Advice on Handling Your current Freight Transportation

Shippers have faced a difficult environment days gone by several years. Some economists are predicting a softer market during the first area of the year, accompanied by an upswing in economic activity and a tightening in freight capacity throughout the remaining portion of the year. How should shippers navigate the potentially choppy waters of 2007? Here really are a few suggestions:

Conduct a Freight Bid

The current softness on the market affords shippers a chance to leverage their freight and recoup some of the rate increases of recent years. A freight bid is a superb tool to accomplish rate stability and capacity commitments while market conditions are in your favor. As your company adds customers, consider conducting “mini” bids on the new destination points. A program such as MapPoint allows you to identify the carriers in your routing guide that serve the points closest to your brand-new customer locations (at the cheapest rates). You can then contact these carriers to secure bids on this traffic.

Sign Multiyear Contracts

Secure your rates and capacity under contract, preferably with multiyear agreements, to protect your company from rate shocks as the market changes. Attach your rates and service-level agreements (SLAs) to the contract. As you complete your “mini” bids, add these rates as contract addendums to make sure that you maintain your cost structure over the life of the agreement.

Monitor your Freight Program

To make sure that your company receives a high-quality service and maintains the savings achieved, set up a compliance program. This program should monitor the performance of one’s traffic management personnel in following a routing guide and the compliance of the carriers in meeting their capacity and service commitments. To steadfastly keep up visibility of the ongoing results, weekly computer-generated tracking reports can be extremely helpful. Take action immediately on any deviations from your plan to keep on track.

Collaborate with Your Carriers

Among the lessons that numerous shippers have discovered during the last few years is the necessity to form strong partnerships with their core carriers. To reach the objectives of ample capacity at competitive rates, there are many things you can do.

Much of your and backup carriers should receive freight throughout the year. This may keep them interested and motivated to aid you throughout your slow and your peak times. Provide them with freight in areas where they require help, and adapt to their operational requirements. Make sure you pay them in a timely manner.

Expand your Carrier Base

As capacity tightens, it becomes much more important to have a robust routing guide. To produce a thorough carrier base, meet with new carriers on a continuing basis, give them trial shipments, and try out their service and customer-service capabilities. Use your motor carrier directories to touch base to carriers who may be a fit for your freight and major shipping lanes.

Increase Capacity Frequently

There are opportunities for shippers to expand capacity by simply modifying existing practices and procedures. This could include changes in packaging and pallet dimensions to boost cube utilization, dealing with your carriers to generate continuous moves and round trips, taking control of one’s inbound freight, and expanding your company’s hours of operation.

Manage your Freight Spend

For many shippers, “the devil is in the details.” Expressed another way, the devil can not be found as a result of lack of detail. Freight spend management is a place that will not receive enough attention. It is very important for shippers to possess visibility into the main element components of their freight spend.

To effectively evaluate the value of one’s precious freight-spend dollars, make sure your individual cost components (freight rates, fuel surcharges, lumper fees, waiting time, etc.) are itemized separately and managed effectively. It is very important to set up a good taxonomy of costs, monitor the average person cost elements on a continuing basis, and take action with those cost elements which are adversely affecting your company’s bottom line.