Today’s Soft Freight Market Will Change. How Shippers Can Prepare.
Currently, shippers are in the driver’s seat as the freight market continues to soften, which means there are more trucks than shipments available to move. Morgan Stanley analysts recently stated a soft market will continue until 2H 2023 as inventory levels normalize– unless major disruption occurs before then. According to Oleg Yanchyk, Sleek Technologies CIO, “Balance could come sooner with typical seasonal spikes, like produce in Spring, and as smaller carriers park trucks due to tax and tag renewals which will create a tight market in a short period of time.” As freight market dynamics shift, shippers will need to evaluate truckload costs and carriers will need to evaluate truckload revenues to make sure it is aligned with current market conditions. A Soft Freight Market Equals Lower Contracted Rates During a soft freight market, locking in contracted rates [capacity] has long been a staple tactic for most large shippers. And it looks like 2023 will be a year where shippers take advantage of lower contracted rates as carriers do their best to hold onto stable volumes. All this said, contracted capacity is reliable now... but what happens when the market recovers? What happens when there are more shipments than trucks available? As the freight market tightens, carriers can demand higher truckload costs. Their attention and priority will pivot to higher-priced business to help recoup losses in revenue from lower contracted rates. The most difficult of lanes, facilities, or late-night/weekend runs will be most vulnerable to tender rejection, which means shippers need to be proactive with strong backup plans to avoid late deliveries. How Freight Procurement Can Overcome Freight Market Fluctuation ...
2023 Freight Procurement Resolution: Making Needed Improvements
Did you know that large companies need continuous improvement to stay ahead of the competition, increase customer satisfaction, improve efficiency, reduce waste, and increase profitability? Whether it is personal or professional, the start of a new year is a perfect time to look back and reflect on successes and failures. Once failures are identified, opportunities to improve will surface. When it comes to business, understanding the latest trends and technologies and embracing the need for change and innovation are key ingredients. Take logistics, for example, many transportation management professionals still believe that decades-old processes work just fine, so why upset the apple cart? This type of mindset is stagnant and toxic, especially knowing that transportation can account for 10-15% of a company's total expenses. Here are some of the core issues we've uncovered throughout 2022, which can help large shippers evolve the critical freight procurement process in 2023. #1: Don’t Treat Freight Procurement As A Commodity Freight procurement is a critical part of a company's supply chain and has major implications for overall success. Unfortunately, many executives still believe freight procurement is a commodity, like purchasing office supplies. Leaders must realize that freight procurement is more than buying a product or service. It involves strategic planning, sourcing, and analysis that could lead to tens of millions of dollars in wasted costs and lost revenue every year. If a company’s freight procurement mindset, processes, and tools have not been evaluated or have not changed in recent years, there’s a high probability the company is missing out on substantial performance improvement opportunities. #2: Using Static Freight Procurement Processes Traditional supply chain processes...
OTD: What is it, and why is it so important?
When ordering online, one of the key factors in how customers determine which products to buy is how quickly the supplier can ship the product. Quick shipping turnaround is no longer a nice to have, but a must-have in the eyes of consumers. This concept not only applies to customers but also applies to businesses. When signing a purchase order, businesses agree upon a Must Arrive By Date [MABD]. This blog will uncover why on-time delivery [OTD] is imperative for businesses, the ramifications for poor OTD, and how transportation/ logistics professionals can yield industry-best service. Poor OTD Stops Production Manufacturing relies on several moving pieces to be successful. When one piece breaks down, a chain reaction occurs. Delivering goods on time is a crucial piece for manufacturers especially when raw materials are needed to keep production running. A recent example that comes to mind is the automobile semiconductor chip shortage that forced automakers to close production lines and/or remove popular features such as heated seats. According to motortrend.com, in 2021 the shortage cost the global auto industry $210 billion in lost revenue. Poor OTD Leads to Empty Shelves Imagine walking into your favorite store ready to make a purchase and the item is nowhere to be found in the store. Empty shelves equal upset customers and poor customer experiences. And when items are essential, such as baby formula and medicine, empty shelves can lead to public panic. So the next time you see a large truck on the road, be thankful and remember that the driver is a critical part of ensuring your local shelves remain stocked. Poor OTD Leads...
Do Transportation RFPs Still Work?
The objective of a transportation request for proposal (RFP) is to lock in freight capacity for a certain period of time. A typical RFP includes requirements, evaluation criteria, timeline, and the expected cost. While RFPs can be a useful tool, they have many drawbacks, and should never be considered the only solution when looking to secure full truckload [FTL] carriers. Here are a few disadvantages of the traditional RFP process, and how innovative shippers have turned to technology and data to help supplement gaps. Transportation RFPs Require Time & Money Ask any transportation manager, and they’ll tell you that the traditional RFP process is time-consuming. Shippers spend a lot of time developing the RFP making sure the request is clear and concise. Then they spend more time waiting for each proposal to roll in. Once gathered, they have the painstaking task of vetting and comparing proposals to uncover the best possible carriers for their transportation needs. Carriers also spend a lot of time reviewing RFPs to ensure they understand the requirements and often have questions that require back-and-forth communications. Transportation RFPs Reach A Small % Of Available Freight Capacity Out of the millions of compliant, asset-based qualified carriers, RFPs only go out to a select few so the daunting process of comparing and negotiating is reasonable. Knowing shippers are cautious about how many carriers get invited upfront defeats the purpose of finding the very best options for the carrier network because not all options are invited to the table. Transportation RFPs Don’t Follow Market Fluctuation RFPs lock in truckload rates for a certain period of time. But because the freight...
Why Data Transparency is Important to Freight Procurement Teams
Have you ever made an important decision, and realized it was the wrong one because you only had part of the story? Well, this is an everyday reality for large shippers, and transportation teams across the country. Most rely heavily on historical 1st party data, along with 3rd party market data, which doesn’t paint a clear picture on a shipper’s unique freight at that moment in time. It’s been my experience that shippers are handcuffed because they only receive a portion of their freight data from their transportation vendors. Data transparency is extremely important in many ways, but there are two that stand out to me. Data transparency allows shippers to make informed data-driven decisions, which will result in better outcomes. For example, if a shipper obtains all of the data related to carriers who are moving their loads they can optimize their carrier network by dropping poor-performing carriers, and shifting more loads to high-performing carriers. Data transparency builds stronger relationships. When a vendor shares 100% of the data, trust is built and both parties benefit from it. For example, freight brokers purposely don’t share carrier names and carrier rates, which gives them a negative perception. Sleek Technologies, on the other hand, shares 100% of the carrier data so shippers know which carriers are moving freight, and what the carrier is getting paid so they can understand true market cost at that moment in time. Data is crucial to any industry, especially logistics. Because the freight market is constantly changing, shippers need to proactively manage the outcome. When a shipper gains real-time, 100% data transparency, they have the tools necessary...
Freight Procurement Automation Reduces Empty Miles
Empty miles weigh heavily on the minds of both shippers and carriers who are involved in the transport of truckload cargo. Not only do empty miles fail to generate revenue, but they increase transportation operating costs, and omit unnecessary carbon emissions into our environment. Knowing that transportation is a costly and critical supply chain component, finding ways to reduce waste [empty miles] will help reduce cost while saving the environment. Empty miles occur most often after a truck delivers a full shipment to the intended location, and then heads home or heads to the next pickup location with no cargo on board. According to the Bureau of Transportation, more than a third of the heavy-duty vehicles on the road move empty. So what can be done to reduce, or eliminate empty miles? According to Dean Corbolotti, Sleek Technologies VP of managed services, “Shippers need to embrace a new automated way to procure freight.” Routing Guides Provide Rates, Not Trucks in the Right Place Shippers spend hours meticulously planning out the routing guide, which on paper illustrates the perfect transportation plan with limited deadheading. But as transportation insiders know all too well, routing guides provide rates, not trucks in the right location. “As the typical waterfall routing guide operates, the likelihood of having a compliant carrier readily available at the perfect time and place to help avoid empty miles is unlikely,” said Corbolotti. To overcome routing guide pitfalls, innovative shippers have embraced breakthrough automation software that dynamically expands compliant truckload capacity when needed most. “Shippers who have not yet advanced freight procurement operations, will continue to struggle to achieve both financial...
Top Tips for Amazing Freight Procurement Customer Service
Your phone rings. It’s “that customer”. Making her happy could mean a very profitable month. This is a huge opportunity, but she’s notoriously hard to please. What can you do to ensure your customer is always happy? These tips may seem obvious, but in the heat of the battle, sometimes we could use a reminder. Communication: Make sure to communicate everything to your customer honestly, especially if it is negative news. Whether it be a truck breakdown, missed pick up or delivery, or not being able to cover a load at the contracted rate, the customer needs to hear the truth with no sugarcoating. And don’t delay; when bad news needs to be delivered it should be right away so your customer can react quickly and make adjustments as needed. Your customer will have more faith and trust in you, and your company, if honest communication is constantly flowing. Adaptability: If you’re in the logistics industry, you know freight procurement management is a demanding job. There are daily challenges, so you must be flexible for your customer. You must always be available to handle last-minute “surprises” your customer may have. And the key is to handle these urgent transportation matters with a smile on your face and a positive tone in your voice. Advise: Strong customer success advisors are not order takers; they are not “yes” people. Instead, strong freight procurement success advisors help their shipper customers solve problems, which means they are not afraid to challenge decisions to ensure their customer sees things from all viewpoints so the best possible decisions can be made. After years of providing customer...
How to Maintain Truckload Cost & Service During Disruption (Do You Have A Safety Net?)
Any logistics professional knows that freight rates jump up and down as supply and demand for over-the-road capacity fluctuates. Maintaining fair truckload cost, while delivering goods on time, has always been one of the biggest struggles for transportation teams, especially when disruption occurs. US truckload rates have decreased some 10% (brokerage and contract blend) YoY, and they continue to ease back towards normal after an unpredictable couple of years. Many analysts expect freight rates to continue to drop into next year. But all it takes is one major disruption. For example, the rail strike could have been devastating for shippers. If the strike had occurred, on a daily basis more than 50,000 intermodal loads would have been converted to over-the-road. This would have caused truckload rates to increase by two to three times depending on the origins and destination. That said, shippers are still facing other perils, such as inflation. This makes finding the optimal shipping method more important than ever, or at minimum finding a contingency plan or safety net. Unfortunately, many large shippers learned the hard way and finally realized that traditional freight procurement processes can not keep up with disruption. For example, the RFP process locks in freight rates with contracted carriers, and only provides peace of mind that loads will be accepted and delivered on time when the freight market is soft and the shipper is over-paying the contracted carrier. When the market tightens, when disruption occurs, contracted carriers decline contracted rates in lieu of more lucrative business leaving the shipper to scramble to find another truck, or ante up and pay more. Forward-thinking shippers have reimagined...