Since the beginning of this year, our weekly Two Minute Warning messages have highlighted the dynamics in the parcel, LTL and truckload markets and how the factors in each one of these market segments could impact your 2024 freight budgets.
So it’s not too surprising that we have heard from shippers who have taken advantage of the Calendly option in our Two Minute Warnings and scheduled a one-on-one conversation to learn more about what shippers should expect to see for the remainder of 2024. Here is a quick summary of the three key items that should be on every shipper’s radar screen.
First, the general consensus is that the truckload market has bottomed out. When you listen to the earnings calls from carriers like Knight-Swift, J.B. Hunt and Werner, their message is pretty direct: Carriers are basically saying they're going to commit more capacity to the spot market until the contract market rebounds. They're not going to lock in capacity at contract prices at current levels that do not deliver reasonable profits.
What does this mean to you? If you are thinking about conducting a TL sourcing event, here is our advice: GET MOVING! If there is any type of economic rebound – and you can expect that to happen – truckload rates are likely to skyrocket. Our recommendation is simple: if you plan on conducting a truckload bid in 2024, you should be in the market within the next 60-75 days. Anticipate the change, do not be surprised by it. If you don't have time to prepare or resources to conduct a sourcing event in this timeframe, get in touch with us.
Second, you should expect further substantial increases in parcel rates beyond those at the first of the year. The reason for that is FedEx and UPS have made pricing into a science. Like the truckload carriers, they're dealing with a difficult market and looking for new ways to increase revenue such as including distance traveled, weight, and extra services in pricing. And with the announcement by UPS that they are looking to cut costs by $3 billion and protect their profitability in the wake of their new contract with the Teamsters, don’t be too surprised if your service levels are affected and you see changes in accessorial charges. Are you prepared for your parcel rates to rise by as much as 10-15%? Let us know if you’d like to learn more about the things you can and should be doing to manage your parcel spend.
Third, know that the LTL carriers have elevated their pricing game when it comes to collecting data. In many cases they know more about your shipment characteristics than you do and they are pricing accordingly. If your sourcing events haven't adapted over time, stop, learn, and adjust before moving forward. As we have shared with those shippers who have contacted us, when you apply activity based sourcing principles in negotiations with your LTL carriers, you will get better results. We’d love to share with you what the carriers are looking for these days and how you can use this information in your LTL sourcing event.
The timing is right to take action in all three markets and set your strategy to adjust to changing conditions. We are experts in all aspects of transportation rate sourcing and have the processes, tools, and resources to help you. Our process provides you with the best possible results that are difficult for you to obtain on your own.
How can you get in touch?
Simply give us a call, send us an email, or schedule a quick meeting.
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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