Freight Market Fluctuation It’s a shipper’s market. Truckload cost has decreased, and shippers are level-setting pricing with their providers. But sometimes, especially when the c-suite has demanded operational cost reductions, shippers push too hard chasing the lowest-priced providers, which can push long-term providers to the side. They lose sight of the bigger picture, and often-times forget about longer-term ramifications until it’s too late. “Focusing 100% on truckload cost may reduce a shipper’s transportation budget in the short term, but opens the shipper up for more risk especially when the freight market snaps back,” said Dean Corbolotti, VP Managed Services at Sleek Technologies. “The long-term approach should be to build win-win solutions that result in both the shipper and the provider reaping benefits year-round, as opposed to one side always winning.” But what happens when it is a carrier market; a tight freight market? Some providers chase the highest-priced loads and charge excessive amounts for their equipment to make as much money as possible. Again, this is a short-sighted strategy as only one party wins. Unfortunately, shippers and carriers take advantage of the cyclical freight market to help cover losses when the other party was winning. 'Win-Win' Shipper/Provider Strategy The only solution that supports long-term partnership relationships is a Win-Win solution. This is when both the shipper and provider work together so both parties win. A Win-Win relationship is built on trust. Here are three things that need to occur to support a Win-Win strategy: 100% data sharing (no more secrets or hidden margins). Charging/paying a fair market price (truckload price fluctuates with supply & demand). Staying the course during extreme...
Working as a successful freight broker, for over a decade, most of my days were spent wheeling and dealing over the phone or via email finding trucks to haul loads. My compensation was based on how much spread or margin I negotiated per load. The truth is, to be successful, most brokers focus on moving loads with the biggest margin. Oftentimes, different customers ship loads using the same lane multiple times per day. For example, many customers use Chicago to Memphis. Customer A is locked in at $2,000, while Customer B locks in at $1,000. As a broker, I know that carriers would accept Chicago to Memphis for $900. Therefore, my attention, like most brokers, would be focused on matching a carrier to Customer A’s load, which means more profit for my brokerage, and my own pocket! Customer A: pays $2,000 and carrier charges $900= $1,100 spread Customer B: pays $1,000; carrier charges $900= $100 spread Unfortunately, neither customer A nor B knows what the market demands which means they are either overpaying to haul the freight or in some cases under paying to haul freight which usually leads to horrible service levels. Without data transparency, shippers never know the true market cost or what carriers demand to haul loads. And this is exactly what brokers want to happen to remain profitable. Re-Inventing Freight Procurement But as supply chains began to embrace technological advancements, specifically AI and automation, I realized that machine learning could find, vet, and transact with carriers much faster than I ever could. That’s when it finally occurred to me that I could soon be out of...
We live in a world of fast-paced technological advancements, which have fundamentally shifted the way things are done. Most companies have embraced technology to streamline critical processes to help reduce COGs. For workers, technology has helped make job duties faster and easier to perform. Due to the increased level of disruption, innovation has had a significant imprint on the supply chain. The trucking industry has seen many recent advancements which have provided benefits for trucking companies, truck drivers, and shippers. Let's dive a little deeper. Improved safety: advanced safety features such as lane departure warnings, collision avoidance systems, and electronic stability control have reduced trucking accidents. Better Customer Service: GPS and telematics systems track trucks in real-time so everyone knows the exact location and status of trucks leading to improved efficiency, reduced downtime, and better customer service. More loads: AI-powered software dynamically matches shipper loads with compliant carriers who are notified via mobile app. With freight brokers eliminated, carriers bid directly on loads resulting in more money in the carrier’s pocket. Increased efficiency: ELDs have replaced paper logs, making it easier for drivers to comply with hours-of-service regulations. ELDs also provide more accurate data on driver behavior and performance, helping companies to improve safety and efficiency. Stronger Decision Making: collecting and analyzing data means stronger decisions related to operations, including driver behavior, fuel usage, and maintenance records to improve efficiency, reduce costs, and enhance safety. Greater connectivity: Wi-Fi allows drivers to communicate with families and colleagues and access important info while on the road. So no matter what company you work for, or what job you perform, chances are you...
Although CSCO’s continue to deal with unprecedented disruption, many remain committed to diversity, equity, and inclusion [DEI] initiatives. In other words, prioritized efforts to make a more welcoming environment for employees, suppliers, and customers. The 2022 Gartner and Association for Supply Chain Management (ASCM) DEI survey found that 93% of the largest, global supply chain organizations have DEI goals, with a strong intent to support women and underrepresented races and ethnicities. Smaller to med-size shippers may not realize that their supply chain, specifically their transportation management efforts, may already support DEI. Big corporations include supplier or vendor diversity as part of their broader DEI efforts. A diverse supplier is a business that is at least 51% owned and operated by an individual or group that is underrepresented or underserved, such as small-business enterprises (SBEs), minority-owned enterprises (MBEs), woman-owned enterprises (WBEs), LGBQT, veterans, and proprietors with disabilities. Forward-thinking shippers have made a conscious effort to provide these diverse business partners equal opportunities within their supply chain. Why Supplier/Vendor Diversity Is Important "Aside from moral and ethical considerations, there are several benefits to launching supplier diversity programs," said Jaimie Kowalski, VP of Sleek Marketing. "An inclusive freight procurement strategy broadens the pool of carrier suppliers which promotes healthy competition, improving on-time delivery, and reducing transportation cost." When supply chains have more sourcing options, they become more resilient and agile which is a must in today’s uncertain times. One Tip To Uncover DEI Within Your Supply Chain If you are a manufacturer, retailer or distribution center you probably use carriers to haul freight. And if you use small to medium-sized carriers [with less...
Disruption, and economic pressures to decrease costs without impacting business outcomes, have forced many large shippers to rethink how quickly they plan to optimize supply chain procedures. Unfortunately, in today's world, emerging risks can no longer go unchecked. In hopes to lower supply chain costs and improve supply chain resilience and sustainability, shippers have accelerated innovation efforts and are set to increase supporting budgets over the next 2 years. As a result, shippers have made supply chain digitization a major company priority with goals to advance and optimize order fulfillment, customer experience, and transportation management. So what's the difference between a traditional versus digitized supply chain? Although traditional supply chains use technology, the technology is usually standalone and lacks integration. A digital supply chain removes silos and provides seamless transparency for all supply chain teams. Another major difference is that traditional supply chains leverage historical data, whereas digital supply chains use real-time data. Real-time insights are important when making transportation management decisions because of freight market volatility. Lastly, traditional supply chains move slow because they involve manual processes. Digital supply chains use technology that replaces manual work with automation, and even better... if automation is powered by machine learning the shipper is armed with AI to dynamically pivot with little notice as disruption occurs. In the end, when the supply chain is digitized, shippers reduce time-to-market, maximize productivity, reduce cost, and most importantly improve customer satisfaction which feeds into the bottom line. Supply Chain Digitization Example [AI-Powered Freight Procurement] Award-winning software has advanced and automated transportation management, also known as freight procurement. AI-powered technology eliminates the hours-long, manual process of...