Matt Harding, principal in the Freight Market Intelligence Consortium of Chainalytics, offers a snapshot of the current transportation environment, looking at rates, regulation and other major factors.
Transportation rates are subject to any number of external factors, including last winter’s severe weather conditions. At the same time, the coming year poses a fresh series of questions that are tied to the continuing health of the economy. Transportation capacity could become scarce, causing sudden shifts in procurement strategies.
“The general sense is that we might be on the edge of some better economic trend,” said Harding. Shippers and carriers need to be ready for it.
An improving economy likely means a capacity crunch and even more serious shortage of drivers. Add to that new safety and environmental regulations, and you have an industry that is not necessarily poised to meet the needs of shippers in an improving economy.
Still, says Harding, “freight always finds a way to flow.” And there’s a wide disparity in the market with respect how shippers are coping with the situation.
What’s common to nearly all shipper-carrier relationships today is a new focus on service quality, and not just rates. Missed deliveries and poor service are inexcusable from the standpoint of the shipper, who can lose a customer permanently if it messes up a single order. Shippers and carriers have to work collaboratively, ensuring that their contracts are balanced and cover all of the options that shippers require. “Working with key partners gives both sides better value,” says Harding.
Whether shippers are willing to make long-term commitments to a smaller number of carriers is another question. “We see a mixed group,” says Harding. “Roughly half of our shippers are opportunistic.” But the other half is open to tighter relations with carriers, focusing on multi-year contracts based on mutual loyalty.