In A Tight Market, Are The Only Freight Rate Options Contract Or Spot?
Knowing the supply chain gobbles up 60-90% of a company’s spend, you better bet your bottom dollar that supply chain efforts have a huge impact on a company’s bottom line. Efficiently managing the supply chain has become the new competitive advantage for many manufacturers. One important effort, within the supply chain, is effectively managing costs to transport goods from point A (warehouse) to point B (end customer). A large percent of a shipper’s trucking services are sourced through long-term contractual rate agreements with preferred or primary carrier networks. Contracted rates provide long-term security on price and capacity, and in 2019 ran with a 95% acceptance rate. In 2020, contracted capacity is tight and acceptance rates have dropped by more than 20%. Shippers have been forced to enter what we call the “feeding frenzy”- the volatile spot market.
Once a load hits the spot market, the shipper loses control and the feeding frenzy begins. No matter the market condition, multiple brokers begin fighting over the same load. They each post the load multiple times, across multiple boards, making it look like demand for trucks has increased. Carriers then see this exaggerated “built-up” demand as an opportunity to bid higher- increasing the overall price to move the load.
But what if there was another option? What if a shipper could have a contingency plan in place to avoid the feeding frenzy? Well guess what, there is another option. Sleek Fleet was designed to help supplement preferred networks as a high-quality backup. In addition to all the regular brokerage benefits, Sleek Fleet provides 100% rate transparency so a shipper knows true market cost on their specific lane. The shipper gets the inside scoop on knowing actual driver cost and actual 3PL margin. This inside rate intelligence fills gaps that historical and market rate data do not provide and provides actionable data to help shippers make stronger, informed decisions.
In today’s world, uncertainty is the only thing we can count on. Having a contingency plan, that provides excess capacity, savings and market intelligence is a winning formula to help navigate unknown waters. So if you want to avoid the feeding frenzy, check out Sleek Fleet. We provide capacity when needed, without inflating load demand and shipper cost.