This blog post comes from Giles Taylor , a transportation consultant who specializes in giving small to mid-sized companies the facts required to make smart decisions on transportation and logistics – www.trans-solutions.com
As a transportation consultant who works daily with multiple shippers and carriers, I've noticed a troubling trend in how carriers and shippers are dealing with the current economic uncertainty. Many leading indicators suggest the economy is rebounding, but carriers remain slow to hire and add equipment to handle increased volumes. They seem to be taking a "wait and see" approach. The problem with that strategy is that adding capacity is not just a matter of flipping the ON switch. It takes time.
Shippers seem equally hesitant to plan for increased volumes. For many, it's about "now," and right now they need a good price more than they need capacity. But what happens when the rules of the game change and short-term capacity needs become more continuous?
Here are steps shippers can take now to ensure that they can get the capacity they need at a reasonable price when the economy fully rebounds.
- Expand the carrier base. That doesn't mean calling a carrier and saying, "I might need you in October." It means building a relationship and giving them freight.
- Begin using brokers if they are not part of the current strategy. Brokers have access to capacity form owner operators and major carriers with whom they have a significant spend. They offer flexibility and a hedge against a future capacity crunch.
- Consider strategic use of a 3PL that has both a warehousing and transportation capability and an existing fleet. In the CPG space, look for opportunities to pool freight with other customers of the 3PL who ship goods to the same grocery chains and mass retailers.
What's the risk of a "wait and see" strategy for freight planning? You can lose customers if you lack the means to ship products in a timely manner. Poor planning can also lead to a major profitability hit if you're forced to overpay for capacity in a tight market. In the end, exploring "what if" strategies now is much better than "wait and see."