Now Is the Time to Take Action to Combat Carrier Capacity Issues
Q: What are carriers saying about the capacity situation right now?
A: The strong economy, increased manufacturing output, driver shortage and other industry developments have all combined to put the highest demands on capacity in years. Capacity utilization rates are at 95% and higher, in both the spot and contract markets. Higher demand points seem to be localized within several Eastern and Midwestern regions where it's typical to see higher demand.
Rate increases going into 2018 were inevitable and we see them happening across the board right now. Carriers faced with the reality of the capacity situation are finding it challenging to be able to communicate these rate increases to their customers.
Q: How can shippers protect their portion of capacity and potentially find additional capacity in a market like this?
A: It is now more important than ever for shippers to proactively work with their carriers to gain "preferred shipper" status. Start by working more closely with core carriers with the goal of accessing and securing capacity, not necessarily getting the lowest rate. Implement best practices and technologies that enable transparent collaboration with carriers and minimize detention and loading/unloading times.
A good dock scheduling system is an ideal solution since carriers can be set up to pick the time slots that work best for them, allowing them to schedule loads as a backhaul to pare down empty miles. A dock scheduling tool significantly cuts idle and wait times at shippers' sites, sometimes by 30% or more, and loading and unloading times by 20% or more, and will help you honor time commitments to your carriers and schedule more realistically.
To find additional capacity, strategic, proactive sourcing methods based on technology specifically created for transportation procurement can uncover hidden carrier capacity by connecting shippers to logistics service providers that serve specific lanes, modes, and industries that may call for specialized equipment.
The second half of 2018 shows all signs of remaining a very challenging market environment. We are seeing shippers who are being put under pressure to react rather than acting deliberately to find capacity in this market, and are advising our customers to beat demand by resisting passive sourcing strategies.
Q: What should companies look for within a TMS solution that will help with capacity challenges?
A: Shippers should look for a collaborative solution that truly allows shippers, their carriers, and the customers they serve to thrive, even within challenging market situations. Comprehensive, end-to-end systems with modular product offerings can help shippers customize solutions to their needs rather than buying an inflexible, all-inclusive TMS package at a premium price.
Look for a solution from a provider with deep embedded vertical expertise that has experience with the processes and challenges specific to your industry.