Capacity Crunch! The alarm claxon has been sounding for the last 18 months. Trucking capacity is tightening! Delivery failures are sure to rise! Between the new Hours of Service rules which took effect this month and strengthening economic data the industry braces for what promises to become a “perfect storm” of capacity shortages.
Industry experts have been filling the pages of trucking, logistics and supply chain industry media with their predictions and prescriptions for dealing with the imminent crisis.
Inbound Logistics talks to Chris Kane whose advice to shippers is to seek out “collaborative distribution” arrangements to minimize empty miles through consolidation of LTL into truckload shipments.; a process improved greatly by use of transportation optimization software tools. This activity is going to be especially important for smaller shippers as they seek to stay competitive with larger shippers during the crunch.
DCVelocity talks to a one well-known carrier who suggests shippers leverage transportation management system (TMS) solutions to provide the consistency and predictability of shipments that carriers prefer. (See our blog post on 3 Questions to find the True Cost of your TMS)
Fleet Owner looks at a Council of Supply Chain Management Professionals (CSCMP) report that confirms rising costs – driver pay, insurance premiums, diesel fuel, and equipment purchase – are prompting an increased reliance on 3PLs and intermodal shipping to offset capacity issues.
John Schultz, editor at Logistics Management offers insight on the benefits of investing in private fleets or utilizing dedicated fleets as a hedge against volatility in freight capacity.
There is no shortage of advice and opinion on how to protect against what, by all accounts, is destined to be a painful period of time for shipping organizations. UltraShipTMS experts suggest the following strategies for mitigating capacity crunch.
- Use integrated private fleet functionality to strategically deploy your private fleet thereby reducing costs. Find the right combination of the highest cost common carrier lanes with the least amount of empty miles.
- Avoid the spot market by working with carriers to reserve capacity. Your TMS should allow you to put backup rates on file for when extra capacity is needed in a lane.
- Keep a close eye on the primary carrier’s acceptance; make sure they are not turning down tenders only to bid them on your spot tool.
We’d be very interested to hear your thoughts. How does your organization intend to overcome the challenges of the capacity crunch?