Do You Have the Shipment Visibility to Manage Your Inventory Pipeline in the face of Post-Pandemic Consumer Spending?

  2021 05 06 Consumer Confidence BL


As consumer confidence returns to pre-pandemic levels in the United States, freight shipments buoyed by consumer spending is expected to pick up commensurately. With increased demand for shipments, capacity in the freight market is sure to tighten, leaving no room for error in the management of supply chains to ensure on-hand inventory to meet growing consumer demand. 

Consumer Confidence Up But Inventories Down 

US consumers are starting to put their Covid doldrums behind them, regaining a positive outlook about the direction of the economy. The Conference Board United States Consumer Confidence level reached 121.7 this past April, up from 109.0 in March. The April 2021 consumer confidence level was the highest it’s been since February 2020 when the Covid-19 pandemic first struck the United States. Most economists viewed the uptick in consumer sentiment as a sign that household spending would pick up in coming months as consumers have become upbeat about labor and economic markets as well as the effective Covid-19 vaccine rollout. 

During the pandemic, inventories fell drastically. The seasonally adjusted inventory-to-sale ratio stood at 1.26 in January, the measure’s lowest level since 2012, according to the latest figures from the US Census Bureau. To meet rising demand, businesses are going to have to restock a considerable amount of goods. 

The uptick in the latest Cass Freight Shipment Index shows that restocking is now underway. A barometer of freight activity in the US economy, the Cass Freight Index for Shipments reached 1.196 in March, a jump of 5.8 percent from February, indicating an increase in the number of truck, rail, and air shipments across the United States. Cass Information Systems, a provider of automated payment systems, compiles a monthly index that gives a picture of aggregate deliveries of US freight. 

  Consumer confidence chart

History shows that the Cass Freight Index mirrors retail inventory.

Tight Capacity in Transportation Markets

With rising consumer spending and low inventory levels, the demand for freight movements should remain strong throughout the year as the consumer sector is historically the strongest driver for US shipments. The limiting factor for shipping at the moment is capacity. The trucking capacity, in particular, is already constrained due to tight equipment supplies and the continuing shortage of truck drivers. 

Faced with limited capacity in the transportation market, every shipment becomes crucial to inventory replenishment as carriers are not readily available for taking loads. When a carrier is found to handle a load, it’s critical that the shipment arrive on time and in full at the distribution center or store to keep products on hand for sale. 

End-To-End Visibility For Agile Inventory Management

Unfortunately, carriers cannot always meet their scheduled delivery times due to unforeseen circumstances such as weather or traffic congestion. That’s why supply chain and logistics service providers need to have end-to-end visibility of pipeline inventory. 

With visibility to track freight movements in real-time, supply chain executives are in the position to take action right away when goods don’t arrive on schedule. In-transit visibility enables supply chain managers to be proactive in handling exceptions to mitigate the impact on inventory. For starters, they can take steps to ensure staffing availability to unload shipments for quick restocking. In-transit visibility allows companies to better manage their cycle and safety stock inventories. That way managers can reprioritize on-hand inventory throughout their network to meet emerging or shifting demand and, when possible, reroute deliveries in progress to different locations. 

Visibility as a Competitive Edge In Meeting Consumer Demand 

As the US economy comes out of the Covid doldrums, businesses will be challenged to keep goods in stock to match inventory with consumer demand. Companies that use end-to-end, real-time, in-transit visibility for smart inventory management will gain a competitive advantage over their rivals by having more goods available to consumers.