Managing the Capacity Crunch
Everyone’s talking about the trucking capacity crunch in 2018. Due to weather issues, increased manufacturing output, strong consumer confidence and the ELD mandate going into effect to track drivers’ hours, available capacity is at an all-time low. There is just simply too much freight to move and too few trucks and drivers to move it.
Carriers are benefiting from the crunch by raising rates and being more selective in who they want to do business with. In a recent WSJ column, Heard on the Street, Justin Lahart wrote, “Freight carriers are benefiting from surging demand while passing costs on to customers, a shock for shippers used to years of flat or depressed rates.” He reports that some carriers and freight brokers are charging double-digit price increases.
Gone are the days when a shipper could dangle a load in front of a list of carriers and wait to get their desired price and service. Now shippers are happy to find capacity anywhere they can, even if they have to pick a different mode of transportation – rail, air, ocean – instead of trucks, to help with the capacity issues.
What can help a shipper better manage the capacity crunch?
Technology can – in the form of a transportation management system – leading to improved efficiencies, lower costs and better services.
A TMS, as the backbone of a global logistics network of carriers and shippers, allows trading partners to connect, collaborate and consolidate to find more capacity. A strong network of thousands of shippers and carriers extends the reach to find capacity, allowing shippers to leverage their existing rates and relationships or find new opportunities via the spot market.
Shippers can collaborate with other shippers across the network to find additional capacity with shared loads or to facilitate continuous moves.
Finding opportunities for consolidating inbound shipments to full truckloads to reduce the number of LTL shipments is another way a TMS can help with the capacity crunch. For example, if a shipper has several orders going to the same geographic area, these orders can be combined to create a full truckload shipment to a pool point; from there the truck is broken down into LTL shipments to end customers.
A TMS collects data from transactions between carriers and shippers, then analyzes this wealth of information to identify trends that can improve carrier selection based on costs, service levels and performance. Reports can be created that provide insights into which carriers respond more quickly and reliably so shippers know who can meet their capacity needs.
Shippers who pay their carrier invoices in a timely manner often become preferred shippers. Becoming a preferred shipper means you treat carriers as a partner and strive to have a mutually beneficial relationship. With the help of a TMS with a freight bill audit and payment offering, shippers can quickly reconcile expenses to pay invoices, so their carriers are happier.
Besides paying on time, using scheduling tools to speed turnaround times at the dock doors improves carrier relationships. Carriers prefer not to wait for a dock to open. Using a TMS with a dock or appointment scheduler means carriers won’t be kept waiting in the yard.
While the capacity crunch is not going away anytime soon, using a transportation management system will help shippers better navigate the current rough waters so they can ship their orders to the right location, at the right time, for the right price.
For more information on how to choose the TMS that best fits your supply chain needs, read The Complete Buyer’s Guide to Transportation Management Systems.