Double Brokering Avoidance – Tips from an expert
Double Brokering by definition is when the original intermediary that has been tendered a shipment turns and tenders the shipment to a trucking company that they think is going to haul the load on their equipment. Without knowledge of the original provider or the customer they in turn tender that shipment to another trucking company who will ultimately move the load. Transparency is the key component here, because it is the lack of transparency that makes it double brokering versus co brokering. It is estimated that approximately $100 million dollars a year of the estimated $700 billion trucking industry is subject to Double Brokering. Communication This is pretty straight forward in the brokering world, but I strongly believe an open line of communication is the key to preventing double brokering issues. A strong line of communication and a good relationship with the carrier you contracted the load with is extremely important. A couple ways to prevent double brokering is by sending that extra email to the carrier about correct driver information or asking for the BOL after they get loaded. Also communication with the customers and or shipping locations about who is checking in and delivering the freight is another length you can go to prevent potential double brokering. Investigate the Carrier Carrier compliance websites such as Carrier411 and Truckstop.com are two examples of websites where you can vet the carrier and see a quick background on any specific carrier. You can look at some key factors such as insurance (do they have the right levels?), freight guard reports (any unethical practices reported?), and time they have been in service...
The Data Challenge
As a shipper, you’re generating and capturing a ton of data around your transportation and freight, such as costs around loads, carrier OTD/OTP, lane history, and more. You may also subscribe to 3rd party data sources like DAT or Freightwaves. Some of this data is useful for RFPs, whether you’re doing those annually or more frequently. But that’s a lot of data to collect, store, and sift through if you’re just using it for (admittedly important!) seasonal contract negotiations. You also likely have a lot of other data that is underutilized or totally unused. Many (but certainly not all) shippers employ data analysts to process all of this data and produce actionable insights. Some TMS and ERP systems have some good analytic capabilities built-in. You may have a stand-alone analytics platform to aggregate data and help with this. Are you really using these solutions to their full capabilities, though? Are you looking at your data just in the bubble of what’s happening with your freight, or are you looking more broadly to see how you’re doing relative to the market? Without a person or a product dedicated to analyzing your data, you’re likely missing out on some valuable insights. How are you deciding which carriers to keep in your network, what rates need to change (and how much they need to change), and other critical transportation decisions? Are these data-based decisions, or are they based on history/experience/rules-of-thumb? As Mike talked about in a blog post last month a lot of shippers fail to segment their providers to and may unnecessarily be rewarding carrier who don’t truly qualify to be considering...
Navigating the Logistics Landscape: Why Reducing Variability is Key to Long Term Success
Removing variability from transportation management is critical in ensuring the overall efficiency, cost-effectiveness, and reliability of the logistics operations. By doing so, it can yield several benefits: Cost Efficiency: Constant changes can lead to unpredicted costs, which can negatively impact a company's bottom line. By reducing variability, a company can better predict and control its transportation spend. Improved Service: Variability can lead to delays or disruptions that affect customer service. Consistency in operations helps maintain service levels and customer satisfaction. Risk Management: A stable transportation process is less likely to encounter unforeseen issues or crises, thereby reducing the risk associated with the business. Performance Measurement and Improvement: It's easier to measure performance and implement improvements in a stable, less variable environment. By reducing variability, companies can more accurately assesstheir performance and identify areas for improvement. So how does a logistics organization reduce as much cost variability as possible? It really comes down to their overall approach when dealing with their carrier partners and how the procurement process is carried out. In times of extreme volatility, whether it’s in an oversold or undersold market, one's approach makes all the difference. Securing the lowest possible rate should be considered a short term strategy because low prices only benefit the shipper in the short term and may result in larger variability in the long run. Shippers need to be asking themselves several questions when potentially adding additional providers to their carrier network based solely on a lower rate structure. Does the provider have a proven track record in the markets they bid on? Can the provider seamlessly integrate with the TMS or are...
Shipper of Choice: Another Take
In today’s rate environment, many manufacturers and retailers believe they have solved their transportation problems because they’re getting high routing guide compliance and meeting their budgets. Is this the same false sense of security that accompanied the downturn in 2019 or do they have eliminated the problems in their network? “Shippers are misinformed or unsure of what it means to be a ‘shipper of choice.’ Ultimately, this can lead to inefficiencies, cost overruns and service erosion over time.” - Gartner The larger swings in price and performance over the past 5 years have led many shippers (Manufacturers, retailers, and distributors) to reshape their strategies in a number of ways. This has resulted in false positives when reviewing strategies for their effectiveness. The gap between spot market (what a carrier/trucker/broker can get in the open market) and contract rates (what they’ve agreed to in advance during a shipper’s bid process) is currently about 20%. In actual dollars, it’s $2.06 vs. an all in contract rate of $2.54 on a national basis. The ~$0.50 gap has been about the same for the past 12 months even as both spot and contract rates have been coming down. Providers that failed a shipper in 2021 but have performed well in 2023 are playing the market, they haven’t had an epiphany. “Logistics leaders must strategically align with carriers and implement the programs, segmentation strategies and digital investments required to become a shipper of choice.” - Gartner Comparing your historical data to market comps is the best place to start Routing guide compliance, Acceptance at contracted rates, On-time service levels, meeting your budgets are the ultimate...
Surge in Freight RFPs: Why Shippers Must Remain Vigilant
The logistics industry is witnessing a remarkable rise in the number of Request for Proposals (RFPs), marking it a record high year. It is expected that GDP will have slow growth between now and thru 2024 - 0.50%-1.00% on average. While this could potentially signal growth and expansion in the manufacturing sector, it also poses a unique set of challenges for shippers. Notably, with the freight market at a low point, rates are poised for a gradual increase. This imminent change, coupled with a diminishing number of carriers, might lead to a decline in acceptance rates. This is exactly why it is crucial for shippers to pay close attention to these market shifts to maintain efficient and cost-effective operations. Freight RFPs: An Indicator of Market Dynamics Traditionally, a high number of RFPs signify healthy market conditions, fostering robust competition among freight service providers. However, the current rise in freight RFPs coincides with the freight market's bottomed-out rates. In fact, spot for Reefer bottomed out back in April 2023. This situation can be attributed to several factors, including ongoing supply chain disruptions and varying capacity constraints that have led shippers to explore more competitive freight options. While lower rates might initially seem beneficial to shippers, they could create a precarious situation in the long term. As rates start to rebound, there is a likelihood of price instability, resulting in unexpected cost escalations. This situation calls for shippers to remain extra vigilant while negotiating contracts to ensure their operational costs remain within predictable margins. Decreasing Carrier Capacity: The Impending Challenge The logistics industry is also grappling with a concerning trend of carriers...
How a Rail Strike Impacts Trucking
The threat of a rail strike has ramped up in recent weeks, even causing the United States government to start discussing contingency plans. Supply chain woes are nothing new to the trucking industry over the past few years, but this would put a heavy strain on over-the-road supply. Roughly 60,000 union members that are employed by the railroad are set to go on strike, and that includes conductors and engineers. The railroad system carries nearly 30 percent of the nation’s freight, and a strike by those conductors and engineers would quickly bring the system to a stop. Trucking Routes Would Become Imbalanced The rail industry doesn’t employ nearly as many people as it did decades ago, but railroads are still a vital part of the shipping industry in this country. Railroads move more than 324,000 containers per week. A railroad strike would have a direct impact on truckload capacity, causing it to be oversold and imbalanced. Trains are how goods get from ports to the distribution hubs. Trains are built to move massive quantities of things like grains, chemicals, and coal. One railroad car has the capacity of between 3-5 semi-trucks. A rail strike would produce an additional 200,000 tanker truckloads per week – just to move chemical products. Find Ways to Expand Trucking Capacity Now If trucks need to shore up the loss of rail shipping options, it would put even more strain on the ports – many of which are already bursting at the seams. The threat of a rail strike is real, and businesses that rely on shipping should be doing everything in their power to prepare...
Happy Carriers
AI-Powered Automation Helps Both The Shipper & Carrier Win! If your business relies heavily on shipping to keep customers happy, there’s another group you have to keep happy, too. Carriers are the lifeblood of any shipping business, and maintaining strong carrier relationships helps to keep goods moving as planned– and most importantly arriving on time. Unfortunately, small to medium-sized carriers are often overlooked, which is a big mystery knowing they represent the lion’s share of compliant, asset-based capacity on the roads today, and yield nothing short of industry-best service levels. This is precisely why FreightTech startups, like Sleek Technologies, have entered the space and worked hard to build strong meaningful relationships with small to medium-sized carriers across the US. And to help gauge carrier sentiment in relation to the competitors, Sleek Technologies most recent Carrier NPS [which determines the likelihood of a carrier to recommend the company to others] was 5X higher (57) than the industry average (10). So what makes Sleek Technology so special? Sleek Technologies has advanced the decades-old way to procure freight by using AI and proprietary algorithms to dynamically source the perfect carrier, at the right time, place, and price for every load. So instead of relying on a small percentage [in some cases less than 1% through contracted carriers] of today’s available truckload capacity, large shippers can now automate carrier sourcing by tapping into a self-regulated freight marketplace. Shippers pre-configure load attributes, and AI dynamically matches out-of-network carriers who are checked daily for compliance. Without the middleman stealing economic value, both the shipper and the carrier win! With no hidden margins, the shipper reduces truckload...
Using AI to Battle Rising Diesel Costs
There’s not much shippers and carriers can do when decisions or events on the other side of the globe impact the price of fuel. But just because fuel gets more expensive doesn’t mean business stops. According to the American Trucking Association, trucks moved around 72.5% of freight in the United States by weight in 2020. Since the majority of those trucks run on diesel fuel, seeing a major increase in the price of a gallon of diesel - like the one the U.S. is in the midst of right now – can have an immediate impact on profits. The average price for a gallon of diesel jumped up to $5.623 on May 9, according to the Department of Energy, marking a 46.3-cent leap over the last two weeks. As recently as Valentine’s Day, diesel was only $4.019 per gallon. A year ago, it was $3.186 – marking a rise of almost $2.50 per gallon over the last 12 months. Trucking companies generally apply a fuel surcharge to cover those inflated fuel prices, but those increases often get passed on to the customer. It’s hard to predict when the rise will stop – or even slow down – so it’s up to shippers to find other avenues to reduce costs. As diesel prices continue to rise, shippers are faced with the dilemma of charging their customers more or operating at reduced margins – unless they can find other ways to cut costs. Innovative shippers have embraced AI-driven tools for automation that have helped offset rising fuel costs. By using these tools, it can lower the overall cost of shipments, ensure that goods are...