When it comes to freight carrier procurement, finding the right balance between service and cost is critical. But how do you strike that balance? On one hand, aiming for low cost may jeopardize service levels, while prioritizing service may mean paying higher rates when capacity is in low demand. In this blog post, we’ll explore the risks and rewards of a balanced approach to carrier procurement.
Weigh your options.
If your primary goal is low cost, beware of sacrificing service when rates and capacity rise. For instance, if your carrier network is too broad and you always choose the lowest rates for every load, you may lose access to capacity by not establishing long-term partnerships with carriers. Pressuring carriers downward on rates could also backfire when the market swings upward, driving carriers to seek higher rates for their trucks and taking their capacity with them. On the other hand, if your primary goal is excellent service to your customers, you risk seeing higher costs in times of lower capacity demand. However, prioritizing service means that you’ll have the capacity you need to keep your promises to your customers when the market inevitably swings.
Be transparent with your carriers.
To mitigate these risks, developing solid carrier partnerships is key. Communicate frequently and transparently with carriers, and contract capacity on regular lanes when feasible to minimize service hiccups. Remember that transparency goes both ways – share your future growth plans with your carriers so they can plan for your potential growth within their network. Such transparency shows carriers that you’re invested in a long-term partnership, and may make them more willing to invest in it as well. Expanding to new markets also gives carriers a glimpse into your future and helps them plan. A carrier that you really value may be willing to invest in reliable capacity and expand to service those new markets.
How can you get both quality service and at a fair price?
Finding the right balance between cost and service isn’t easy, as rates and capacity are in a state of constant change. But working with Transportation Insight’s team of experts can help you develop a carrier procurement strategy that mitigates the impact of market volatility and adapts to your changing business needs. Our experts understand how freight market dynamics can impact your business and can help you procure the right carriers for the right shipments, whether you need low cost or high service levels. To learn more about how we can help you, start the conversation with a Transportation Insight expert today.