What is coming for the next 12 months, how it will affect

you, and what you can do to improve performance.

FREIGHT FORECAST

12 Months and a Whole New World

• Drivers left the road, demand left the atmosphere,

rates followed along on short supply of drivers

• Quarantine life proxied demand for freight services

to 150% of average while low supply had 1 in 4

shipment tenders being rejected

Brutal Comps and Continuing Trends

• YTD Dry Van $/Mile National Average vs Pre-Market-Shift 2020

• National Average Dry Van Load-to-Truck Ratios 2019-2021

Zero Relief from “Contract” Rates

• 1 in 4 shipments tendered to contract rates are

rejected/declined. Emphasizing their nickname “paper rates”

• “Contract” rates climb directly in line with spot, but decline

much slower

Largest CPGs in North America report supply chain results

from 2020 via Food Marketing Institute and Boston Consulting

Group. 800bps decline in On-Time In-Full Performance and

37% increase in transportation cost/case.

*Note that, even pre-COVID, these brands were not performing well in Service Levels.

For Price Shoppers, Costs Rise While Service Plummets

Predictive Indicators

• Import data shows a surge of inbound TEUs to US

Ports. Red line illustrates the correlation between

import TEUs and demand for trucking services.

• The Logistics Managers Index (LMI) is a composite

index similar to Purchasing Managers Index (PMI).

LMI is a reliable predictor of logistics costs and is

forecasting demand for trucking services continuing

to grow and at a faster rate looking forward.

Freight Trends on the Horizon

• The proposed infrastructure bill is poised to be a disruption event for the freight market

• It will increase demand for trucking services and pull capacity from an already tight market

• Could also pull labor out of trucking as drivers look to construction jobs for improved working conditions

• If an infrastructure bill passes or inventory restocks continue, capacity could be further strained

• Infrastructure building materials would take priority over other types of freight, thus further shrinking capacity

• Ports along the West Coast are already backlogged for months

• Uncleared freight at ports commands capacity that would otherwise haul CGs

Congestion and capacity situation could worsen

More freight to be added to the marketplace

Continuing Consumer Trends• Retail demand remains strong. CPG sales in 2020 grew by

9.4% over 2019. More of the same is predicted for the coming

year. According to the Consumer Brands Association expects,

“the annual rate of purchases still is expected to grow by 7.4%

to 8.5% compared with 2019.”

• Consumer demand will stay strong and continue to buoy use

of freight services. Analysts are predicting that all parts of the

transportation side of the supply chain from ocean container to

over-the-road carriers are set for more of the same in 2021.

This demand, in combination with supply chain disruption, will

continue to apply upward pressure on rates.

The Situation at Retailers• Retail environment adapting to COVID trends, restocking inventories

• Tightening SKUs, upping compliance measures, pushing substitutions,

aiming to work with brands that can meet delivery standards

• This is both a challenge and an opportunity for brands. Your

organization can win, secure, and grow shelf space just by being there

• Even after the initial pandemic shock and despite paying up by 15+%,

CPGs reported no better OTIF results with critical retail customers

• Transportation cited by a Consumer Brands Association study as the

leading cause of cycle time variability and out-of-stocks

What Can Brands Do?• Success in the post-pandemic world will require a retail

optimized supply chain

• Time to rethink your logistics strategy

• Chasing rates has proven myopic

• Transportation should be viewed as an organizational

investment

• Specialized logistics providers can help you improve

processes, consistently meet OTIF requirements, and

increase supply chain performance while reducing costs

Understand Retail Scorecards: Failure Equals Lost Sales and Fines

• Dashboard Level Performance Visibility

• Wal-Mart OTIF and Fines – Note: Wal-Mart reports average supplier scores in mid-70s

Focus on Performance• Lost sales to out of stocks and the chargebacks that come

along with them are doing more harm to your gross profit

than logistics costs ever have or ever will

• Instead of looking at “Logistics Spend,” take this opportunity

to align your company toward performance and look at

“Logistics Investment”

• The right partners can bring you a return in the form of OTIF

success that drives increased margin and improves your

relationships

Optimize Your Network

• Utilizing a data–driven approach to your logistics network can unlock

previously untapped performance

• Secure synergies in the supply chain by leveraging data analytics and

geographic pricing trends

• Allows your organization to set up warehouse location, product mix, and

inventory density properly

• Grants the ability to understand preferred carrier arrangements, where

those carriers fit into your network, and how that works with a receiver’s

network

Get Strategic About Logistics

• Strategy should be more encompassing than cutting spend

• Get deeper to realize larger savings and performance increases

• Exert control and add end-to-end visibility, eliminate CPU arrangements

• Wielding a successful supply chain strategy can differentiate you from your most

vehement competitors

• The CPGs best positioned to succeed in the post-COVID environment are those

using their supply chains as a competitive advantage