How Guaranteed Capacity Affects Your Rising Transportation Costs

Written by Paul Forand

3pl-costWith a multitude of factors such as economic growth, heightened government regulations, driver shortages, and aging fleets and highways converging on the market all at once, it's hardly surprising that the transportation system is experiencing growing pains. If you're feeling the pinch in higher prices, slower service, or even lost shipments, there's a reason for that.

Freight carriers are purging unfavorable business to make room for more desirable freight that better fits their networks, as demand is at or near capacity. Now may be a good time for you to partner with a company that can guarantee capacity and aggressive rates with quality carriers.

Challenges Facing Today's Transportation Market

To a certain degree we're in uncharted territory and, simply put, demand is beginning to strain many of the infrastructures currently in place. Among the issues facing shippers:

  • Unpredictable but generally higher fuel costs
  • A severe shortage of qualified drivers
  • Increased government regulations, such as maximum drive-hours
  • The West Coast port strikes
  • Aging fleets and inability of truck manufacturers to keep up with demand
  • Unstable political climate

This is one situation where "greed" really isn't a reason for steadily-rising costs. Both shippers and carriers are feeling the pinch with the lack of trucks and drivers becoming a serious issue.

All of these factors, in turn, are creating new challenges and problems for those trying to guarantee that their own shipments have space on a truck and arrive on time at a reasonable rate.

New Risks To The Shipper

This isn't a good time to find shipping companies to haul your freight by calling around on a per-carrier basis.  There's a good chance they're busy servicing their top customers, those who can guarantee them consistent volume in return.

Since carriers can be selective in this environment, some have even begun dropping the rate-shoppers and historically unprofitable small shippers from their rolls, so they can focus their efforts on freight that better fits their networks. Others are shifting from a continental focus to a more localized radius of service, which could also sever existing client relationships.

Companies in this position (perhaps you've already had it happen?) are being forced to rely on carriersFreight-Classification unfamiliar with their business and are paying even higher costs in the form of damages and delays – a risk that could endanger your relationships with your clients.

However, there are still alternatives for businesses having trouble finding carriers at reasonable rates: Third Party Logistics companies can bring significant cost-savings along with the peace of mind that comes with guaranteed capacity.

3PLs Can Bring You Guaranteed Shipments At Lower Prices

3PLs have everything the smaller carriers and brokers don't:

  • Existing long-term relationships with carriers
  • Extensive databases of routes, schedules, and pricing across the industry
  • The ability to buy cargo space in huge bulk
  • Lower prices from carriers

Quality 3PLs have dedicated capacity with carriers, which they fill with the cargo of their clients. The 3PL buys in bulk, and you enjoy the savings.  Plus, thanks to pre-existing carrier relationships and contracts, they have deeply discounted rates. ReTrans Freight can bring you the best of both worlds:  Rates and capacity you lack the leverage necessary to achieve.

If you're feeling the pinch, call ReTrans Freight today for a free cost-savings analysis.