Freight Market Fluctuation
It’s a shipper’s market. Truckload cost has decreased, and shippers are level-setting pricing with their providers. But sometimes, especially when the c-suite has demanded operational cost reductions, shippers push too hard chasing the lowest-priced providers, which can push long-term providers to the side. They lose sight of the bigger picture, and often-times forget about longer-term ramifications until it’s too late.
“Focusing 100% on truckload cost may reduce a shipper’s transportation budget in the short term, but opens the shipper up for more risk especially when the freight market snaps back,” said Dean Corbolotti, VP Managed Services at Sleek Technologies. “The long-term approach should be to build win-win solutions that result in both the shipper and the provider reaping benefits year-round, as opposed to one side always winning.”
But what happens when it is a carrier market; a tight freight market? Some providers chase the highest-priced loads and charge excessive amounts for their equipment to make as much money as possible. Again, this is a short-sighted strategy as only one party wins. Unfortunately, shippers and carriers take advantage of the cyclical freight market to help cover losses when the other party was winning.
‘Win-Win’ Shipper/Provider Strategy
The only solution that supports long-term partnership relationships is a Win-Win solution. This is when both the shipper and provider work together so both parties win. A Win-Win relationship is built on trust. Here are three things that need to occur to support a Win-Win strategy:
- 100% data sharing (no more secrets or hidden margins).
- Charging/paying a fair market price (truckload price fluctuates with supply & demand).
- Staying the course during extreme market swings (shippers don’t abandon carriers for lower priced options/ carriers don’t abandon shippers for higher priced options).
To understand more on this topic, read Why A ‘Win-Win’ Partnership Approach Is The Most Effective Long-Term Transporation Strategy. If you are interested in learning more about how AI-powered software supports ‘win-win’ relationships through transparency, innovation, and seamless integration visit www.sleek-technologies.com.