We’re all busy. The day-to-day noise of the transportation function is never calm and peaceful. This is especially true as we ramp into and through peak and GRI season. But urgent is the enemy of strategic, and the tactical issues of today tend to overshadow the more strategic elements of our roles as transportation leaders. The things that don’t squeak loud enough tend to get left alone to operate as they always have. That is, until the squeak becomes a roar, and now we’re dealing with something a little oil and effort can’t fix.
Normalcy bias is the tendency to minimize the risks (and opportunities) based on overreliance on historical norms. We see this bias in the transportation realm repeatedly and consistently, and it is something we need to be cognizant of, and to mitigate, if we don’t want to have to re-learn hard lessons.
Prior to 2020, most small shippers were still single-sourcing with one national parcel carrier. While larger shippers were often utilizing multiple carriers, it was typically with an eye toward exploiting cost differentials, rather than for mitigating capacity risk. Luckily (or unluckily), this didn’t hurt shippers too much when capacity tightened, as the capacity shortfall spanned carriers, and even shippers that were well diversified had capacity issues. In other words, everyone was in the same boat. But in a carrier-specific situation, let’s say a looming labor dispute at a specific carrier, or maybe a technology exploit, the bias toward single-sourcing could have a dramatic impact on shippers’ ability to execute shipments.
Nor is this the only example highlighted by the pandemic. As lockdowns became common and social distancing became the norm, the US economy saw an unprecedented growth of e-commerce. This is what brought about the capacity issue in the first place. Carriers scrambled to increase capacity, both flex capacity and fixed, to ease the strain and to take advantage of the growth. However, they planned and executed growth as if the growth they were seeing would extend into the future indefinitely. And after all, why not? Many of the economic prognosticators predicted it would do exactly that. But nothing lasts forever, and the business cycle comes for us all. So, when parcel volume began to first slow and then fall in late 2022, the carriers were left with the unattractive prospect of excess capacity. That was a problem for the carriers in late 2022, and as volumes continue to contract, the problem becomes bigger and bigger, all because fixed capacity was built with the expectation that e-commerce growth would continue in perpetuity. Luckily, this situation was a net positive for shippers as it, combined with new entrants into the carrier market, has resulted in a more competitive, more shipper-friendly market. But the inverse could just have easily been the case (remember 2020/2021?).
“We’ve been a UPS (or FedEx, or anyone) shipper for 20 years!” Really? A single carrier has been the optimal carrier partner for you for two decades, with no additional cost, transit, or service opportunities with any other carrier? It’s a cliché at this point, but it’s a cliché for a reason: Just because you’ve always done it one way, does not mean it’s the right way.
Now that we’re all on the same page that normalcy bias is a hazard, and that it has sharp teeth, what can you do to avoid the bite?
Don't Go It Alone
Establish a peer group that meets regularly to discuss the transportation landscape, macro-economic implications, trends in carrier performance and pricing, and opportunities for cooperative actions. Ideally, this group will be made up of leaders from other organizations, and a mix of both those within your specific industry as well as from other industries. The goal is to avoid insular thinking; to get outside the box and expand the perspective. Obviously, there is a balance to be maintained between what is shared and what is held close. But avoiding the temptation to share nothing and hear everything will produce better results.
Embrace the Pot Stirrer
How many times have you seen a strategy presented and immediately all heads start nodding and everyone gets on board? Well, maybe. But maybe not. The Law of Unintended Consequences can be mean. Assigning one person in the meeting/workgroup to assume the role of contrarian can be extremely valuable. By assigning a person to this role explicitly, you remove the stigma of conflict, leaving the contrarian free to explore risks and alternatives more openly.
Block Out the Time
On a bi-weekly, or at least monthly, basis, block out an hour (two is better) for a macro assessment. Turn your ringer off. Ignore incoming emails. Even go offsite if you need to. Whatever you need to do to separate yourself from the immediate and allow the time to assess what your organization is doing simply out of habit or ritual. Consider the potential consequences of these non-decisions. Without distance and focus, you will never be able to zoom out and take the long view. And you will never be able to achieve either in the controlled chaos of the typical day in transportation management.
See It Coming
Fighting normalcy bias isn’t solely about broadening your perspective and challenging assumptions. It is true that the items above are the best option for seeing events beyond the horizon. But no one anticipates everything. And black swan events seem to be the new normal. Technology is the answer in these cases. Visibility and reporting tools are necessary. But they are simply insufficient in these situations. This is where artificial intelligence, or AI, comes in. AI, through machine learning, can identify, communicate, scale, and quantify aberrations in even the largest datasets, recognizing trends that would not become apparent to humans for weeks or months. AI-enabled solutions are an important tool in the savvy transportation leader’s toolbox.
It probably sounds like combating normalcy bias is going to require a fair amount of time. It is. And it’s worth it. More to the point, failing to acknowledge and resist normalcy bias is risky in the extreme. The potential outcomes are large in scale and consequence. Don’t assume the status quo will continue into perpetuity. If the last three years have taught us anything, it is that change is inevitable, and those who can anticipate, and respond effectively, win.
Joe Wilkinson is VP, Professional Services (Transportation Consulting) at Intelligent Audit. He can be reached at email@example.com
This article originally was published in the November/December, 2023 issue.