5 Tips for Freight Capacity Management this Fall

(Septebmer 8, 2014) The Cass Freight Index shows that September and October are the historically strong months for freight demand. Annual drivers of this demand include:

• End of many produce harvest seasons
• Winding down of the construction season, and a push to get projects completed
• Rush of Christmas freight coming in from the ports
• Last month of the US gov’t fiscal year (government funding ends on Sept 30)
• Last month of Q3

This year, demand may be even higher than in recent history because of strong manufacturing growth in the US. In August, US manufacturing grew at its highest pace in 3 ½ years according to the report from the Institute for Supply Management.

With a shortage of some 30,000 truck drivers to accommodate strong demand, some trucking companies are offering sign-on bonuses or raising wages to attract and retain drivers. DC Velocity reported that US Xpress just raised “the pay of its over-the-road solo drivers by an average of 13 percent” to put it among the top 10% companies for solo driver pay. (Full article here.) Other major trucking companies have also reportedly raised wages, although not as high.

How much of the pay increases will be passed on to shippers is yet to be determined, but it is likely that at least some of the costs of rising driver wages will make their way into rates charged.

As a shipper you can help ensure capacity and pricing by:

1. Planning ahead.

    • To the extent possible, lock in loads and rates in advance. In times of tight capacity, spot market rates may be high, and capacity hard to come by. Locking in your load early will ensure that your carrier can schedule and plan to get you the service you need at a price you can budget against. You might also want to consider paying a little more today to get your freight moved rather than wait until the last minute when that freight rate could double or triple if your regular provider runs out of capacity.

2. Building long term partnership(s).

    • A trucking company or 3PL that knows you’ll be a repeat customer will likely go out of their way for you if they know you’ll be coming back. Having several capacity partnerships in the industry is a good way to make sure all your freight gets moved in a timely fashion.

3. Being open to new ways of shipping.

    • If you’ve always done over the road for long haul, it may be time to consider another method such as intermodal to move your goods.

4. Being flexible.

    • Having some wiggle room in dates and times could open up new options for you. This is especially true if you have freight with a long shelf life; bringing goods in early might save you money.

5. Finding a third party warehouse partner.

    • If it turns out that you need to build up extra inventory, you may need the extra warehousing.

 

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