recession, so shippers must adapt with alternate options. These options include expanding networks while also strengthening long-term contracts with reliable carriers. Increased use of spot quotes has been a necessary stopgap strategy for the past several years, but decreasing demand calls for a return to steady relationships with vetted carriers. 

Adjusting inventory management strategies 

For some time now, large suppliers have been adopting stopgap storage strategies to accommodate for pandemic demand that has far exceeded capacity across supply chains. These solutions have included chartering ships, simplifying product lines, and purchasing trailer space to combat rising warehouse costs. Decreasing demand doesn’t eliminate the need for these stopgap solutions, as supply overflow will remain a challenging issue with reduced demand. However, there is room for some adjustment to these pandemic-era strategies. 

Shippers can adjust when decreasing demand lowers the volume by consolidating shipments and reducing inventory wherever possible. Once again, the resilient strategy is grounded in flexibility. Supply chains must be agile enough to accommodate short periods of high demand and long periods of low demand. Shippers need to prioritize access to a wide range of suppliers and warehouses. This type of access is best managed using virtually integrated processes.

Increasing reliance on predictive analytics

As decreasing demand continues, shippers are reducing costs using predictive analytics to determine to mitigate risks. Predictive insights gathered from real-time market analysis allow shippers to forecast potential disruptions. Shippers increasingly rely on BI analytics for forecasting efforts, which are made available through robust logistics platforms.  

A robust TMS promotes real-time visibility of operations at every step of the supply chain, providing the BI tools that shippers need to predict demand, find the best rates, and nurture long-term relationships within a network of vetted carriers. CTSI-Global’s Honeybee TMS™  provides access to over 20,000 carriers, along with 60 years of continuously updated data reporting, so that shippers can respond to demand fluctuations in real-time.

A potential economic recession is just one of many challenges that shippers have to face, but CTSI-global has the tools for you to weather the storm. Contact us to discuss how you can adjust your strategies for decreasing demand. 

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