Transportation professionals, like a lot of industries, are effected by inclement weather. Developing a proactive plan to deal with severe weather is necesarry in order to streamline business continuity and mitigate time and resource losses.
Last winter was especially brutal for transportation professionals. Frigid temperatures across the northeast and mid-west and snowfall down south left business reeling. This year already unprecedented snowfall in Buffalo caused highway congestion and freight delays. Railroads could not clear snow from the tracks fast enough for trains to get through. Snow and ice made it impossible for planes to safely land and take off. Like dominoes, one delay led to another, disrupting supply chains across the country.
Many managers had developed lean budgets around negotiated rates. But those rates went out the window as service failures occurred. Rather than explore mode shifting to deal with the sudden capacity shortage, shippers rushed to the spot market to snap up capacity.
Before being submerged by any bad weather, you can use these 8 tips to help you develop a plan to deal with the most common issues that arise with capacity and rates.
1: Don’t try to time the market. There’s nothing wrong with seeking competitive rates at a given point in time. But there’s no more likelihood you’ll be able to time the truck market than stock market. Conduct a procurement exercise at the same time of year, every year. Reviewing rates and service providers every 12 months allows for better alignment of shipper and provider networks for long-term, sustained pricing levels.
2: Maintain a stable set of service providers from year to year. This doesn’t mean you can’t add any new service providers. Competition is healthy. But before you choose, measure how much freight your carriers are actually hauling, compared to what they promised. If you’re giving too much to non-incumbents, it will show in higher rates.
3: Understand what drives ongoing fluctuations in the market. Market changes affect availability of capacity. Truckload capacity, like the economy, is cyclical. While there are no ways to absolutely identify when a capacity shortage will occur, you can watch certain economic indicators to understand what is happening in the market and anticipate potential impacts on transportation rates.
4: Shipper-receiver relationships can have a significant impact on the carrier’s engagement and satisfaction. That’s especially true when the carrier gets caught in the middle between two parties. Don’t leave them there. Shippers are ultimately responsible for resolving the issues carriers have with receivers. Ultimately, any negative treatment will adversely impact your relationship with the carrier.
5: Be sure the transportation providers you are using are flexible. Can they step in and move additional freight volumes in a pinch? Do they have the size and scale to help you weather the storm time and again?
6: Look for a link between your inbound and outbound transportation strategy that wasn’t there before. You may be able to have providers who deliver inbound raw materials supplement your outbound transport needs.
7: Be flexible. Appointments do not allow for the most efficient transit time and use of a driver’s hours of service. Sometimes, the driver will be held up a day because a receiver has a small dock and too small a window for unloading.
8: Communicate within your own organization. Educate your company about how weather affects capacity to avoid service failures and unmet expectations. Explain your plan for capacity this year. Will you ship early to avoid the rush? Leave inventory in strategic locations thereby balancing inventory (carrying costs against higher transportation rates)?
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