2022 has had its fair share of supply chain disruption. Trucking rates through 2022’s Q3 haven’t seemed as volatile as in months past, as fuel prices have stabilized a bit. But even if things like fuel prices and inflation have peaked, Q4 is too vital for many businesses not to be prepared. Now that we’re heading into the Holidays, the peak trucking season is ramping up which will bring on more chaos and fluctuation in truckload capacity, service and rates. The key question to all large shippers is… how have you prepared for it?
To help fend off potential risk, some shippers have continued to lock in long-term carrier contracts. But unfortunately, RFPs produce fixed pricing that does not fluctuate with market demand resulting in the shipper paying too much or receiving horrible service. Innovative shippers have taken a much deeper look inside freight management protocol, and they have determined that traditional practices, such as the time-consuming RFP, no longer work. Why? Because static and manual processes can’t keep up with today’s market turbulence. They don’t provide the flexibility needed to pivot as disruption occurs.
Forward-thinking shippers have embraced technology and industry 4.0 concepts, such as automation, AI, and visibility/ data. They have spent time and money overhauling critical supply chain processes, such as freight procurement, to help keep goods moving. Shippers who continue to rely on decades-old processes, like RFPs and freight brokers, will eventually lose their supply chain competitive advantage, and worse erode their margins and profitability.
Automation & Data
Freight procurement automation utilizes AI to help shippers always deliver goods on time, and at a fair market price– no matter market conditions. The technology removes waste from the process and dynamically sources asset-based carriers at the perfect time, place, and price. When dealing with brokers, there are mystery fees built into the cost, and precious time is wasted as they find a carrier. With AI-powered automation, loads are only sent to complaint carriers who match the shipper’s preconfigured load attributes. With the middleman eliminated, carriers bid directly on loads in real-time which means the truckload price is set by the carrier based on current market conditions [freight supply and demand]. And both the shipper and carrier get full transparency into the transaction. Everyone wins!
Another way for shippers to prepare is to obtain advanced freight procurement data. Unfortunately, most 3PLs only share a small portion of the data back with shippers, which makes it hard to know how best to optimize things like the carrier network.
Looking Ahead
Although things have remained fairly steady in Q2 and Q3 2022, that doesn’t mean there aren’t more surprises around the corner. To help prepare for unknowns, shippers need to embrace tools that support agility. Utilizing technology to automate freight procurement, along with obtaining actionable freight data from vendors, will help shippers uncover sustainability, resilience, and cost reduction opportunities.