By Tom French
It is rare that I read an article and decide to send it to our customers and friends. But the cover story for The Journal of Commerce (April 28, 2014) edition talked about the high need for trucking, resulting in unprecedented rate increases in logistics. The article was titled “Trucking Hits a Reset Button” and it addressed the 3-5% increase in ground transportation costs.
Retailers are feeling the financial crunch this Spring as the trucking industry, which has taken a hard hit in the last several years through several smaller companies going bankrupt (335 to be exact), is turning away business because they are in such high demand. Trucking companies are in the rare position of making rate increases by lane as high as 10-20% depending on the industry and urgency for these shipments. And customers are being forced to pay these prices or run the risk of not getting their consumer goods out.
The article goes into detail about how the industry got to this point and why it is not going to get better any time soon. The clear takeaway – You need to have a Game Plan.
If you are currently using brokers of any size, they will be the first to be impacted by two issues:
- Rate increases
In this highly competitive market, asset carriers want to deal with shippers directly, cutting out the middlemen. They want easy to process and fill orders. If you are managing your transportation using a software solution, examine the origin locations. If you need to go with a Broker, make sure you have one or two asset companies as backup. The exception to this is if your 3PL or broker has an origin – destination contract with carriers locking in capacity and rates.
Now more than ever it is crucial to have awareness surrounding your supply chain.