Shippers have faced a challenging environment days gone by several years. Some economists are predicting a smoother market during the very first area of the year, accompanied by an upswing in economic activity and a tightening in freight capacity through the remaining portion of the year. How should shippers navigate the potentially choppy waters of 2007? Here really are a few suggestions:
Conduct a Freight Bid
The existing softness in the market affords shippers an opportunity to leverage their freight and recoup a few of the rate increases of recent years. A freight bid is an excellent tool to achieve rate stability and capacity commitments while market conditions have been in your favor. As your company adds customers, consider conducting "mini" bids on the brand new destination points. A course such as for instance MapPoint lets you identify the carriers in your routing guide that serve the points closest to your new customer locations (at the best rates). Then you're able to contact these carriers to secure bids with this traffic.
Sign Multiyear Contracts
Secure your rates and capacity under contract, preferably with multiyear agreements, to protect your Source company from rate shocks as the market changes. Attach your rates and service-level agreements (SLAs) to the contract. As you complete your "mini" bids, add these rates as contract addendums to make sure that you maintain your cost structure over the life of the agreement.
Monitor your Freight Program
To ensure your company receives a supreme quality service and maintains the savings achieved, set up a compliance program. This system should monitor the performance of your traffic management personnel in following the routing guide and the compliance of the carriers in meeting their capacity and service commitments. To steadfastly keep up visibility of the ongoing results, weekly computer-generated tracking reports can be very helpful. Take action immediately on any deviations from your own plan to remain on track.
Collaborate with Your Carriers
One of many lessons that lots of shippers discovered during the last couple of years is the necessity to form strong partnerships making use of their core carriers. To achieve the objectives of ample capacity at competitive rates, there are numerous things you can do.
Your primary and backup carriers should receive freight through the year. This can keep them interested and motivated to support you throughout your slow and your peak times. Provide them with freight in areas where they require help, and adapt for their operational requirements. Be sure you pay them in a regular manner.
Expand your Carrier Base
As capacity tightens, it becomes even more important to have a robust routing guide. To produce a thorough carrier base, meet with new carriers on an ongoing basis, give them trial shipments, and try their service and customer-service capabilities. Use your motor carrier directories to reach out to carriers who might be a fit for your freight and major shipping lanes.
Increase Capacity Frequently
You will find opportunities for shippers to expand capacity by simply modifying existing practices and procedures. This could include changes in packaging and pallet dimensions to boost cube utilization, working with your carriers to produce continuous moves and round trips, taking control of your inbound freight, and expanding your company's hours of operation.
Manage your Freight Spend
For many shippers, "the devil is in the details." Expressed another way, the devil can't be found due to a insufficient detail. Freight spend management is a place that does not receive enough attention. It is vital for shippers to own visibility into the important thing components of their freight spend.
To effectively evaluate the value of your precious freight-spend dollars, ensure your individual cost components (freight rates, fuel surcharges, lumper fees, waiting time, etc.) are itemized separately and managed effectively. It is vital to set up a good taxonomy of costs, monitor the person cost elements on an ongoing basis, and take action with those cost elements which can be adversely affecting your company's bottom line.