The economy, consumer confidence, regulations, and capacity/driver availability have created a challenging time for shippers to secure capacity and stabilize pricing. Prior strategies that used annual bids to leverage freight volume with pricing were a great success, but with this recent shift, these plans have yielded mixed results.
So, what can a shipper do to ensure capacity with a reliable range of pricing and still meet their customer’s delivery expectations? It is not only a good time to review who is servicing your customers, but it’s also a great time to review how you secure your pricing.
Benefits of quarterly pricing
Most large shippers review their logistics plans yearly or every other year with their transportation providers. By having a quarterly check-in with your providers, you are building your relationship and are able to communicate the expectations of your organization and determine (along with scorecard data) how well this provider is performing for you.
Quarterly visits will allow you to share your capacity needs and where they will be needed. With this type of visibility, your carrier partners are able to plan committed capacity to your forecasts.
As you share your forecasting, it is your carriers’ turn to share what they are able to commit for the upcoming quarter. This allows you to make changes if needed. If the capacity commitments are not where you need them to be, additional providers can be added or existing providers can be offered existing tonnage.
At this point, having quarterly engagement, visibility of forecasts, and capacity commitments in place, pricing can be negotiated for the quarter. If you are shipping in a market where there are seasonal impacts to capacity, you may notice a change in pricing from quarter to quarter. This allows you to navigate the dips in the market and stabilize when the market tightens.
At CAI Logistics, we have found this to be an upfront and proactive way to plan out each quarter and get results. Whatever the best combination of transportation methods is for your company, it’s wise to rely on your logistics provider to identify the most trustworthy carriers to handle your goods. Not only can they save you money on shipping costs (whether for an FTL or an LTL shipment), they can provide peace of mind that your goods will get to their destination safely.