Industry Insights & News

Runaway Rates: Four Tips for Taking Control

May 16, 2022

At any given time, rates for a specific mode of transportation can rise. Shippers may look at modal shifts to find more economical solutions for less time-sensitive freight. However, we are experiencing a unique time in which rates across all modes of transportation appear to be on the rise. According to one industry source, all modal rates are up, some as high as 300 percent. Many factors contribute to runaway rates, including rising fuel costs, uncertainty due to global political events, and more than two years of situational supply chain disruptions, including an ongoing pandemic.

However, shippers have ways to take control of managing logistics costs in turbulent times. Here are four practices that can be implemented quickly and easily with the help of appropriate technology solutions.

Leverage freight procurement as a competitive advantage 

The first place to begin looking at cutting costs is at the point of procurement or freight sourcing. Streamlining the RFP process through technology allows shippers to react more quickly to market changes by doing more frequent bid events.

Beyond the timing of bid events, shippers can benefit from freight procurement solutions that identify options to optimize their freight spend. An RFP solution with a benchmarking tool can add significant value for shippers. With real-time access to data that compares a shipper’s pricing strategy to the market, companies know if their rates are at, above, or below the industry. 

Using benchmarking for this level of business intelligence to specific lanes, shippers can focus on specific areas that offer the best opportunities, such as choosing carriers that need backhaul freight in specific lanes. Shippers can achieve favorable rates, often reducing costs, while carriers have freight to help eliminate empty miles - a win-win made possible by data-enabled solutions.

Expand networks to access capacity from more carriers

Shippers must find ways to move products, so accessing capacity is critical for supply chain management. With supply and demand fluctuating (at times daily or weekly), shippers and carriers need to connect much faster than ever before. Emerge offers direct access between shippers and carriers – there is no middle person. A shipper's current carriers may be involved in a bid event, and at the same time, the shipper may access thousands of vetted carriers through the Emerge marketplace. 

More choices and direct connections are helping shippers discover new providers.By the same token, carriers can reach Fortune 500 companies that in the past may have been difficult if not impossible to approach due to the carrier's size.

Gain visibility of internal practices and external market dynamics

An old saying is that you can't manage what you don't measure. This concept directly applies to freight spending. If different units of the same company do not follow the most current route guides, there is a real possibility that planned rates are not being realized across the organization. 

If you do not have good business intelligence about market conditions and how your actions stack up, you may be "leaving money on the table" or "pricing yourself out of the market" with every bid. This can have a lasting impact on your pricing strategy.

Evaluate your technology solutions for speed, ease of use

A final area to review is the systems you use to manage transportation. Suppose your current systems are complicated for users and take a significant amount of time and effort to implement. In that case, you may want to explore integrating other systems into your technology stack or eliminating some systems altogether. Extra steps or rework add to logistics costs – they do not reduce them. 

We are experiencing turbulence across many aspects of the supply chain. The good news is that disruption often leads to innovation and can turn risks into opportunities.

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