When broader market rates for truckload freight change significantly, shippers can find themselves paying prices for shipments well outside of what current market rates should dictate. This is particularly true when market rates fall after a period of sustained high pricing. It would seem, shippers are currently experiencing this situation today as the markets telegraph lower freight rates. Here’s the rundown of today’s rate environment and what smart shippers can do to protect their freight spend.
The Logistic Report from the Wall Street Journal writes, “What a difference a year makes for trucking companies. Carriers across the sector are throttling back profit projections for 2019 as they wrestle with the hangover from last year’s freight boom. WSJ’s Jennifer Smith writes, “Freight demand that was red-hot last year has cooled down and many operators say they now are coping with expanded capacity on the highways. Freight demand isn’t far off last year’s high levels, but rates have been sinking. Measures of spot-pricing for truckload business are down by double digits from last year…”
Unless you’re running very regular procurement events to update rates in all your lanes, you may still be paying more for contracted freight that you would if you booked loads on the spot market! As carriers reduce their rates to best the competition, the contracted rates in your TMS must follow suit or you’ll be paying too much. And if you’re one of the many shippers who plowed last year’s profits and gains from a tax cut into new equipment and other logistics-related capex just as shipping demand began softening, it is more critical than ever that you find innovative ways to adapt to the changing environment and protect profitability.
One way large shipping organizations are achieving the dual goal of keeping abreast of market rates in real time and yielding impressive cost savings to protect profitability involves the use of a powerful and award-winning technology. The UltraShipTMS Spot Quote Automation tool does much more than the name might suggest. This is part of the reason why this solution earned a 2019 Stevie Award at the American Business Awards as well as the People’s Choice Award having received the most votes from actual users. Here’s how it works!
Realizing they may already be overspending on truckload freight now that rates have cooled, the contracted rates negotiated with shippers’ carrier base likely reflect the trend established over the trailing 12 months. Shippers using Ultra’s Spot Quote Automation Tools are setting aside a few hours at the beginning of each week to send spot tenders for shipments in their top 10 most commonly used lanes. The bids returned below contracted rates in any given lane indicate market rates have fallen since the last procurement event and should be used as an indicator that it is time to renegotiate contracted rates with carriers in those lanes.
There is a bit more to the practice than we can cover in this article. Reach out to UltraShipTMS today to learn more about how to leverage the UltraShipTMS Spot Quote Solution as a vehicle for attaining real-time freight rate visibility across your entire transportation network!