Major trends continue to influence the state of logistics. According to John Schultz of Logistics Management, US logistics costs rose more than 11% through 2018, and they allude to a year of continued growth throughout 2019. Such costs amount to 8% of gross domestic product (GDP), and shippers are scrambling to find ways to keep costs under control. To maintain profitability and reduce freight spend, shippers need to rethink their freight carrier management strategies, considering the challenges of traditional freight management, why modern, innovative systems can help and apply a few best practices.
What’s Wrong With Traditional Logistics & Freight Management?
Traditional logistics management involved a complex process that relied on manual activities. Freight was tendered through paper-based systems, and shippers lacked real-time access to freight rates. Latency in freight quoting amounts to higher costs, not to mention losses and efficiency. Part of the problem derives from a lack of information about what to expect within the supply chain. Carriers can only plan for what they know, and while the use of data can improve demand forecasting, data grows in value as its volume increases. It can be a confounding principle, but the truth remains.
8 Big Factors to Consider for Efficient LTL Shipping
Modern Systems Enable Better, Proactive Freight Carrier Management
Modern shippers and carriers have significant advantages through the use of technology and data. While problems remain in those operating with paper-based systems, evolving supply chain processes and practices to reflect the 21st century opens the door to new possibilities. For example, shippers and carriers can collaborate more efficiently, plan for demand, lessen reactivity, and transition to a proactive freight management approach.
Think about it; carriers have an interest in knowing what to expect. If shippers leverage advanced systems to connect with carriers, carriers can apply more data to manage their operation better. As a result, the inefficiencies found within a traditional logistics management approach decline.
Best Practices to Improve Carrier Management and Reduce Costs
It can be challenging to identify the best way to keep carrier management at the forefront of all interactions. In today’s world, new systems are continuously evolving, promising better savings, more profitability, and happier customers. To achieve these goals, enterprises need to follow these best practices:
- Upgrade your freight carrier management platform. The carrier management platform is a system that allows shippers and carriers to work together. A transportation management system, digital freight forwarding, and other software may serve as a means for essential carrier management. In a sense, the TMS manages interactions with carriers. Of course, actual carrier management is more complex, requiring shippers to hold carriers accountable for their actions.
- Use data to track carrier performance. In today’s age, it’s easy to assume carriers have all the power. Carriers are the ones that decide when freight will arrive, how much it will cost, and what type of service guarantees come with it. Reality paints a different picture. Carriers, while providing a vital service, would not exist without shippers. Therefore, shippers have the power of persuasion in carrier management, including the ability to negotiate freight rates and hold carriers accountable for failures within shipping.
- Stay forward-thinking concerning freight carrier management. The systems implemented within the last five years to manage carriers are great, but room for improvement always exists. Shippers must not remain confident and comfortable in older systems. Yes, this is the cloud-based, software-as-a-service (SaaS) conversation again. Centralized platforms allow for the continuous use of new features and functions, giving shippers the ability to manage carriers proactively.
- Transform carrier management into a turnkey process by letting a third-party logistics provider (3PL) handle everything. This can be among the most challenging concepts for shippers that continuously worry about their supply chains. Controlling freight spend does not amount to micromanaging everything. In other words, shippers to take advantage of 3PLs and other supply chain corporations to lessen the burden of managing carriers in house.
Evolve Your Freight Carrier Interactions and Management Style With the Right Partner
Freight carrier management can help shippers reclaim control over their operations and keep freight spend in check. Those that have experienced trouble when communicating or work working with carriers should start by following the tips mentioned above, working to connect the supply chain, and learn more about what is happening, what may happen, and what needs to happen to achieve the best possible outcome. Of course, it also depends on choosing the right partner that has a proven history of improving freight carrier management.