As trucking capacity tightens, and rates continue to increase, we begin to see Shippers move from their primary carrier provider to the second and third carrier on their routing guide to find a carrier with capacity and possibly aligned rate structures. This hopping and searching for trucks is one approach but certainly not a long term and sustainable model in today’s environment. As capacity tightens, especially with the grace period ending on ELD, shippers may end up digging deeper than three carriers in some lanes before finding one.
With rate hikes averaging from 4 to 8% and in some lanes into double digit increases, shippers have some difficult choices to make to retain costs yet satisfy demanding customer delivery dates. With a healthy economy and tight capacity, pressure for rate increases will continue.
“With rising energy costs affecting fuel prices, new regulations in the ELD mandate, a continuous shortage of drivers and a growing economy, we believe the challenge for trucks for shippers will continue for quite some time” noted Brad Morris, MILAN VP of Sales
So, what is the best method for this madness? There are several things you can do. However, with the current climate, MILAN recommends one thing to help you during the crunch. Shippers need to invest in the relationship with their Carriers and collaborate together to determine the best approach in an industry fraught with issues. This can be the one single method that can build loyalty and trust for both organizations and create a sustainable supply chain. In an effort to keep service levels high, shippers need to be carrier friendly. Work with your carriers to come up with short and long-term solutions that can achieve the best outcome for both sides.
MILAN Supply Chain Solutions is a single source third-party logistics company who specializes in warehouse distribution, transportation and value-added services to its clients. Our warehouse facilities in Tennessee distribute throughout the southern region while our asset-based trucking operation touches points throughout the southern and midwestern regions. MILAN also provides a non-asset solution from our brokerage department to clients based on the best-fit solution.