SHIPPER SERIES: Ten Ways to Prepare for the Market Turn
Whether it’s Q4 of 2024 or sometime next year, a market turn is inevitable. Unfortunately, everyone’s crystal ball is no clearer than the Chicago River on St. Patty’s Day. What we can definitively say is that a change is on the horizon, and that is good for everyone. With that in mind, shippers big and small should start preparing. Here are a few things to consider to help weather the storm of a hot market.
1. Protect your Ass(et)
Talk with your top asset-based providers about maintaining drop pools or providing dedicated capacity even when the market shifts. Balance volume with fair pay now to avoid losing capacity and tall increases.
2. Indecent Exposure
How much of your freight mix is asset compared to brokered and what potential corridors have the highest risk of tender rejections and overspend. Do a historical analysis to identify your highest risk lanes. If you are dealing with low-volume lanes in poor capacity areas, see if you can couple them within a primary award to a high service provider.
3. Outbound Seasonal Woes
Note any seasonality for outbound shipping points that might affect your freight. Consider rolling these into a mini bid or quarterly bid until a the market outlook is clear.
4. Managing Great Expectations
Prep your sales or purchasing reps to have conversations with your customers and vendors about these changes in the transportation industry and how they may affect potential cost adjustments in your terms. Make addendums to include this in your contracts if you haven’t already.
5. On Demand
Prepare your warehousing and logistics staff for an increased workload for when demand spikes and you are short-handed. Many departments are more lean and it may take extra time to fill those additional positions. Organization along with standardized processes is going to go a long way in keeping tedious and inefficient work off your employees’ plates.
6. Leverage the Tech
Have an efficient spot quoting and tendering process for your freight. If you have already been growing, expect that volume to double when the market really takes off. EDI or API capabilities for tendering help with the team’s workload while a platform to handle overflow and spot shipments really allows you to focus on what’s important.
7. Time is of the Essence
While we may not know exactly when these market shifts happen, the last thing you want is your budget to get shot and leadership comes breathing down your neck. Shorten your bid lengths and consider moving them to quarterly or adjusting the go-live dates. Perhaps a traditional Q4 annual bid is best left quarterly until a true market outlook is identified.
8. A La Mode
Your business very well may not rely on only truckload. So how will other modes like ocean, air, rail, or LTL be affected? If you have no historical data to lean on, the Bureau of Transportation Statistics is a great place to start to see how other modes may have trailed or led into these turns. Getting involved at the micro level will paint a clearer picture of what to expect and where you may need to get creative.
9. Sky’s (Not) the Limit
Discuss weekly capacity limits with your primary carriers and how they may change. If backing off volume to maintain cost is an option, consider sharing high volume lanes with other carriers to help lighten the load while staying close to budget. This, along with not price-gouging your carriers in a shipper-favorable market, could give you the balance you seek.
10. Top Guns
Know who your top service providers are, who has maintained high KPI’s through market volatility, and who was there for you during your times of need. Stick to those that value a long-term win-win relationship. This will help drive quality carriers into your network when you think beyond tomorrow.
We’re all eagerly awaiting a favorable market turn, but waiting is for the DMV. Start to be proactive about preparation now and optimize your supply chain. Who knows, maybe that market turn starts today.
