3 Ways to Ensure Capacity during the Q2 Surge
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With summer only two months away, the United States heat index is experiencing a surge and so is demand for freight capacity. BBQ season is almost here, which means commodities like proteins, produce, and bottled beverages are especially getting a boost. The spring surge began in March with freight volumes rising 34 percent compared to February (CCJ). We expect to see that trend continue for the coming months.
High freight volume means tighter capacity and increased transportation costs for shippers. The March Cass Truckload Linehaul Index, which measures market fluctuations in per-mile truckload linehaul rates, rose 5.1 percent year-over-year to an all-time high. Prices will remain high through the second quarter of 2015 and are expected to see an overall increase of between 4 and 9 percent in 2015 (Cass Information Systems).
When product demand is high and the capacity market is tight, taking a strategic approach to truckload procurement can lead to cost savings and higher levels of service over time. Below are ways shippers can get better access to capacity regardless of market conditions.
1. Plan Ahead
Thinking proactively about capacity needs will serve shippers well during a surge. It’s best to schedule shipments as far in advance as possible to keep costs down. Past that, it’s important to understand what drives market fluctuations, as many capacity shortages are driven by seasonality or predictable economic indicators. Shippers should monitor freight indexes that publish week-over-week, month-over-month, and year-over-year rate changes to better anticipate potential market fluctuations. Pricing tools, such as LoadDex, can also help—allowing shippers to compare current rates to the overall market and set realistic expectations.
2. Be Flexible
Shippers can secure more capacity by being flexible with scheduling, mode selection, and their distribution systems. For example, spreading shipments out over the week or extending shipping hours to nights and weekends are ways shippers can make themselves more attractive to carriers.
At LoadDelivered, we are committed to providing 24/7/365 continuous coverage and can accommodate off-hour requests like this. Our dedicated teams ensure continuous capacity, constant visibility, and around-the-clock attention to our customers’ shipments.
Shifting from over-the-road (OTR) to intermodal and increasing the use of drop trailers are additional solutions that help ensure coverage and keep costs down in a tight-capacity market.
3. Focus on Relationships
Working to build strong relationships between shippers and service providers is a strategy that benefits both parties. Communication is critical; transportation partners that have visibility into their customers’ annual bidding cycle are more likely to proactively adapt to market changes since they have a better idea of what is expected and where resources need to be allocated.
Additionally, shippers should focus on building long-term relationships, rather than constantly searching for the lowest pricing—which often comes from less reliable providers. In the long-run, there can be more value in working with 3PLs who have strong partnerships with their network and can provide consistently reliable coverage. Shippers should look beyond the price of the transaction and ask themselves, “What is the total cost of my shipment?”
Another thing shippers should consider is taking steps to make themselves more attractive to carriers. Carriers often have the luxury of choosing the accounts that will be most profitable to them when freight volumes are high, and becoming a “shipper of choice” is a good way to strengthen relationships and ensure more capacity.
With the surge capacity demand on the rise, it’s important for shippers to think strategically about how they will source carriers during the busy season. Planning ahead, building in room for flexibility, and understanding the value of strong relationships with their network are ways to keep freight moving and save a significant amount of money.