Wrestling with the capacity crunch? Get strategic about managing transportation.
As long as companies have been moving goods, there have been two kinds of freight: easy freight and hard freight. For years, that wasn’t a problem. There were always plenty of carriers with an adequate supply of drivers willing to get behind the wheel of a semi and move goods from point A to point B. Even if point A was in the middle of nowhere, and even if they had to make multiple stops along the way, everything was fine. Until, that is, the driver shortage and freight capacity crunch put the brakes on “carriers for all.”
This year, the capacity constraints throughout the industry were the worst in recent history. There are more shippers than carriers and fewer qualified drivers. So, carriers are becoming very selective about the freight they’ll carry. To attract drivers, some are moving to dedicated or regional models. They’re focusing on easy, consistent runs instead of over the road runs. Many companies are purging the bottom 20 percent of their business, turning away “hard” freight to focus on driver-friendly freight that’s good for the bottom line.
This leaves those shippers with “hard” freight scrambling for capacity, which can be costly given that spot rates have risen 15 to 20 percent year-over-year, compared to a mere 4 to 7 percent uptick in contractual rates. So, what qualifies as easy or hard freight, and how do you keep your cargo moving in today’s capacity-challenged market?
You’re a shipper with “hard” freight if you have:
- Irregular spikes in volume; no consistent flow of loads
- Remote points of origin that are tough to get in and out of or hundreds of miles away, requiring drivers/carriers to absorb deadhead miles, which impacts profit
- Off-hours shipping and receiving that require drivers to lay over and/or long loading/unloading times
- Restricted loading/unloading at a single time rather than within a flexible window
- Route inefficiencies due to multiple in-transit stops and deliveries that take several days rather than starting at one point and delivering to another
You’re a shipper with “easy” freight if you have:
- Locations near major population centers that are easy to navigate and have lots of freight moving in and out of the area
- Consistent loads that are delivered every day, every week, all year
- Drop & hook arrangements where trailers are dropped in place and freight is pre-loaded, giving carriers/drivers flexibility to pick up loads at their convenience
- No more than one stop in transit: one pickup, one delivery
5 ways to keep your freight moving
If you’re a shipper with “hard” freight, here are five quick tips.
- Take care of drivers. Give them a place to take a break and park onsite, a comfortable lounge area, vending machines and a place to rest to make your freight appealing.
- Cultivate relationships with carriers. Carriers have many choices today. If you don’t have a solid relationship, carriers are more likely to walk away from your freight. And while money and margins always talk, many carriers will continue to work with shippers that stick with them through tough times/through the years.
- Be smart about planning routes. Single- or no-stop routes aren’t feasible for everyone. Not all shippers have the same amount of freight headed to one location all the time. If you have multiple stops, how you plan routes is important. Don’t plan stops over multiple days and look for ways to consolidate loads/routes.
- Sign a contract with a carrier. It’s more economical than playing the spot market. In exchange for weekly volume commitments and signing on the dotted line, carriers will give you capacity at an agreed-upon rate rather than going with the lowest cost of the day on the spot market.
- Partner with a 3PL with a transportation management system. Can’t secure capacity without hitting the spot market? Team up with a 3PL or transportation partner that can. Look for one that has strategic partnerships with carriers and shippers that can combine your freight with other customers in the network to compensate for irregular volumes. Choose a provider with excellent technology, and expertise in route planning. Remember, it’s not about the number of carriers in the provider’s portfolio, it’s about strategic partnerships with them.
Written by Clint Larson, Truckload Modal Manager at Ryder System Inc. Clint has worked in Transportation Management for over eight years with the last two spent focusing on Carrier Compliance and Procurement. He currently heads up the strategic sourcing of truckload and intermodal providers for Ryder’s Transportation Management customers.