In 2014, if you are shipping freight, undoubtedly you have experienced issues finding capacity for your freight. You have read all the articles stating that truck capacity is running close to 100%. Experts in the transportation industry have been saying the increased freight volume that comes with sustained economic growth, plus other factors such as a long bout of poor weather, could create a truly critical situation. That is why it is vital right now to work with a logistics expert with a focused department carrier relations department who can lock in your freight shipping rates that are truly unique to you based on your needs and shipping history.
Today we will go over the advantages of using creative multi-lane and dedicated lane freight shipping rate negotiation services provided by a 3PL.
The Commerce Department’s May 29 revised report that first-quarter GDP contracted at a 1% annual pace, the first contraction since 2011, may be the only factor that’s staving off a worst-case scenario.
This, however, is all good news to truckload carriers, which downsized during the recession and most likely will not add capacity until the supply-and-demand economics restabilize. But for shippers, this means higher rates, fewer trucks available when they need them and the negative effects all this will have on customer service.
The Producer Power Index, according to the IHS, for the LTL sector remains on an upward trend and will rise throughout the year, albeit at a subdued rate. LTL rates will increase 2.4 percent in 2014, after having risen by 3.1 percent last year. IHS expects price growth to reach 3.2 percent in 2015.
What’s a shipper to do? The solution is to embrace expert logistics services from a third party logistics company (3PL), perhaps for the first time, to expertly handle all things related to shipping and freight management, like locking in customized unique freight shipping rates.
Just as home buyers are trying to lock in today’s low mortgage rates, shippers need to take a page from that playbook. The way it looks now, rates are only going to get higher and available trucking capacity more scarce. Shippers should investigate why 3PL usage is growing in popularity and how it can help them control costs and grow businesses.
In a normal environment, where a healthy amount of truck supply is available, shippers have the leverage. Those that implement transportation management systems internally are finding more carriers are turning down freight or may not be able to satisfy windows of delivery as easily as before. Those that stay focused on their core and choose to outsource the function to 3PLs to secure freight shipping rates are finding more success and have many additional freight management advantages.
All of these issues can be erased in the 3PL outsourcing scenario. The following are the advantages of using a 3PL to not only lock in freight shipping rates, but enjoy many other benefits that help save on both hard and soft costs as it pertains to total freight and transportation costs.
An expert 3PL with tens of thousands of man hours in establishing and negotiating rates with LTL and truckload freight carriers is armed and prepared to deal with any negotiation for your lanes’ freight shipping rates. Most 3PL freight partners have formed direct relationships with a multitude of regional and national carriers. By aggregating the freight volume of many small- to medium-sized businesses, they are able to negotiate better discount rates and terms than some businesses might be able to establish on their own.
The 3PL carrier relations team will take a unique look at the shippers’ overall needs and objectives, and then tailor freight shipping rates programs to fit specific business strategies. The 3PL works diligently with carriers to ensure both the carrier and the customer get their needs met effectively and efficiently.
The 3PL should have such expertise and flexibility that they can negotiate better rates due to their volume, but also after running an historical freight invoice analysis, able to get specific pricing for the shipper by asking many carriers for a request for pricing or “RFP.” These rates are then loaded into the transportation management system, and when the shipper is ready to ship, they simply have to choose the carrier based on transit time, limit of liability, and of course the quote for shipment.
Besides offering deep discounts off the carriers’ base rates, a 3PL freight partner can provide additional value-added services, sometimes at no additional cost. These
services are designed to lower your overall logistics expenses. Some of the operational features can include:
Given the real capacity crunch which is driving up rates, and the fact that LTL freight carriers are also starting to add more services, which are driving up rates, and with a recovering economy, look towards increasing rates over the next few years, it may be time to start handing over your in house management of freight shipping rates, and freight management, to an expert third party logistics company.
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