Transportation News

Shippers and Carriers Must Operate Differently to Overcome Market Conditions

How are you managing rising transportation costs and uncertain capacity constraints?

Across all segments, freight costs have escalated as trucking capacity has tightened nationwide.

Suspicious shippers expect these costs to continue to rise as carriers compete for drivers and new federal regulations come into play.  Shippers are estimating this will add millions to costs in 2018 – but are you confident in your estimates?

Although shippers planned for much higher freight costs, the level of increase has exceeded expectations and freight expenses are negatively impacting the first quarter.

What’s all the commotion about?

  • Struggling carriers – Who among your carriers are under delivering on their service promise?  Carriers are struggling because of poor service crippling their business or are even shut down due in part to weather and the Amazon Effect, which is taken capacity on their trucks away from you and your shipments.
  • Capacity Crunch - The Wall Street Journal reported in January that shippers are postponing deliveries or are being forced to accept higher prices due to a nationwide truck shortage.
  • Driver Shortage - Over the last three months, the U.S. gained an average of 192,000 new jobs in various industries including construction, restaurants, health-care and manufacturers.  The transportation industry will compete with these industries to hire skilled workers and are taking action now to increase hiring for the impending driver shortage due to retirements and competition with these other industries.

Carriers winning this battle are marching to their own beat and responding to customers in a new way with solutions of all kinds.  Looking for a new beat?  Consider the following ways to Think Differently, Act Differently, and Operate Differently.   

  1. Collaborate – When carriers gain greater efficiencies by enhancing their network through the most effective use of equipment, driver availability, and network design, shippers can save money through lower freight rates, better handling of their freight, lower claims and better service.
  2. Multi Year Deals – Entering into a multi-year agreement is a significant decision, with potential significant savings.  Long term contracts can save you money where the threats are often balanced by the benefits, but it is important to understand your company’s objectives and how they align with your carrier.
  3. Packaging - Improved packaging leads to improved shipment density, which can lead to better equipment utilization and lower freight rates.

Successful shipper/carrier relationships recognize the market conditions and have a shared understanding of what each other are facing in 2018. Open communication and appreciation result in a louder beat as shippers and carriers understand the importance in thinking, acting and operating differently in 2018 and the years to come.

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Article Topics
Best Practices   Transportation   Transportation Management   Carrier Rates   Freight Rates   Transportation Spend Management   All topics


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