Last year Cerasis covered the capacity crunch in great detail, culminating in a helpful and educational e-book titled “The Great Capacity Crunch: The Current State, Future Outlook, and How Shippers Can Thrive in Any Capacity Crunch.”
As an update, in this post, we’ll address a more updated way that shippers can navigate the 2018 Capacity Crunch many shippers are currently facing.
The combination between the capacity crunch, the ELD mandate, rising rates, and last year’s hurricanes has been called the perfect storm of the transportation industry. And given its intensification, it may well leave those shippers who aren’t prepared for it stranded.
So, as a shipper, what are your options? Greater versatility, closer partnership with freight brokers, and new technologies are some of the many steps you can take to secure the capacity you need. Read on for an overview of the ways you can tackle the 2018 capacity crunch, and why working with a broker may be essential in the process.
Navigating the 2018 Capacity Crunch
The way it looks, the 2018 capacity crunch is not going away anytime soon. April presents yet another hurdle for shippers, as annual produce shipments pick up and the ELD mandate is fully enforced. While the effects of the latter cannot be anticipated entirely, a number of small carriers are said to have already pulled out of the market. In other words, a further crunch increase may be expected, as if it wasn’t already record-high. Moreover, apart from raising rates, carriers are also becoming more selective with regards to who they do business with.
That means that shippers need to find solutions that help them navigate the 2018 capacity crunch effectively. Among others, these solutions can include the following:
- Adopting alternative transportation modes
- Implementing new technological solutions
- Finding professional brokerage partners
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Shift to Other Modes of Transportation
Picking a different form of transportation such as rail, air or intermodal can reduce supply chain delays due to capacity limits. According to Averitt’s supply chain survey, over 20% of shippers plan on using more rail and air transport this year. Moreover, intermodal has been found to sometimes even reduce transportation times and cost when compared to road transport.
While careful planning is key to successful implementation, this is increasingly becoming a more viable option to shippers who are struggling with capacity. Making use of various modes of transport is also constantly being improved by the implementation of new technologies.
Make Use of New Technologies
The capacity crunch is fueling innovation and giving rise to a series of new technological solutions that hope to tackle the problem. From freight matching and dynamic load matching platforms to transportation management systems like the Cerasis Rater, a host of solutions are already available on the market.
Some of these are only intended for brokers or carriers. Yet, others, such as matching software, allow shippers and carriers to connect more efficiently as well as to collaborate with brokers or 3PLs, and solve capacity issues together.
Choose a Good Brokerage
Not all shippers work with a brokerage, especially if they have long worked directly with carriers. Yet, at this time this may need to change. Working with a broker can significantly improve your ability to have your goods delivered on time.
When choosing a broker, the first and most important thing you need to pay attention to is that they are licensed and have freight broker surety bond security. This may sound like common-sense advice but it is the foundation of any business you do with a broker. A license from the FMCSA guarantees that the broker you will be working with is qualified to work as a broker. The bond, on the other hand, serves as financial security that will shield you, the shipper, in cases of a broker non-compliance with the law.
Brokers can be your strategic partner in times like these and can easily secure better rates than you. This is due to their greater buying power when it comes to negotiating with carriers but also due to their bigger network. Brokers can also supply shippers with a larger carrier pool and they can easily shift modes of transportation. So, when picking a broker, it is important that you assess their capacity to offer you rates that are better than the ones you already have. It is also important to get a sense of their carrier network and how quickly they are capable of reacting when you need them to.
Working with a broker can help mitigate your own supply chain delays by reducing carriers’ deadhead. For example, good brokers can ensure that different shippers co-load with each other and fill carriers’ trailers both ways. To achieve this, they also make use of TMS systems. When speaking to a broker, inquire about the systems they use and how they work with their carriers to decrease capacity pressures.
Apart from carefully vetting the brokers you work with, you can improve your own chances of securing capacity by becoming a broker’s “shipper of choice“. This will require you to amp up your own game by making sure you pay on time, offer greater delivery flexibility, implement a drop and hook program and various other improvements that make it preferable for carriers to work with you.
How Are You Braving the 2018 Capacity Crunch Storm?
How are you dealing with capacity issues? Do you work with a broker? What else would you say is important when a shipper contracts a broker?
Leave us a comment!