Rate Shopping and Disruption: What You Should Know
Rate Shopping and Capacity
Rates were high and capacity was tight in 2018. So much so, that shippers spent a lot of time and effort towards creating beneficial relationships with carriers. In the ever-shifting landscape of logistics, we all know that relationships can help both shippers and carriers weather some of the bigger storms. And in 2018 there were quite a few storms to navigate.
The second half of 2019 has proven to be a bit more favorable towards shippers. Capacity loosened up and rates stabilized. When this happens, lots of shippers start pushing for the lowest rates possible–rate shopping which simply put means comparing the costs from a variety of carriers and going with what seems to be the most cost-effective solution.
Rate Shopping vs. Strong Relationships
Here at AM Transport Services, we do NOT rate shop, and we recommend you don’t either. You see, we’ve been in the business for 30 years, and we know that rate-shopping is a short-sighted and ineffective business strategy creating headaches instead of benefits. We believe in the lasting power of strong relationships.
We get to know our customers and our carriers. We get to know your freight and your lanes. At the same time, we have long-term partnerships with a broad base of core carriers. Small to midsize carriers you couldn’t possibly know about. Did you know that carriers with fleets of 5-100 trucks are less likely to experience the driver retention problems mega carriers have? And guess what–experienced drivers make sure your freight is quickly and reliably picked up and delivered on time.
Rate Shopping and Disruption
We’ve all heard Newton’s 3rd Law of Motion: What goes up, must come down. Here’s the thing, the opposite is true in logistics. When rates go down, they’re likely to go back up–sooner rather than later.
We’re talking about disruption here. Simply put–disruption is always around the corner. Yes, 2019 has been a great year for shippers, but the end of the year brings a couple regulations that will impact capacity and rates.
AORBD Conversion: On December 16, all fleets still using automatic onboard recording devices (AOBRD) instead of ELDs are required to convert to ELDs. As when the ELD mandate went into hard enforcement in April of 2018, we expect this new conversion to impact capacity as larger fleets implement the newer technology.
IMO 2020: The International Maritime Organization has ruled that beginning January 1, the marine sector must reduce sulphur emissions by over 80%. This will increase the cost of ocean-going freight and will begin to impact freight transportation costs indefinitely.
Commercial Driver’s License Drug and Alcohol Clearinghouse: On January 5 the new clearinghouse will go into effect. The FMCSA’s rule will require mandatory use of the Clearinghouse for employers to both report and collect information about drug and alcohol violations by drivers. The Clearinghouse will allow potential employers to access information concerning drug and alcohol violations, as well as, positive drug and alcohol tests and test refusals and thus identify those drivers who are not legally allowed to operate commercial motor vehicles.
Strong Relationships Make the Difference
If you or your 3PL partners are rate-shopping, now’s a great time to revamp your strategy. Lasting relationships built on mutual trust and best practices will keep your freight spend predictable during good times and bad.
Here at AM Transport, we know that creating and cultivating long-standing relationships and partnerships with folks who know and understand your business, your lanes, and the best carriers will provide you more benefit than the negligible cost-savings rate shopping might offer. Give us a call today to find out how we can help.