There are several ways you can analyze the performance of your carriers and 3PLs, and use that information for good. The right metrics and Key Performance Indicators (KPIs) will ensure you’re getting the level of service you’re paying for by identifying hidden inefficiencies that may be hurting service, as well as costing your company time and money.
If you want to consistently secure capacity at good rates, you’ve got to make your freight appealing to carriers. And while it’s never been easy, getting your products delivered on time has never been more difficult than it is right now due to the current truckload market conditions. As many shippers continue to experience volatile spikes in demand, and carriers remain in recovery from a rough first part of the year, capacity has never been tighter.
One of the leading trends in the shipping industry is the Smart Load Board. This technology matches shippers and carriers with the right loads in ‘intelligent’ ways by utilizing machine learning algorithms and data analytics. With centralized access to expansive logistics networks, shippers and carriers can leverage these freight and capacity finding solutions in ways that automatically identify the most fitting logistics partners for their situation.
Economics seems so easy…supply and demand. As demand goes up, supply reacts accordingly – either supply remains unchanged, but higher prices and longer waits satisfy the demand or increase the supply to satisfy the demand while keeping prices unchanged. But like most things in life, there are many layers to peel back to understand the reasoning behind supply and demand changes.
Increasing carrier insurance costs in combination with large “nuclear verdict” penalties have played a huge part in the abnormal amount of recent carrier bankruptcies. And, as more juries are awarding these types of verdicts, even some insurance companies are also being forced out of the industry. The extent of this legal issue and the resulting rise in insurance rates are posing a major threat to many trucking and shipper businesses.
One of the most difficult issues shippers who operate their own fleet and most logistics companies today face is the persisting lack of available drivers. As a result of this labor shortage, companies have to shell out more cash to keep up with growing demand and ensure their products are moving on time. To effectively manage these tight job market conditions, shippers of all types and sizes need to understand why this phenomenon is occurring in addition to the impact it has on their business – regardless of how they handle their transportation requirements.
While the truckload spot market is still showing record high spikes, things seem to be winding down a little, at least for right now. This brief calm could not have come at a better time for those trying to recover from the last few months' volatile price hikes. Given that this trend could lead to huge increases in next year’s contract truckload rates, shippers should start preparing their budgets now.
As logistics professionals, we all know that a low rate is nothing without good service to match. A late delivery on an important shipment, or any other type of supply chain service failure, can cost far more than what the carrier or a fulfillment center’s being paid. And when problems do occur, the provider who made the mistake is still usually getting their money with no penalty for the extra cost or wasted time that their performance failure caused.
When you’re up against a global pandemic, new industry regulations, and rising consumer expectations for more sustainability, every step you take toward optimizing your transportation processes makes a difference. It may be cliché to say it, but it is an unprecedented time for the logistics industry.