Last week we talked about the skyrocketing prices the spot load market is seeing in freight and transportation costs. Shippers are bearing the brunt of these elevated rates and are having to rethink the way they arrange the movement of their goods so all their profits don't fly out the window.
Changes to processes may help mitigate some of the recent pricing burdens that have been brought on by limited capacity and a robust economic outlook -- just the newest development in the tumultuous supply chain.
Shippers can re-evaluate their current shipping practices by improving certain aspects of their daily process, such as streamlining their pickup and delivery times at the dock, avoiding detention, consolidating shipments, spreading out shipments, or researching alternative modes of transport.
But the single, most impactful resource a shipper has is the third-party logistics company they work with and the salesperson they rely on regularly. 3PLs live and breathe the industry every day. They know the latest market conditions and have access to the largest pool of dedicated, reliable carriers in the nation. The relationships they’ve built with these carriers afford them the ability to negotiate the best rates, sometimes saving a shipper significant costs.
Maintaining a great relationship with your account representative is a frequently underestimated asset. Sometimes the quest for the best rate overshadows the value of dealing with a reputable and reliable partner. Beware of the freight broker who gives you a rate that sounds too good to be true; it probably is. Utilizing an unproven broker to save a few dollars can leave you dealing with dropped loads, OS&Ds, late deliveries, or even cargo theft, all of which end up costing you more money in the long run.
Top 3PLs have salespeople that are specifically trained to find the best options for their customers. Their business depends on you coming back and they know that the value they add has to be a combination of excellent service, reliability and a propensity for thinking outside the box to save their customers money. With current high freight rates becoming the norm, these three attributes have never been more valuable to a shipper.
Case Study #1: Changing the mode of transportation
TL to reefer LTL
SITUATION: Customer could no longer afford recent hi
gh spot rates. Jasmine needed to explore any and all cost-saving options. She first checked intermodal but found that there were no options for rail at the time. She then looked into quoting it as two separate LTL shipments instead of one full truckload.
SHIPMENT DETAILS: 21 pallets at 41,172 pounds going from Wisconsin to Virginia. A full truckload price was coming in at $3,600.00. By splitting up the shipment into two dry LTL moves, one at $1,180 and one at $820, the customer saved $1600 total.
TL price: $3,600
LTL combined price: $2,000
Case Study #2: Changing the mode of transportation
TL to dry LTL
SITUATION: Laina recently had a customer who needed a particular lane quoted. The price seemed high so the Choptank representative decided to explore some options.
SHIPMENT DETAILS: One pick up, three drops of 691.4 total miles. A full truckload market rate was $3,600. After running some numbers for the customer the sales representative discovered that doing this shipment as three separate LTL shipments would save them appreciable money.
The total charge to the customer was $2095, a savings of $1,505 or 41.8% over the original market rate. That’s profit the customer can put back in their pocket!
TL price: $3,600
LTL combined price: $2,095
Case Study #3: Changing the mode of transportation
TL to Intermodal
SITUATION: Angel has a regular shipping customer who has a weekly cross-country lane. Issues with covering these lanes began to arise in September due to a lack of capacity in the northwest area. The only rates being given were extremely high.
SHIPMENT DETAILS: Truckload freight from Oregon to Tennessee -regular shipping customer. Because of the exorbitant rates, the salesperson at Choptank Transport decided to try to rate it using their intermodal services as an alternative. The rates came in at half the price of over-the-road (OTR) and the customer has been shipping intermodal instead. They have been happy with the rates and the service.
TL Price: (December 2017 lanes) $6,000
Intermodal Price: (December lanes) $3,200