How to Maintain Composure During Trucking Capacity Shifts

When logistics executives and decision-makers get together, the conversation often turns to transportation and truck capacity—currently a conundrum for many.

Loosening capacity means spot market rates are down 20% on average, which can be a tempting proposition for shippers, despite inherent volatility. On the other hand, a tougher pricing environment means trucking company failures are rising at an alarming rate.

In the first half of 2019, approximately 640 carriers went out of business. That’s up from 175 for the same period last year, and it’s more than double the total number of failures in 2018, according to transportation industry data firm Broughton Capital.

That has industry professionals talking about truck capacity, an area of particular concern for shippers that require specialized equipment and highly trained labor to reliably make time-critical deliveries. These shippers can’t afford to roll the dice on the spot market in the long-term. They need guaranteed truck capacity with safe, reliable drivers at predictable, competitive rates.

A good, dedicated transportation provider can save companies up to 25% on their overall transportation spend, which should be between 2% and 2.5% of operating revenue, in general.

When choosing a provider, look for a company with a long-standing, reliable track record in dedicated solutions, including fleet and route optimization, shipment optimization, and load planning, as well as the procurement power to manage and negotiate rates with carriers. A good provider invests in business intelligence and analytics, measures key performance indicators, and considers continuous improvement initiatives a core value. Equally important is the provider’s ability to recruit, train, and retain qualified drivers. Finally, before handing over the keys, look for a provider with an industry-leading safety and compliance record that will take liability, as well as compliance, safety, and accountability (CSA) concerns, off your hands.

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