A strong carrier procurement process accommodates several criteria. Common full truckload freight carriers vary in size, regionality and capabilities. In your logistics carrier management efforts, these factors will predict carrier performance and what freight they’re best suited to move.
Like any good investment strategy, shippers should strive to choose the right logistics partner. When it comes to optimally serving transportation networks and mitigating risk, the best choice isn’t always the low-cost option.
Your best strategy for carrier management is to establish a balanced blend of partners to meet your freight transportation needs. Let’s explore some of the things you can do to achieve that blend.
Balance Logistics Carrier Partners to Avoid Risk
Determining the right truckload freight carrier mix is challenging. Many shippers don’t know what a healthy, balanced carrier portfolio looks like. Imbalances in carrier selection can put you at risk. And risk hurts shipper-carrier partnerships over the long run.
If you are a manufacturer or a retailer, your logistics carrier management team has a single mission: deliver goods to market to meet customer demand. Most transportation sourcing teams spend most of their time and energy on meeting operational requirements. Unprecedented levels of disruption in 2020 forced transportation teams to pivot on their truckload carrier sourcing.
Strategic carrier procurement varies from organization to organization. Some shippers rely on a pricing strategy, looking for low-cost options. Others leverage experienced carrier relationships built over time. Some have contingency plans, while others seek freight services through a request for quote (RFQ) process.
When vetting your carriers in the procurement process, evaluate how you allocate truckload freight to your partners. Your routing guide should be balanced and diverse. Carriers should demonstrate positive performance metrics.
Whatever the carrier strategy, using data to in your carrier performance management will help address inefficiencies and hidden costs in your network.
A Case for Long-Term Logistics Partnerships
Many full truckload freight shippers have a group of core carriers who handle most of their volume. Managing fewer relationships is easier, and it creates opportunity to forge strong carrier relationships and trust. On the other hand, this approach can create an inherent risk.
Your truckload shipping needs and the carrier networks are constantly evolving. Regardless of how close you and a carrier may be, when networks change you can lose alignment between your needs and your partner’s capabilities.
Long-term relationships are beneficial to both shippers and carriers because partners can align their logistics network patterns strategically. That is vital in times of disruption. But, like any supplier relationship, these agreements must be continuously evaluated.
And if you rush to award freight to low-cost network newcomers, you can add risk to your truckload shipping network.
When a low-cost carrier is selected without due diligence, it can be easy to overlook network inefficiencies. While longstanding carrier partners can shift out of network, brand new truckload freight capacity can come and go. Service tends to be the first area where your network performance suffers when you buy solely based on price.
Truckload Carrier Sourcing: Depend on Depth
When your volume on a lane increases suddenly, your existing full truckload freight carriers might not have the capacity to meet your increased demand. We saw that happen during the COVID-19 pandemic for truckload shipping of nondurable goods.
If your carrier is awarded freight from another shipper at a more profitable margin, it might not have the capacity when and where you need it. That’s why a solid routing guide requires depth. If tried-and-true relationships are based solely on past experience, shippers might be disappointed by surprise costs and poor service.
National and Regional Carrier Networks
Some large volume shippers believe that only national carriers are properly equipped to handle the size and scope of their full truckload freight demand.
This is an easy misconception when comparing your full-network map with that of a national carrier. If you drill down to the local level, however, you’ll find more logistics optimization opportunities.
National carriers might have a wider reach, but even if they service a certain lane, they might not fit your network.
Small to medium-sized carriers focused on regional service are often a good fit, especially if they’re active networks that surround a handful of key lanes. National carriers might be willing to send trucks to these areas – often at an added cost.
The best choice might be a small or medium-sized regional carrier that’s more familiar and available along these lanes. These carriers can more effectively manage your freight without the additional cost of non-compliance, deadheading or other inefficiencies.