Why Using One Mode Can Add to Higher Freight Spend

A common problem with rising freight spend lies within the assumption that working with a single mode will help to unlock additional volume discounts. While volume discounts are great, they are practically useless in the age of a spot market. After all, volume discounts are based on contracts, and even mini-bids will have that volume factor. Unfortunately, when brokers and carriers are unable to guarantee capacity, the whole notion of getting those discounts goes out the window. The only solution is to maximize efficiency throughout the transportation network wherever possible. This includes identifying the harbingers of higher costs, including poor shipment visibility, higher cargo insurance damage rates, and more. 

Using a TMS That Considers All Modes and Rating Opportunities Lowers Costs

The biggest way a modern TMS can lower costs lies in its ability to look beyond the standard expectations for freight management. Modern TMS users and shippers could leverage an advanced TMS to rate all shipments across all modes, considering extra opportunities to save money and including multi-modal shipping.

For example, parcel shipments could be consolidated into LTL freight, which could then be consolidated into full truckloads. That will naturally involve a deconsolidation process. In addition, any of those individual steps could swap modes at a point in the shipping journey to reduce the total cost for the shipment. As a result, the supply chain can save resources, better allocate assets, and keep overall spend under control. An advanced TMS should enable this functionality. Of course, leveraging a modern system to manage peak season costs should also consider the total landed cost for such freight, not just its upfront quote.

Consider this; supply chains tend to add on accessorial charges and other fees after the fact at a higher degree during times of peak activity. This is expected. Things will go wrong. Demurrage fees may occur, drayage costs could go off the rails. The economy could swing suddenly. And consumer shopping will continue to be subject to outside influences, including the COVID-19 pandemic. That uncertainty means squeezing efficiencies from the beginning is crucial to saving total landed costs.

Additional Opportunities to Reduce Peak Season Costs Through a TMS

Working with an advanced TMS to manage peak season costs also opens the door to other opportunities to maximize efficiency. These include:

• Predictive analytics to determine future freight forecast rates and demand.
• Increased accountability by tracking carrier and third-party provider performance.
• Recognizing the limitations and opportunities to improve shipper-carrier relationships by looking at possible savings from renewed bidding processes when compared to actual costs.
• Working with additional outside companies to handle the creation of new routes to satisfy peak season demand.
• Taking advantage of self-optimizing systems to continuously isolate and address potential disruptions in real-time.
• Using robotics process automation (RPA) to streamline exception management.
• Creating a holistic supply chain strategy that collects and applies data in real time to build more collaboration with supply chain partners.
• Integrates appointment scheduling resources with dock scheduling software and applies such information to reduce the risk of early or late arrivals, thereby lowering total risk of dwell time charges and other accessorials.