The 2:00 Minute Warning

Our recent Two Minute Warning, which addressed whether it was time to revisit your 2024 freight budgets, elicited some interesting feedback. In particular, one of the questions raised was: "If we are going to open up or revise our 2024 budget, is it possible that instead of just accepting carrier rate increases and higher costs, are there things we could do to actually lower our freight costs?!"

The answer to that question is a resounding "YES!" Even when your parcel and LTL carriers are raising rates, it is still possible to lower freight costs.

But first, having attended numerous industry conferences and talked with several senior executives from trucking companies and various financial analysts, here is what shippers can expect to see from their truckload and LTL carriers in 2024.

In the truckload market, rates continue to be soft since there’s excess supply and continued soft demand. As Bruce Chan from Stifel pointed out, the "normal" freight recession lasts 12 to 14 months. We are now in the seventh quarter of this current freight recession and significant increases in demand, or related rates increases aren’t expected until at least the third or fourth quarter.

On the LTL side, in our recent interview with Rob Estes, CEO of Estes Express, he noted that in light of the Yellow bankruptcy, the LTL carriers are looking at a "balanced" market between supply and demand and will be able to increase rates to cover their increased costs. At the SMC Conference, Avery Vise from FTR predicted that LTL shippers should expect rate increases of 4-5% this year.

So how do shippers reduce their costs when LTL carriers are raising their rates? The answer is to look at how your processes and business practices impact your LTL carriers, how freight is tendered to those carriers and what "extra" services are required from the carriers to meet your requirements. For example, in one of our webcasts last year, Geoff Muessig listed six important items that could result in shippers lowering their freight costs. Let me know if you’d like a copy of that list.

Beyond that list, some shippers are asking: "Where do we start in lowering our costs?" One option is to use our LTL strategic assessment. For years, we've been conducting this assessment to help companies identify the things they can change internally that can lead to lower costs. We've consistently found lots of opportunities that can lower costs and improve processes.

If you’re interested in learning more about the LTL assessment or resources for reducing costs even when LTL rates are rising, simply send us an email or schedule a time to meet. 

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

CONNECT ON LINKEDIN

LET'S TALK! BOOK AN APPOINTMENT WITH ME