In our prior blog post, It’s the Final Countdown to the ELD Mandate, we discussed the effects that the new regulation may have on the industry, focusing especially on shippers. Since the transportation/logistics/supply chain is not mutually exclusive, disruptions in one area of the chain can affect the entire process.
So, today we’re going to take a look at one option to lean on that can help simplify your transportation strategy; it’s going to provide you capacity when you need it, optimize your transportation operations, and, if done correctly, can save you up to 20%! Did that get your attention?
What is a Dedicated Contract Carrier?
Overall, dedicated contract carriage is part of a transportation strategy where a carrier has a contract with a shipper to move all freight as outlined in the contract. This strategy takes many forms throughout the industry, but overall the benefits are pretty much the same. Dedicated contract carriage provides shippers the capacity they need while avoiding pricing spikes in spot market and seasonal capacity constraints. By locking into rates with your dedicated carrier, you protect yourself from fluctuations in the market based on seasonality or impacts of weather.
Over the last 14 months, we’ve seen spot market rates increase 2-4% year over year, with some markets seeing an increase of up to 20%! A dedicated freight strategy will help shippers secure capacity, set a transportation budget, and removes the volatility from the market.
Not all freight is a great option for a dedicated scenario, if your freight falls into any of these categories, it’s time to start the dedicated conversation with your transportation provider.
- Consistent volume: Does this lane provide consistent volume? The volume of the lane does not necessarily need to be high, the key factor here is consistency. If the carrier knows that every Monday Company A has a load to destination X; their sales team can work on finding a backhaul that matches your lane.
- On the other hand, there are times when a high-volume lane can provide your pricing advantages, especially if it’s into a geographical area where the carriers’ trucks frequently backhaul out of.
- Closed-loop scenario: Does your freight go from Point A - > Point B - > Point A? If so, this is the best scenario for a dedicated freight option. There are a few variations that can be applied to your lanes to create a closed-loop scenario.
- For example, let’s say Point A is your plant, you ship the product to Point B your customer, then you pick up your customer’s packaging at Point B (or in the vicinity) and head right on back to deliver it to Point A creating a closed-loop. Working together with your customer or supplier may help you set up a scenario that will save you up to 20% on this particular lane.
- Short Haul: Is this lane less than 100 miles? With the Hours of Service (HOS) regulations on drivers, short haul lanes provide the opportunity for a driver to handle more than one load a day, thus optimizing the use of the truck. Or, the cost to deadhead back to the terminal may be included in the price. It’s when the distance becomes a Tweener load that optimization of the truck and driver get difficult.
- Nature of the freight is heavy: Does it weigh out before it bulks out?
- Usually, you can load up to 45k pounds onto a trailer. With a Heavy Haul program where carriers use lighter weight equipment, shippers can load up to 52,500 pounds on one trailer decreasing the volume of loads and saving the planet one truck load at a time.
- Spotting or Shuttling:
- A form of dedicated trucking is to provide a spotter driver to move trailers in and out of your loading docks. The practice of utilizing drop and hook scenarios in your yard decreases congestion as drivers are waiting to be loaded/unloaded. Not only will this make your facility more appealing to the driver, you won’t run into the issue of being charged detention because it took more than 2 hours to load or unload.
If specific lanes came to mind while reading the types of freight that are a good option for dedicated contract carriage, there’s no time like the present to pick up the phone and get a rate quote.
It’s time shippers start having the conversations with their carriers, because as we know, there are never two days exactly the same in the transportation world. Why not lock in some capacity for a few lanes and let us bare the load for you.