The cost of items is going up and people are spending less, which has made the freight market soft and marked by high capacity and low rates. The 22.4% drop in shipments from Q2 2023 to Q2 2024 shows this trend and shows that demand is still slowing down, which is affecting the transportation business.
Shippers might be tempted to only focus on short-term cost savings right now, but signs that the freight market is getting tighter mean they need to take a different approach. Shippers need to use data, technology, and market knowledge to find key carrier partners that fit with their network goals in order to be ready for future changes in the market. Shippers can improve their ties with the right carriers and make the supply chain more resilient in the long run by using this method.
How to Stay Ahead of the Freight Market Flip
Due to the weak freight market, many carriers have more space than they can fill. This has caused prices to drop and given shippers more power in talks. You shouldn’t try to make money off of short-term wins though, because the freight market is likely to change soon.
As ships restock for peak season, freight demand is likely to rise. This is because stocks are back to normal levels and interest rates may be lowered, which could help the economy grow. Soon, this change could make it harder for shippers to get space, lower competition among airlines, and raise costs for them.
As with any change in the market, it’s important to get ready for these problems in a way that won’t harm the environment. You can keep costs down and service quality high even as the market changes by building smart relationships with transport partners.
Setting Your Standards for Strategic Carrier Partnerships
You can be better prepared for future market changes and challenges if you find the right operators for your network and improve your strategic relationships with them.
But what you look for in a strategic partner might be different from what another shipper looks for. So, you need to use the factors that are most important to your company to describe what a strategic partnership means for your network.
Matching the needs of the network. If you only use middlemen, you won’t be able to control who moves your freight. Instead, you might want to work directly with asset-based companies that fit into your current logistics network. This method helps you make smarter choices about which providers will best meet your business needs.
By selecting carriers that are capable of handling backhauls and creating full loops, for example, it is possible to reduce the number of empty miles carried while simultaneously making things more efficient and cost-effective. In the event that you often relocate goods to locations that are difficult to reach, you may choose carriers that already have routes in those areas, which will allow you to obtain superior service at lesser charges. There are a lot of carrier search technologies that are accessible today that simplify this procedure and provide you with direct access to a variety of options that are considered to be of high quality.
With a concentration on evaluating achievement and always improving oneself. Although you may have worked with carriers for a considerable amount of time, when was the last time you examined them without any preconceived notions? The worth of a carrier may be demonstrated and increased by assessing how effectively they perform, but relationships and previous victories can be beneficial to relationships.
The most significant aspects of your company, such as safety ratings, delivery times, or service efficiency, should serve as the basis for the establishment of unambiguous key performance indicators (KPIs). Through the process of comparing your carriers to defined metrics, you may identify areas in which they might be improved, recognize partners who are doing an excellent job, and make decisions based on facts in order to ensure that your carriers are contributing to the efficiency of your supply chain.
Data and technology are also very important for making carrier partnerships work better. You can keep these relationships strong and adjust to changes in the market by using a transportation management app designed just for shippers that gives you real-time insight into shipping operations and suggestions you can follow.
Risk spotting and planning for what to do in case of an emergency. Market changes require businesses to be flexible, and good planning for what could go wrong can help you stay flexible when things go wrong. Even though it’s important to find possible risks and weak spots in your supply chain and make plans to fix them internally, it can be very helpful to also talk about these things with your transport partners.
Working together with carriers lets you make strong backup plans that protect both of you. For instance, you could make a plan B in case of an unexpected problem that lets you switch to a different provider in your network. Talk about these things before the busy season starts to make sure that you and your carriers are ready to be flexible when new problems and changes in the market come up.
Strategic carrier partnerships can help your business be more resilient.
Because the market could change soon, being flexible must stay a top concern. This means figuring out what’s most important to your shipping business, like whether it’s cost or dependability, so you can set clear criteria for a smart carrier relationship.
Putting money into these ties now will pay off in the long run when the market gets tight and airlines can’t handle as many passengers. You will have the tools you need to handle future problems, no matter what the freight market throws at you, if you have strong, well-kept relationships with carriers and technology providers.
