Avoid Gambling On The Spot Freight Market

Don’t Gamble On Spot Freight

Are you a shipper who goes to market via freight brokers for freight quotes on every shipment? Are you doing so even if you’ve shipped the same freight in the same lane multiple times every week or month for years? Many shippers believe they are saving money by paying what the marketplace will bear each time they ship a recurrent lane. There are hidden costs in time, money, and risky relationships inherent in this process that offset any potential for savings. Instead of gambling on the spot market, shippers should make an investment in managed solutions and contracted carriers.

Strategic Planning Pays Off

Managed solutions and contracted carriers avoid the pitfalls of quoting every load on the spot market by providing stable service agreements and pricing, as well as mutually beneficial partnerships with experienced teams. Managed solution providers are focused on ever-shifting market conditions like seasonality, regulatory and even weather (think Winter 2014 disruptions) that can impact your freight movements.

Providers invest in the tools to extend visibility across freight spend, helping shippers capitalize and leverage historical data toward lower costs and increased efficiency. Tapping a provider with these duties allow customer service resources to take freight out of their job description and focus on increasing order volumes and managing clients needs. Other benefits include:

Total Landed Cost:

Whether or not you have a 1 day, 1 week, 1 month, or 3 month sales cycle, wouldn’t be nice to know the cost of freight before the sale is made to protect margin?

Accruing / Budgeting Freight Costs:

You have a new client whose business will greatly expand the geographic footprint to which you ship, you can predict freight costs before committing to your sell price. Budgeting freight dollars in advance is a great way to project financials 3-6 months in advance if not farther.

Capabilities and Service Levels Agreements:

Contracted pricing and accessorial charges allow for a course of action when service fails; Become a shipper of choice – Consistency in freight volumes makes you a preferred client rather than a one-off spot market shipper.

Accountability:

Single sourcing allows for efficient management of all carrier/providers via a single accountable resource. KPI creation, monitoring, management can allow for dynamic monitoring and corrective management that can extend up (to vendors) and down to warehouses or clients.

Investing the time and effort to develop a long term transportation strategy with experienced partners will provide savings and increase efficiencies, and odds are, those companies will have more time to focus on driving success.

  • Costs of Playing The Stock Market:
  • Time - Performing these tasks can lead to a tremendous amount of time wasted: Creating, publishing, waiting for quote responses.
  • Labor Inefficiency - why have your most valuable CSR chasing freight dollars and trucks when they could be managing your most important client relationships and their orders.
  • Money - Many transportation markets and submarkets (National, Regional, Local) exist, each with their own subtleties that impact freight rates. Tracking rate increases in all markets when bidding every move becomes untenable, and shippers can fall prey to opportunistic pricing. Further, if you have strict requirements on trailer specifications for your freight, what is the cost of late trucks and incompatible equipment? Often these service failures lead to increase labor (OT) and utilization in warehouse and distribution area, and longer order to ship cycles.
  • Risky Relationships - Entrusting your freight and your customer’s orders to the lowest bidder, when the depth of a brokers relationship only goes as far the $50 in margin on any given shipment, how do you know that they are willing protect your interests? Are they willing to extend services or absorbing additional costs in doing so?

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Want to learn more about how Columbian Logistics Network can help with your logistics challenges? Contact us, or call us at 1-888-609-8542.

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