For thousands of retailers, distributors and marketing companies in North America that rely on freight and supply chain providers to get their products in store and to the end customer on time, there is no other season like the Christmas season that capacity becomes a ‘fever pitch’ issue. To compound the issue, industry experts say that the 2017 Christmas season will be one of the most challenging and critical for capacity than it has been in the last 10 years.
We know there are a myriad of reasons for capacity crises during the Holiday season. They can be due to:
- Firm demand
- Limited capacity which is directly relative to this demand
- Peak season surcharges implemented by major global & national supply chain providers
- Fallout from a weak economy and recession from 2008 resulted in cost cuts and a reduction in driver availability, to name a few factors.
Undoubtedly, the Christmas season tips the scale in the favour of freight providers as they are in a position to refuse loads, due to demand for equipment being much higher that the supply. It is certainly not an easy task to beat the freight capacity crunch but, there are some ways to work around the capacity crunch problem with minimal or no damage to your shipping schedule.
- Shippers must be strategic. Shippers who select carriers based on a tactic of the lowest price will continue to encounter difficulties. Carriers should be properly vetted based on historical service, testimonials and value propositions that are based on trust and flexibility from their service providers.
- Transparency is paramount. This should be on both sides – shipper and carrier. Both the shipper and the carrier should be fair and keep it real. At the beginning of the tender discussion with prospective carriers, the shipper should be as precise as possible about the current and forecasted volumes and all expected conditions and terms of the freight. This provides the carriers the opportunity to make an educated and transparent decision on whether the opportunity is a fit for both parties. Conversely, the freight companies should be completely forthcoming regarding their service offering and capacity capabilities especially during the Christmas holiday season.
- Do your homework. Shippers must use proper vetting processes when selecting carriers of record. Does the carrier have a high driver turnover? What is the historical success of the company? Find out what percentage of their business clients are long term. (business relationships with customers 20+ years, for example).
- Be creative with your TL shipment plans when possible. Maximize alternatives by breaking full truckload into LTL shipments. Then consolidate, collaborate or ‘pool’ shipments with other shippers within your defined geographic radius to arrange consolidated pickups for your LTL. This sharing of supply chain resources which already has space existing on one leg of the haul, results in freight savings as it reduces the need to find capacity.
- Diversify – Reduce the risk. In other words, avoid ‘putting all your eggs in one basket’. This ranges from using more than one reliable carrier to seeking out other modes of transportation, including intermodal, which will assist in mitigating capacity issues. Bottom line, shippers should align with suppliers who possess capabilities they can tap into, to help provide the right services and strategies to improve their shipment objectives. A freight broker can help diversify your carrier choices while maintaining the convenience of a single point of contact.
- Make your freight more attractive to reduce capacity problems. Exercising some flexibility for pick up times as well as pick up days make a substantial difference during the peak season. This flexibility for ‘off hours’ and weekend pick-ups provides greater availability for freight carriers. To add to flexibility, employ a more efficient, driver friendly operation that eliminates driver waiting time by having freight ready on time for pickups and use drop and hook freight when you have a trailer pool facility.
- Use Automation. Employ a TMS system, or a freight broker with the right tools, that provides real-time information and captures data to automate a multitude of processes to enhance your freight movement strategies. These interactive systems lead to reduction of costs and increased accuracy. Have retrievable information in real time in order to plan production, and shipments. This ensures inventory goals to stores and DCs are met on schedule.
Don’t let the transportation capacity crunch get the best of you. Work with a solutions specialist. Whether you are looking for help in fighting the capacity crunch of 2017 or choosing the right carrier to make your supply chain work more efficiently and effectively, hopefully these tips can help.
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