Finding Capacity When None Exists
Shippers everywhere are having trouble finding capacity, thanks to the driver shortage, fewer trucks, and rising fuel and insurance costs. These challenges are likely here to stay for awhile, so shippers need to plan ahead. Here are 10 tips on finding capacity, from John N. Roberts III, executive vice president, enterprise solutions, and Gary L. Wicker Sr., vice president engineering services, J.B. Hunt Transport Inc.
1. Share your shipment plans in advance. Have a peak planning session with your carriers. Plan a week, a month, or a quarter ahead, if you can. This gives carriers the insight and time they need to provide a capacity solution.
2. Tender freight early. Get to your carrier’s capacity first. That means eliminating process delays that waste time communicating your shipment needs to the carrier. Minutes count.
3. Trade carriers. Talk to your inbound or outbound trading partners, or identify other transportation users in your community, and find out what carriers they use. See if their delivering carriers can make your pickups. It won’t hurt to ask.
4. Buy short-term dedicated capacity. Try buying capacity for peak periods at a flat rate. While costly, you can use the capacity in an opportunistic manner and gain a measure of control to make sure product gets delivered as needed.
5. Buy long-term dedicated capacity. Many shippers can cost-effectively utilize dedicated transportation solutions year-round. Dedicated capacity is flexible, and can help alleviate random capacity constraints as they occur.
6. Relax operating rules and parameters. Business as usual may not work in peak, crunch periods. Be creative and flexible. Many rules can be bent. Allow existing carriers to utilize other carriers in their stead, for example, and perhaps extend operating hours.
7. Eliminate time-wasters. New hours of service rules make drivers’ time a perishable commodity. Make sure your operations are efficient and require the minimum amount of time from the driver. Capacity is created by moving more driver hours to the driving line, which means no dock, paperwork or inspection delays, and efficient appointments.
8. Tap into weekend capacity. Drivers often work over the weekend. They have the time and hours to drive, but demand for their services typically is 50 percent less on Saturday compared to a weekday, and 25 percent less on Sunday. Use that available capacity.
9. Examine other transport modes. See if other modes can supplement your needs during peak or constrained periods. Perhaps you don’t normally prefer intermodal, but will it work during this period? Options exist. Check them out.
10. Pre-buy capacity. You can do this in two ways. One, ship early and store the product at or close to the point of use. This levels production and transportation flows, using inventory as a smoothing buffer. Two, commit to buying an option on future capacity. A simple, low-cost option involves offering to pay carriers for specific capacity commitments requested in advance and not used. Carriers will hold capacity for shippers who put this type of agreement in place.