Whether the economy is booming or a recession appears on the horizon, logistics professionals must reduce overall transportation costs, gain efficiency, and maintain or improve customer service.
With much of the "low-hanging fruit" already harvested through modal optimizations, scheduled deliveries, and other operational improvements, how are shippers planning to gain efficiency and reduce costs in 2023?
A recent white paper produced by FreightWaves, "Why Are Shippers Leaving Money on the Table?” offers insights regarding ways shippers are gaining efficiency while ensuring that they make the most informed freight procurement decisions.
Based on research conducted by FreightWaves last fall, the top three shipper strategies are shorter contracts, more frequent RFP events, and using technology to streamline the freight procurement process and benchmark performance against industry averages.
With capacity and rates changing frequently, shippers recognize the need for flexibility and opt for contracts that cover shorter periods. While the industry practice of annual bid events is still viable, shippers want more options in a volatile market. Shorter contracts are the best of both worlds, with guaranteed rates, capacity with selected carriers, and an opportunity for shippers and carriers to adjust as market conditions change.
There are many reasons a shipper may choose to create a bid event – to find carriers for hard-to-cover loads, address any performance issues on a tactical basis, or align rates with market averages. With freight procurement technology, like the Emerge Dynamic RFP solution, shippers can streamline the bid process, replacing hours of manual work and making it feasible for a company to manage more bid events.
The FreightWaves research indicated that about one-third of the companies surveyed host bids every three to six months. Some shippers host monthly or weekly bid events. More frequent bid events allow shippers to make improvements at any time and for any portion of their networks.
In addition to streamlining freight procurement processes, some solutions include benchmarking capabilities. Emerge benchmarking allows shippers to evaluate their rates for any lane to determine if they are above or below industry averages. With this actionable information, shippers can make data-enabled decisions to adjust rates.
The combination of shorter contracts, more frequent bid events, and benchmarking are three ways shippers are gaining efficiency, reducing costs, and being more strategic in freight procurement.
Learn more about these and other best practices from logistics professionals by reading this FreightWaves white paper – a good first step in ensuring that you are "not leaving money on the table" in 2023.