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A new study by American Shipper on transportation-procurement practices offers hope that shippers are starting to look at more than just price, when they select carriers to move their freight. American Shipper's third annual survey, conducted with the Retail Industry Leaders Association (RILA), surveyed 300 transportation buyers and sellers. It focused on their practices, bids and requests for quotes, covering multiple modes and geographies, according to American Shipper publisher Jim Blaeser. The result was a look at the practices of some "best-in-class" companies in the area of procurement.
Participants were asked to compare their transportation budgets with past programs in order to assess current trends. The study, says Blaeser, found that transportation spending, excluding fuel, increased for the second year in a row. Contract rates rose as well, albeit not as fast as in the prior year. Volumes rose as well, he notes, with shippers actually paying less per pound or container for freight.
The period for negotiating rates and services with carriers expanded, from its prior period of one to three months to more than three months, Blaeser said. In the trans-Pacific eastbound trades, shippers were holding out longer for lower rates, hoping that one or more carriers would break ranks from the Transpacific Stabilization Agreement, the voluntary discussion pact that formulates recommendations for rate levels in the trade.
As always, shippers were shopping for value, but they were also figuring service into the mix. Blaeser says the most recent round of negotiations also included a third component: risk. Shippers were clearly demonstrating concern over not getting promised services, or key carriers going out of business. As a result, price and service levels essentially reached parity as topics for negotiation. "Price," notes Blaeser, "was far more dominant in the past."
The video of the interview can be accessed here.
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