As shippers gear up for the crucial fourth quarter of 2023 and next year, it’s essential to make informed decisions and take proactive steps to ensure a smooth and efficient supply chain. In this blog post, we will provide valuable tips and insights to help you navigate through this period of uncertainty and make the right choices that will contribute to the success and stability of their operations.
1. Prioritize Service and Reward Loyalty:
To maintain a reliable and efficient supply chain, it’s crucial to prioritize service quality and reward loyal providers. Relying solely on paper rates can be risky, as they can turn against you unexpectedly. When converting lanes to contractual agreements, it is vital to honor volume commitments when carriers meet your service requirements.
You may carriers offering cheap rates, but those may not be sustainable or those who approach rate increase negotiations early on, aiming to secure long-term commitment. Your decision on which direction to take will significantly impact your stability as a shipper when the market dynamics shift in carriers’ favor. If you have contracted carriers at favorable rates and service levels, consider extending those agreements into 2024 for added stability.
2. Conduct a Thorough Network Assessment:
During this period, it’s necessary to conduct a comprehensive supply chain analysis to evaluate your carrier base and distribution network. Simply riding the market wave without understanding your data and the health of your supply chain can lead to avoidable challenges. Assess if you’re working with financially stable providers and whether you have the right mix of third-party logistics (3PLs), brokers and assets. Look for opportunities to optimize your network and safeguard against potential volatility in 2024. By identifying improvements and acting now, you can build resilience and protect your supply chain in the long run.
3. Strike the Right Balance Between Spot and Contract Freight:
Achieving the right balance between spot and contract freight is crucial for shippers. If you haven’t done so already, it’s time to prioritize shifting volume from the spot market to the contractual market in the next three months.
This shift should occur before contractual rates become inflationary year-over-year. Begin with the areas that contribute consistently high volumes or markets where you can find competitive contractual rates. While doing so, ensure you’re not caught off guard with the freight left in the spot market as rates increase.
4. Embrace Uncertainty and Stay Agile:
For shippers, we understand that the freight market operates in cycles, with rates constantly fluctuating. However, there are periods where uncertainty weighs heavily on supply and demand dynamics. In the coming months and into 2024, concerns such as inflation, fuel costs, increased payroll expenses and the impact of the Presidential Election Cycle Theory will influence the market. Embracing this uncertainty and ensuring agility in planning and decision-making will be of utmost importance. Observing how the industry reacts to these stressors will provide valuable insights into the speed and magnitude of the upcoming market shifts.
Conclusion:
Preparing for Q4 2023 and beyond requires shippers to take proactive steps and make strategic decisions now to plan ahead. By prioritizing service and rewarding loyal providers, conducting a thorough network assessment, striking the right balance between spot and contract freight and embracing uncertainty while staying agile, shippers can position themselves for success and mitigate potential risks. Implementing these measures contribute to the stability and resilience of your supply chain, ensuring smooth operations and customer satisfaction in the years ahead.
Interested in learning how we came to these conclusions? Read our Transportation Outlook to gain a deeper understanding of the analytics behind it all.