5 Reasons Your Freight Spend Is Going Up
3 minute read
Transportation is a pretty exciting, isn’t it? Kind of like a roller coaster, except roller coasters are fun and not quite as topsy turvy as working in a business where dropped loads ruin on-time deliveries and ever-changing technology leaves you scratching your head. When you factor in a rising freight spend, this roller coaster isn’t all that much fun.
Here’s the thing–if your freight spend went up in 2018, there were a lot of good reasons for it. Capacity was tight for a variety of reasons including changing regulations (remember all the hoopla about the ELD mandate), massive weather upheavals, worries about tariffs, as well as, a driver shortage coupled with a booming economy.
But if your freight spend is going up in 2019, something’s not quite right. Capacity is pretty abundant, and typically when there are lots of trucks, freight spend goes down or at least equalizes.
When freight spend goes up during times of loose capacity, it might be that your freight isn’t that attractive, and there are a few reasons this might be true.
Check your detention times at loading. If drivers are being made to wait too long, they might pass on your next load.
Short tender time frames.
This means you’re not giving your tier 1 providers enough lead time. They’ve already committed to other loads by the time you offer yours.
Consignee or suppliers detaining trucks.
Are your consignees holding up delivery? Here’s an example: If you’re a manufacturer who ships to grocery warehouses notoriously terrible for detaining trucks and being rude to drivers, you’ll pay higher prices due to their shortcomings because in the end, carriers have to deal with it.
Lack of TMS.
If you don’t have a transportation management system (TMS), you’re probably working off of spreadsheets and lack consistency in your tendering practices. It’s likely that your compliance to routing guide optimization is off too. Inconsistent volumes or lanes means your providers can’t build up lane density, so you pay higher rates to get folks to take the loads.
If you spend a lot of time rate-shopping, you won’t foster loyalty among providers. Rate-shopping may work during short-term economic downswings, but any time there’s even a bit of tightness in capacity, you’re going to pay extra.
What can you do?
You can keep using an outdated model to get your freight moving and continue to experience ups and downs or you can find a logistics partner who treats your freight like their own, transportation professionals with experience and technological know-how. A predictable and reliable freight spend is the best-kept secret in logistics, and it can be yours.
Here at AM Transport, we believe in doing the right thing, and that’s why we’re always working to keep your freight spend predictable and reliable. You don’t have to ride a roller coaster dependent on market conditions, driver shortages, and missed opportunities. When you work with us, you gain the power of the best TMS in the business, the most sought-after small carriers, and experienced professionals cross-trained in every aspect of the business.
If your freight spend is going up, don’t hesitate to give us a call today. We’ve been in the business for 30 years, and we can help. Ask about our managed freight services. We can help you drastically improve your supply chain and put a stop to out-of-control freight spend.