It’s that time of year again. Shippers are bracing for the onslaught of holiday peak shopping and shipping season. As carrier rates increase in response to stronger-than-average demand on e-commerce and brick-and-mortar retailers, carrier freight rates will set new records. Meanwhile, the fears over the driver shortage and a desire for faster delivery will add fuel for higher costs and undermine your current carrier rate selection processes. According to William B. Cassidy of the Journal of Commerce, driver problems top the list of issues for shippers. Unfortunately, issues with drivers can amount to direct increases in freight spend, including the alienation of carriers that will refuse to work with individual shippers. Shippers that wish to keep freight spend under control need to understand why rates are still climbing, how the best rates lead to business benefits, and a few tips for getting the best deal at the negotiating table.
Why Are Rates Still Climbing?
As explained by FreightWaves, continued increases in freight rates are the result of tightening capacity. Yet, ample capacity exists. It’s a confusing topic. While capacity is there, the drivers are not. As a result, freight rates increase. Pair that with the approaching peak season, the demand for 2020, uncertainty regarding the political state, and Amazon’s relentless push for world dominance, and shippers will see higher freight rates. Unfortunately, higher rates cannot directly be passed along to customers. Forcing customers to pay for higher rates will result in more customers choosing to do business with your competitors. That brings up another integral part of the discussion—the value of the best rates.
The State of Freight Management
The Value of Getting the Best Carrier Rates
The best carrier rates mean the difference between keeping product price points under control or passing shipping costs along to customers. The best rates deliver products on time, without added hassle, without added fees, and leave customers with a sense of satisfaction. The best rates reflect both positive attributes for both the shipper and carrier. Carriers realize more productivity when moving more freight shorter distances, and shippers can take advantage of lower rates associated with volume discounts. Unfortunately, finding the best carrier rates remains a complicated process, especially for shippers operating across disparate areas and working with dozens, if not hundreds, of smaller carriers.
Tips for Finding Better, More Competitive Rates
To secure the best carrier rates for freight, shippers should follow these tips:
- Take advantage of digital, real-time rating systems. Real-time freight rating eliminates the effect of time delays between scheduling and shipping, ensuring shippers pay the expected rate.
- Learn what the carrier defines as eligibility for “Shipper Of Choice” status. Carriers have a broad license when setting requirements for “Shipper Of Choice” status. Know what they are and how to become eligibility.
- Keep economies of scale in mind, negotiating better rates in tandem with growing the company. Buying power is real, and working with a 3PL or other supply chain partners can improve access to economies of scale.
- Use a TMS to track and handle both inbound and outbound freight management. Centralized transportation management eliminates data siloes and keeps all freight in view of the bigger picture.
- Give customers the option to pay premiums for faster delivery. Customers are willing to pay a premium to get their products faster, so shippers could use that principle to lower freight spend and avoid the problem entirely.
- Be transparent about the real costs of faster shipping. Faster shipping comes with an environmental cost. While modern consumers want faster service, they also want sustainable interactions. Transparency about the environmental impacts of faster shipping will likely lead to a willingness to wait for deliveries, lowering costs along the way.
Secure Better Rates for Your Portfolio and Customers Alike
Finding better carrier rates will benefit both your customers and your inbound freight spend. More control over carrier negotiations, improved data, holding carriers accountable through auditing programs, and applying the tips above will help shippers secure and retain the best possible carrier rates. Of course, another option exists, using a TMS, like the Cerasis Rater, that leverages automation and advanced algorithms to predict which carrier will offer the best and most successful rate/mode combination for each shipment.