Should Contracted Carriers Now Be in The Hot Seat?

Heading into the end of the year usually means an uptick in carrier demand as the fourth quarter is generally the busiest time of year for most shippers. But this year, we are seeing a different picture caused by inflation and stockpiling of goods. 

Stockpiling & Inflation 

To be proactive, many merchants overstocked goods early to avoid the supply chain issues from a year ago. As we all know, last year, supply chain disruptions resulted in empty shelves, and Holiday demand that could not be fulfilled in time for Christmas morning. Retailers, manufacturers, and distributors opted to ship and hold Holiday inventory much earlier this year. So instead of huge Holiday shipments hitting the ports all at once, shipments staggered in. 

But that’s not the only factor. As inflation continues to make waves, analysts have agreed that consumers will purchase fewer gifts in 2022. In fact, they are predicting 9 gifts compared to 16 gifts from last year. Lower inventory that needs to be imported, combined with lower customer spending creates the perfect storm for a fourth-quarter plunge in freight capacity demand. 

Contracted Carrier Pricing  

The fourth quarter is typically the busiest time of year for shippers because of all the holiday traffic. Usually, brokers and the spot market make out like bandits this time of year, as carrier demand outweighs carrier supply. But with fewer shipments, many shippers are relying on contracted carriers to move goods. 

So, the key question for ALL shippers should be… “Are my contracted rates this Holiday season, aligned with true market cost”? As spot rates continue to decline, and shippers rely more on contracted freight, a complimentary lane assessment has uncovered that shippers are still leaving 15-20%+ of truckload cost on the table. 

Freight Procurement Automation 

The hardest part of the shipping industry is predicting freight market demand, which means knowing if you are paying a fair market cost to ship goods. This is precisely why manual freight procurement processes do not work. For example, RFPs lock in pricing, which means pricing does not fluctuate as over-the-road demand does. And transportation insiders usually know that when contracted carriers are accepting loads, the guaranteed rates are higher than true market cost. 

Fortunately, new breakthrough technology, freight procurement automation, is helping shippers dynamically source carriers at the right time, right place, and the right price. By removing waste, technology provides shippers with peace of mind that they will always deliver goods on time, and always pay fair market cost– no matter freight marketplace dynamics.

Sleek Technologies is offering a complimentary lane analysis for shippers to uncover how freight procurement automation technology will help optimize transportation efforts.