A shipping capacity crunch is a necessary evil. It serves as a reminder to never get accustomed to customers’ shopping habits, and it can help reinvent stagnant processes. Unfortunately, a shipping capacity crunch tends to occur during already stressed periods, like winter, after tropical storms and during peak shopping seasons. However, a third-party logistics provider (3PL) can help shippers persevere through the tough times with these capacity crunch strategies.
3PLs Bring Better Freight Shipping Rates During Shipping Capacity Crunch Hikes
Carriers operate on the fundamental principle of supply and demand. As capacity tightens, rates skyrocket, and shippers are left to pay the piper. However, 3PLs have significantly more buying power than small-business shippers, and they can renegotiate freight rates and services with carriers on the shipper’s behalf, asserts Jeff Berman of Supply Chain 24/7. In addition, value-added services, like freight invoice auditing, can help shippers reclaim extra monies paid due to instances of double-billing, late deliveries and damages.
They Have a Bigger Carrier Network
Part of the problem with a shipping capacity crunch is lackluster networking. Even during periods of plentiful capacity, few carrier options may leave shippers feeling the pressure. As explained by Edward Hildebrandt via Talking Logistics With Adrian Gonzalez, a strong carrier network is the cornerstone of shipping capacity crunch strategies. 3PLs have broad connections across local, regional, national and international carriers. Thus, they can determine which carriers have the best rate without the stress of negotiating new contracts with carriers you did not know existed.
Multimodal Shipping Is a Key Benefit of Working With 3PLs
Speaking of carrier networks What does it take to increase the available capacity within an existing carrier network? The answer is simple; take advantage of all available space in across all modes of transit. However, shippers may not realize space exists within their non-preferred shipping modes. This is where a 3PL can help mitigate much of the stress during a shipping capacity crunch, explains Thomas Griffin of Inbound Logistics.
3PLs can consolidate parcels and less-than-truckload (LTL) shipments into full truckload (FT) and back again. Thus, shippers see a single shipment, but the package may change modes as needed to get to its destination on time. Furthermore, the use of 3PL benefits and technologies can help with route optimization, reducing your delivery Windows will still finding available capacity where you need it.
They Offer Technology Solutions, Like a TMS
A 3PL may offer alternative technology solutions to simplify the shipping process. Newer systems, such as a transportation management system (TMS), like the Cerasis Rater, reduce the in-house burden of managing multiple carrier systems, incoming and outbound truck schedules and networks from legacy and enterprise resource planning (ERP) systems, explains Steve Banker of Logistics Viewpoints. Depending on the 3PL used, a TMS may also offer additional services to streamline the entire freight process, including inbound shipping and procurement through last-mile delivery. Paired with value-added services, such as freight invoice auditing, small package delivery and real-time shipment tracking, the role of the 3PL can help save money during a capacity crunch as well. But, that is not all.
Managing the Fleet and Truck Driver Hiring, Review and Payroll Processes
Have you heard about the upcoming electronic logging devices (ELD) implementation date? If not, you are behind the learning curve. Awfully vehicles must be equipped with an ELD no later than December 10, 2017, and while the Federal Motor Carrier Safety Administration (FMSCA) will not take your fleet vehicles out of service just yet, it represents another added expense in navigating a shipping capacity crunch.
Working with a 3PL puts this burden in the hands of an outside entity, so you can avoid the pitfalls of managing your fleet, as well as the processes involved in hiring, maintaining and paying truck drivers. The truck driver shortage tends to move in accordance with existing capacity. When a surplus of capacity exists, there is a surplus of drivers. As a result, wages decline, but during a capacity crunch, wages may spike, and truckers will expect big hiring bonuses and unmatched benefits. However, a 3PL is already working with existing fleet vehicles and truck drivers, so the added costs of paying bonuses and enticing truck drivers to stay with your company are effectively outsourced to the 3PL.
Capacity Crunch Strategies: The Big Picture
A shipping capacity crunch is the monster hiding under the bed waiting to scare shippers in the night, but a 3PL is the parent that comes rushing in to check under the bed, in the closets and find that lost safety blanket. Partnering with a 3PL can mitigate many of the consequences associated with a shipping capacity crunch, and depending on how things were going beforehand, the partnership could even lead to savings that rival your pre-capacity crunch profit margins. From multimodal shipping to the use of a TMS, the value of 3PL shines brightest during a shipping capacity crunch.