If you’re a food, beverage, cosmetics or pharma manufacturer, and require temperature controls, chances are you’re struggling to move freight. Reefer tender rejection continues to hover around 50%, up from 10% this same time last year. Think about this for a moment… 50% rejection means one out of every two tendered reefer loads are passed on. To complicate matters, produce season is right around the corner so chances are the situation will get worse before it gets better.
So what can shippers do to prepare for the harsh reality that reefer freight capacity will remain scarce, and freight rates will climb?
Rethink relationships with large, contracted carriers.
It’s funny but in most industries words like “contracted” or “guaranteed” mean that the vendor partner is obligated to perform said duty. In transportation, when the market gets tight, “contracted” holds little value. This is exactly what reefer shippers are experiencing. Time and money have been wasted negotiating contracts that don’t hold up when it matters most! Unfortunately, large carriers see dollar signs, and the opportunity to make more money elsewhere. In fact, large carriers are already pushing hard to renegotiate contracted rates so they are closer to sky-high spot rates.
Avoid brokers & spot market at all costs.
After primary, secondary and tertiary carriers have opted out, shippers are left to the mercy of freight brokers and the spot market. This is when shippers lose control not only on freight cost but on carrier visibility. Freight spend can increase 30%+, and important metrics like OTD can decrease by 30-40% causing distribution bottlenecks and late sales orders.
Technology has optimized the freight procurement process, empowering shippers to adapt more quickly, and effectively manage swings in freight market conditions. With OTS technology, shippers can:
- Immediately source lower-cost compliant carrier alternatives when needed most.
- Maintain complete cost control through proprietary algorithms that coordinate the optimal carrier, conveyance, and rate.
- Uncover freight rates that are not aligned with current market conditions to help level-set pricing.
OTS leverages proprietary AI & ML algorithms, coupled with custom-configured shipper rules, to match the perfect small carrier/owner-operator to every load, including temperature-controlled loads.
For more information on this topic, read “Refrigerated Trucking Capacity Shortage: How to Avoid Sky-High Costs” published on Food Logistics (7/12/21)