Supply chains continue to endure dramatic changes arising from volatility. More volatility makes the process behind each load tender more important in the grand scheme of things. Without a focus on transportation costs in a capacity constrained environment, it is difficult for shippers and logistics service providers to achieve total cost reductions. This is true across all modes of transit, including truckload, less-than-truckload, parcel, and last mile. Look no further than current inventory rates for a hint at the cost impact.
As reported by William B. Cassidy of JOC.com, “U.S. retail inventories are climbing from their pandemic low point in 2020 on a monthly basis, but at $603.5 billion in August, they were still 9.2% lower in value than two years ago, according to data from the U.S. Census Bureau. Monthly U.S. manufacturing and wholesaler inventories, however, both hit record highs in August. Those sectors pushed up the total value of U.S. inventories 7.4% year over year in August to $2.08 billion.” Such demand factors have increased trucking rates by double-digit hikes above those in 2020 and 2019. However, automated processes can help.
Continuing Challenges of Load Tender Pricing and Capacity in the Market
Trucking rates are the result of supply and demand in available trucking capacity. As reported by Talk Business, DAT Freight & Analytics found an 11% increase in its truckload volume index in June 2020. Following several months marred by heightened consumer demand, specifically, a 10.1% increase found by the U.S. Bank National Spend Index, the chances of declining transportation rates through Thanksgiving “looks less likely in 2021.”
Those trends derive from the following challenges of pricing in a highly competitive environment:
- Increased activity among LSPs creates room for error in managing capacity.
- Back-office processes to find capacity — i.e., calls and emails — take more time.
- Ocean delays create equipment uncertainties and tighter capacity.
- Above-average demand among shippers results in more chaos.
Automated Freight Management Creates Instant Visibility & Capacity
When faced with limited capacity, automating the process of creating a load tender and confirming a freight booking is the go-to solution.
- Shippers secure more confirmed bookings. They also ensure every shipment is processed at the right service level and with the right equipment.
- Use of a high-quality, connected TMS aggregates capacity and data from a larger network. Since users can tag and submit time-sensitive shipments, they are also able to better identify opportunities for improvement.
Additional Freight Booking Benefits of Real-Time Pricing and Capacity Data
Leveraging a world-class TMS does much more than simply use real-time data to reduce costs. It can boost throughput and enhance back-office processes, too. It can lessen the risk for error in all activities. And using a centralized supply chain control tower will inevitably lead to:
- Reduced deadheading in trucking by giving carriers and LSPs more tendered loads.
- Increased access to mid-market carriers that may not have their own TMS platforms.
- Improved collaboration and schedule management.
- More digital document management solutions that compile data and keep everyone informed at each step.
- Secure, digital track records that improve traceability to build more accountability.
- Lower landed costs by keeping all shipments focused on the end goal.