An analysis of the top six retail brick-and-mortar department stores shows an estimated annual freight spend of between $8 billion and $12 billion.
Along with consumer demand skyrocketing for tangible goods during the pandemic came issues with the reliability of the retail supply chain. By 2021 just in time was replaced by just in case as retailers fiercely competed for manufacturing time and freight capacity to move goods onto store shelves. By February of 2022, however, the party was over in many cases. Consumers shifted their spending back to a more traditional mix of goods and services as the pandemic eased.
In this economic environment, retailers that are using freight market intelligence to drive supply chain decisions are gaining a competitive advantage over their peers.
Driving cost savings is essential. In our analysis, we show that a 1% savings on freight costs can drive material results to a retailer's net income. To do this, though, a company must understand not only what drives the freight market but how it all drives supply, demand and rates in real time.
A second and often overlooked benefit is that freight markets are leading indicators of the overall economy. In addition to freight spend savings, strategies for inventory management, order timing and more accurate revenue forecasts are directly tied to identifying when and why freight markets make significant moves. Our analysis shows how SONAR freight market intelligence has predicted each of the major moves in economic activity during the pandemic.
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