Is a Transportation Sourcing Event in Your Future? Do It the Right Way

Nov 16, 2022


It’s been a very busy couple of months. I’ve been speaking at numerous industry events, doing some interviews and getting the chance to catch up with a bunch of “industry experts.” Personally what has been really noteworthy for me is that every industry veteran or expert - a.k.a. people that have been in the transportation, logistics, and supply chain space for a lot of years - ALL AGREE on one key point: We are living in uncharted waters and we are seeing things we’ve never seen before.

For example, who could have foreseen the collapse of ocean rates where today, the cost to move a container has dropped by 75% to 80% compared to last year? Who could have foreseen the curtailment of production in China, the country with the world’s second largest economy in the world? And that's just for starters.

As we have noted in our list of five things that should be on your supply chain radar screen, lots of “stuff” is or could be happening. There is a real threat of a rail strike, disruptions at the West Coast ports, the possibility of a UPS strike in 2023, concerns about AB 5, and the escalating price of diesel fuel. All these things could wallop your supply chains.

And that is why we want to steady the course and let you know that if you are going to be conducting a transportation sourcing event in this environment, there is a RIGHT way and a WRONG way to conduct that event. We address this topic because recently, at the Chicago Traffic Club’s outstanding education seminar, I was on a panel with a shipper that shared how they are doing bids in a different way based on where the market is at right now. Specifically, they are doing it the right way. What are they doing? They aren’t doing annual global sourcing events. Instead they are doing micro bids on a targeted basis.

It is extremely import to understand the significant changes that have occurred in the transportation procurement process in light of the major market swings we’ve seen in the past few years. To dive further into this topic, I was honored to host a webinar yesterday with Dr. Chris Caplice of MIT and DAT, and Kevin Smith, former SVP of Supply Chain at CVS, in conjunction with CSCMP’s Center of Excellence.

They addressed how truckload and LTL procurement is unique and how market changes have called past models into question. This also extends to the ocean market where ocean rates have dropped remarkably, and rate commitments are shorter. As Chris noted, shippers need to know why economies of scale in the transportation bids are not as important as they may be for traditional commodities and why having contracted rates won’t necessarily get you the capacity you expect. And Kevin talked about how you cannot eliminate the impact of variability from your transportation budgets.

The feedback from the webcast was extraordinarily positive. Several people commented that it was one of the best webcasts on transportation rates and pricing they have ever heard. It would be impossible to include all the great insights they shared in an email, so here is what you need to do: Sign up to receive the recording of the webinar tomorrow. And if you’d registered for the webinar you’re all set - it will be sent to you tomorrow as well.

And after watching the webinar, if you want some ideas and support in conducting a transportation sourcing event done the right way, contact your friends here at TranzAct.