Tips for Shippers Who Are Navigating in this "Code Red" Transportation Marketplace
Oct 14, 2020
Four weeks ago, we started using our Two Minute Warnings to alert shippers to the impact that the CODE RED conditions in the freight marketplace would have on their freight costs and supply chain capabilities.
“WOW!” That was about the only thing I could say as people have responded to these Two Minute Warnings. I mean, what else can you say when a CEO tells me that his company’s freight costs are seeing a 300% year over year increase, or another shipper tells me that over the past five months, their freight as a percentage of sales ratio has risen by 25%!
We’ve also heard from other shippers with their own horror stories about how the CODE RED conditions are affecting their freight budgets. Right now you have shippers:
Paying $2,000 to $3,000 more if they want their ocean containers to arrive before 2025. (Just kidding - about the 2025 part).
Scrambling to figure out how they will get their parcel shipments delivered after being notified by UPS and FedEx that they will reduce the amount of parcel shipments they will handle.
Seeing lower tender acceptance rates in the truckload market and rates in the spot markets up by 20% to 25%
Dealing with LTL carriers that are imposing embargoes affecting pickup and delivery schedules and using surcharges to make it more costly to move certain types of volume/dimensional shipments.
Trying to figure out how they will get chassis and capacity for their intermodal and rail movements!
One thing is very obvious: The capacity crunch in all modes of the transportation market and the CODE RED conditions are real, likely to continue for the remainder of the fourth quarter on into 2021, and will result in significantly higher freight costs.
We have some useful tips for you to consider in navigating these uncharted waters, but first, we need to get you signed up for the CODE RED Freight Forecast webinar that TranzAct will be hosting with our friends from CSCMP and NASSTRAC on October 20 at 11am CDT. It will help you understand the key issues and challenges of operating in a CODE RED environment.
After you sign up for the webinar, consider these important tips to operate in challenging markets like the one we're in now.
First, make sure your C-Level executives understand what’s happening in the marketplace and that the increases your company faces aren’t unique to your company. We can provide you with articles and resources that highlight how the situation is affecting all shippers in the United States. And as noted above, you may want to invite them, or members of their teams, to join you for the upcoming webinar CODE RED Freight Forecast on Tuesday, October 20 at 11am CDT.
Be prepared to respond to the question: “What are we going to do about it?” While you might not be able to lower rates, there may be other opportunities that can lower costs and increase savings. What are those opportunities for your company? That brings us to our third tip.
Take advantage of our eBook about How to Create a Transportation Spend Management Plan if you haven’t already. It will help you take a look at how decisions within your company impact your freight costs, rather than just focusing on reducing costs through better rates. Now is a great time to evaluate the different drivers that impact your overall supply chain budget.
Looking for more tips? Download our new resource “20 Tips for Managing Freight Costs” or visit our Resource Center.