As a shipping manager, keeping costs down while securing capacity can feel like an impossible balancing act. Factors like the driver shortage, increased fuel costs, and the ELD mandate don’t make this process any easier.
While these demands may seem overwhelming, you’re not left to sort it out on your own. In this article, we highlight actionable optimization strategies you can implement to reduce costs when capacity is tight.
If you ship small quantities of cargo at a time you’re likely relying on less than truckload (LTL) shipping. LTL carriers coordinate multiple customers’ cargo together so it fits into a single truckload making LTL shipping a more expensive option. One shipping strategy, known as origin consolidation, can help you avoid these problems. Origin consolidation is the process of combining cargo, often from multiple vendors, into full truckloads. By consolidating cargo, customers can take advantage of truckload pricing and help optimize their inbound shipments to stores or distribution centers. Other benefits of origin consolidation can include reducing the number of inbound shipments and labor planning to help unload those shipments.
Today, capacity has tightened for several reasons including ELD regulations, driver shortages, and the fallout from recent weather events. Most experts believe this is will be the new normal and has many shippers taking a second look at the use of railways in their supply chain. Because of its fuel efficiency and capacity options, rail can be a more affordable option compared to over-the-road trucking on shipments over 700 miles and sometimes less. There’s also been considerable investment in railway infrastructure over the last decade.
You can gain the benefits of the rail and the flexibility of Truckload by combining the two through Intermodal transport. Intermodal transport is done on a single bill of lading and doesn’t require any additional handling of freight when changing transportation modes. Even though intermodal transport may add transit, the access to additional capacity and cost savings make it the perfect solution for predictable and repetitive shipments. Railcar transportation (Boxcar) is also expected to see a resurgence as customers look for capacity solutions and have access to rail sidings or providers that can transload into railcars.
Arranging Intermodal or railcar transportation can be stressful and complicated, especially if you’re new to the process. Speak with an experienced 3PL to help implement rail solutions into your shipping process.
The quality of your transportation providers (asset and non-asset) makes a big difference in the amount of capacity you’ll have available. Good providers, with your support, can put together an efficient long-term capacity strategy that limits your downsize and maximizes some level of capacity. Unreliable providers add stress to your shipping process, restrict availability to consistent capacity, and may affect your company's reputation because of their inconsistency. Below you’ll find some ways to help you find quality vendors.
1) How often they receive out of service orders
2) How often crashes occur
3) Additional licensing and insurance information
Non-asset providers can help you find high-quality asset vendors through a rigorous vetting process. This process often takes into account factors such as financial stability, contract loyalty, insurance coverage, the condition of assets, and operational efficiency. This process helps you to be more certain you’ll receive the capacity and services you’ve planned for.
While all these ratings are a good starting point, it can take years of experience and relationship-building to find reliable, loyal, and professional transportation provider.
What’s your logistics strategy in this hot market?
Many companies will struggle to obtain capacity, and this could affect their bottom line. That’s why it’s important to implement these shipment optimization practices into your transportation strategy. If you’re ready to optimize your shipping with smart strategies contact us. We’ll take a look at your current logistic practices and help you use the shipping optimization strategies best suited for your company’s needs.