Well, it’s that time of year when we hear from shippers who are developing their freight budget for next year. One of my favorite calls came from a friend who told me that he needed TranzAct’s help. When I asked: “How can we help” he responded. “Either help me prepare an accurate freight budget, or help me prepare a great resume. Because if my freight budget isn’t on target, I may need that resume and want to know what they should consider.”
I assured him that TranzAct has a lot of experience in helping companies prepare their freight budgets so he was in good hands as we have some great resources to share with him and other shippers who are concerned about their freight budgets.
There are a couple of things that need to be considered as part of the budgeting process. These things generally fall under the umbrellas of external and internal factors.
First, the biggest external factors to look at concern economic conditions. It's important to understand these conditions and then to address how they will affect your company.
What do we expect to see with the economy in 2024? To help shed light on that topic, we recently held an our semi-annual interview with noted and award winning economist, Gary Shilling.
I know you are super busy, but you should check out this interview and then share it with others in your organization. Gary addressed important questions about the economy in the United States and around the world for the year ahead, such as:
What's ahead for the U.S. economy? Is the long awaited recession imminent, will there be a “soft landing” or will we avoid a recession altogether?
Will we continue to see inflation resulting from the increased costs of food and fuel and labor (resulting from the various labor negotiations in the last six months)?
On the freight side, how will the labor settlements with UPS, ABF, T-Force, the railroads and the ILWU workers at the West Coast ports affect your freight costs?
What are some of the issues to watch with China and how will this affect the global economy?
Like I said, we covered a lot of ground in this interview and I trust you’ll get some great insights in listening to Gary as he covers all this and more in the interview.
If you’d like a sample copy of Gary’s monthly newsletter, send us a note. Gary has graciously agreed to send a sample copy of his monthly newsletter to our audience members.
Second, consider internal factors and ask this important question: What processes or practices will my company consider changing if it could improve and even lower our overall freight costs?
The reason this is an extremely important question is because if the answer to this question is: "We’re planning to maintain the ‘status quo’ and business as usual mindset” you can expect to see your parcel and LTL rates go up by as much as 8% to 12%. And if the economy rebounds and we exit this current freight recession in 2024, your TL rates will also go up.
Fortunately, that doesn’t have to be your company’s reality if your company is willing to consider making some changes in response to how the current freight markets are operating.
So here is the challenge for you: Is your company willing to change to improve and lower its costs? Yes, that is possible even in the wake of things like the closure of Yellow. There are opportunities to make internal changes that result in lower rates or costs.
If you’re looking for help identifying internal opportunities or other external items to watch specific to your organization, simply send us an email or schedule a time to meet.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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