Thanks, But No Thanks To Rising Prices Thanksgiving Week
As you’ve probably seen, tender volume and rejection rates climbed to new heights Thanksgiving week. Analysts recorded over 17,000 outbound tenders on the day before Thanksgiving. And post-Holiday generated over 12,700 tenders, which represents a whopping 49% increase year-over-year. “There’s a massive amount of volume out there, and reports show that online shopping is already up 22% from last year which means records will continue to be broken,” said Dean Corbolotti, Sleek Technologies VP of Managed Services.
Beginning mid-November, the rejection rate climbed over 20%, and it has stayed there. Unfortunately, many shippers have been forced into the spot market to move freight. Unlike the beginning of 2020, average spot rates have been higher than expected and experts predict this will not change anytime soon. According to DAT, brokers have seized the opportunity to widen the spread between spot and contracted rates by $0.13 to a new national average high of $2.45 per mile. “Fear of the unknown drives shippers to seek brokers and pay any amount necessary to move the load,” said Corbolotti. “There’s no doubt that brokers are using this time to help recoup lower margins from the first half of the year”.
And now for the kicker… what will happen to rates when the Covid vaccine rollout begins? “Shippers are already struggling to maintain routing guides with higher tender rejection, and transportation budget overruns with increased freight cost”, said Mike Nervick, Sleek Technologies CEO. “The rapid rollout of the vaccine will impact capacity and pricing, especially in the refrigerated market. To prepare, shippers must look to new technology that turns static processes dynamic, such as updating the old, static way to secure capacity.”
Without a smart contingency plan, in other words... options, shippers will remain at the mercy of brokers. Optimal Transportation Spend (OTS), a nextgen software solution, empowers shippers to stay in control by dynamically providing direct access to small carriers [who by the way are already hauling for the shippers but hidden behind the broker], and providing 100% transparency. OTS cuts out waste and additional cost by eliminating the non-transparent broker, resulting in truckload savings for the shipper and more revenue in the carrier’s pocket- not the broker’s pocket. With 100% transparency, a shipper knows who the carrier is, and the carrier’s cost to haul the load. Plus, shippers have the opportunity to build a direct relationship with the small carrier if they choose to do so.