This post was originally posted on Cerasis.com and written by Adam Robinson, Marketing Manager at Cerasis.
Shipper and carrier relationships are subject to many factors, and the slightest change in the market can lead to uncertainty regarding where those relationships stand. Unfortunately, increasing freight rates for LTL, full truckload, parcels, multimodal shipments, and even international shipments will result in a greater focus and emphasis on making shipper and carrier relationships work. Also, shippers will look for new ways to make freight attractive to carriers, a prerequisite to gaining shipper-of-choice status, essentially putting Shipper A’s freight higher in priority over other shippers. Consider these trends and how they will necessitate better shipper and carrier relationships throughout 2019.
Multimodal Shipping Will Increase, Resulting in More Interaction
Continuing rate hikes and the increased use of Multimodal shipping will naturally lead to more communication between shippers and carriers. This is the result of an increased volume being shipped and increased complexity of shipments. Failure to provide accurate information and complete all preparation steps before picking up will lead to poor performance reviews by the carrier. In other words, carriers will be more likely to refuse to pick up shipments, and if they do, carriers may charge a higher rate for your freight.
Tariffs Will Lead to Higher International Shipping Costs
The steady rate increases associated with shipping in 2019 will also evolve in response to current and announced tariffs. Although the economy has exhibited strong growth over the past year, uncertainty at the end of 2018 leads to many misgivings regarding the Federal Reserve’s actions and plans for 2019. Unfortunately, this uncertainty could lead to the release of new tariffs, which may prompt retaliatory tariffs by foreign countries. This will effectively lead to higher international shipping costs, which will translate into higher domestic costs as well. The only way to successfully combat higher tariffs is through better shipper and carrier relationships, tapping into the unique negotiated rate and value-added services.
Tightening Capacity Will Result in Refusals and More
As explained by Bob Farrell via Transport Topics, multiple rate hikes are likely throughout 2019. Even though the capacity crunch remains in the news, actual utilization is expected to drop closer to 94 percent. This may seem impossible, but it is the result of wasted capacity and the talent shortage. Even though capacity exists, drivers may be unavailable to fulfill carrier needs.
More Companies Will aim for Shipper of Choice Status
According to Steve Banker via Forbes, becoming a shipper of choice is one of the easiest ways for shippers to reduce freight spend and ensure available capacity, despite the ongoing driver shortage and capacity crunch. Also, gaining shipper of choice status helps shippers properly balance costs and service, benchmark performance, access latest rates, enhance bids and much more. As more companies look for ways to gain shipper of choice status, eligibility criteria for the recognition may evolve. Therefore, those with this existing level of recognition should stay in contact with carriers to ensure their status does not change.
Compliance and Tracking Will Come Under Scrutiny in 2019
As noted by via Food Logistics, 2018 saw multiple foods recalls and uncertainty regarding the sourcing and transportation of foods. As a result, shippers and carriers are working to improve their relationships through continuous measurement and analysis of performance, enhancing efficiency and safety. The coming year will see a renewed level of scrutiny over food supply chains, and compliance initiatives will likely extend over to medical and pharmaceutical supply chains as well. As a result, compliance and tracking measures will be a primary focus for 2019, and keeping an accurate chain of custody requires increased collaboration between shippers and carriers.
Flexibility in Scheduling and Reducing Dwell Time Will Be Crucial
As explained by Aaron Huff via CCJ Digital, flexible dock schedules and order tendering reduces dwell time. However, flexibility is useless when drivers do not know when they should arrive. Shippers and carriers will need to stay in constant communication to increase capacity utilization rates and avoid unnecessary dwell time. Reducing dwell time may lead to freight spend reductions due to fewer surcharges.
The Big Picture
Shipper and carrier relationships will be put to the proverbial test in 2019. Shippers should take action now to correct any issues and work toward attaining shipper of choice status. As capacity tightens and freight rates increase, gaining shipper of choice status and working as a team, not competitors, will help both shippers and carriers remain successful throughout the coming year.