Less than truckload freight carriers are multiplying. No, that statement is not necessarily true, especially given the decline of spot market rates earlier in the year. However, there is an increase in predictions for a stronger-than-average demand through peak season that will force shippers to rethink their shipping strategies. Shippers will look for more LTL carriers, and more LTL carriers will form two service the market. While uncertainty remains in political instability and economic upheaval, a few trends continue to be evident. Chief among them is the continued growth of e-commerce and demand for faster shipping that goes beyond the traditional limits of parcel and falls below the threshold for the use of full truckload. As explained by CNN, the quickest option can have a detrimental effect on the environment and lead to customer backlash. Meanwhile, the ongoing rise of e-commerce leads to a higher demand for more LTL carrier options. Instead of getting bogged down and choosing a carrier randomly, shippers need to understand challenges in choosing a less than truckload carrier, how using a TMS can streamline the process, and a few tips for selecting a carrier within the TMS of use.
Less than truckload carriers fall in the unique position of moving freight that sits in the “middle ground.” Middle ground freight is just another way to describe freight that does not meet the demands for full truckload and would cost too much to send through parcel carriers. The challenges arise when considering the various surcharges less than truckload freight carriers may assess for freight that falls within specific classes or dimensions. Speaking of dimensional pricing, the application of dimensional pricing presents new challenges for shippers. Learning how to calculate freight class has changed and involves a bit more math. Failure to automatically categorize and obtain a dimensional weight for a shipment across all available less than truckload carriers will result in a selection that is not necessarily the best fit.
Instead of relying on outdated, standard freight quoting processes, modern shippers can maximize operational efficiency with an advanced transportation management system (TMS). A modern TMS leverages electronic data interchange (EDI) and application programming interfaces (APIs) to automatically connect a TMS user with carrier freight scheduling and quoting systems. In today’s world, most carriers use digital resources. These resources are readily available and on-demand, but depending on the type of TMS in use, freight rates for such systems may vary. Remember, freight shipping is an industry reliance on strategic value partnerships. In other words, shippers that move more freight unlock additional discounts, comparable to discount associated with gaining “Shipper of Choice” status. As a result, more shippers have turned to third-party logistics providers (3PL) platform vendors for their TMS needs. For example, the Cerasis Rater gives Cerasis-partnering shippers the bargaining power of the entire Cerasis network of shippers. Furthermore, using an LTL specific TMS can automate the less than truckload freight carrier selection process, turning a traditionally burdensome activity into a turnkey process. According to Penske Logistics, using LTL offers critical benefits, including less risk, better rates, and even faster shipping without harming the environment unnecessarily.
Automation is the best path forward in modern supply chain management, but it can have adverse effects. Using automated carrier selection rulesets are only as valuable as the most recent, specified criteria. Thus, the best carrier of today may not necessarily be the best carrier for tomorrow. While a TMS can mitigate this risk, some shippers will wish to retain control of the selection, even when those selections are not necessarily the fastest option. For instance, shippers conscious of environmental costs may opt for a slower delivery, which will incur a lower fee. The same applies to consumer-facing shipping selections. To eliminate customer-preference from the equation and for this discussion, shippers should follow these tips when considering a less than truckload freight carrier for inbound and outbound, business-to-business relationships.
There will always be periods when the most apparent carrier is not necessarily the best for your shipment needs. Such instances reflect the uncertainty in global supply chain management and the hesitation of shippers to bind their organizations to a single carrier or mode. Furthermore, the number of less than truckload carriers in the market continues to expand, and the best carrier for one region may have geographic boundaries that result in added complications. Shippers should thoroughly consider their LTL partnerships and potential, focusing on overall strategy and how they can tap the most extensive available network to secure the best rate possible. Reach out to Cerasis today and request a demo of our LTL focused TMS, the Cerasis Rater.
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