Diversifying carriers to manage rate volatility
A variety of complex market factors—including fuel costs, driver shortages, and a broad range of available shipping options—can make freight and logistics decisions a challenge for businesses. Shippers should do their best to be aware of the economic and market conditions that drive the logistics decisions they must make.
An ongoing capacity crunch can create rate volatility, since rates go up as freight demand rises and the number of available trucks falls. It’s therefore critical that shippers have established relationships with a wide range of carriers to keep their options open.
Here are three key reasons why leveraging a diverse group of carrier options can help shippers balance rate volatility:
- Certain carriers might boost rates due to higher market demand, seasonality, new regulations, strikes, weather, natural disasters, and other factors. These factors can be difficult to track and unpredictable.
- Shippers that limit themselves to only the largest carriers might think higher volume means better rates, but that’s not always the case. In some cases, larger carriers are more selective about shipments that may not fit in their service network, and could therefore boost rates to adjust.
- Making use of smaller providers opens up more options, and potentially more elasticity in rates. Smaller carriers might travel to a wider range of locations, for example, or be more open to shorter lead times—and they may offer more competitive rates in an effort to attract more demand.
Shippers with a transportation strategy that balances your supply chain needs with market fluctuations will obtain the greatest flexibility and efficiency. The right partner can help you better manage rate volatility by leveraging a wide variety of carriers, while also giving you just one point of contact to manage.
Agforce Transport Services tracks industry developments closely and advise our customers how best to navigate these issues. We specialize in transportation solutions for our customer’s specific business needs.
To learn more and how we can help simply your path to market, contact Agforce today for a free consultation. Give us a call at 844-713-6723 or email us at firstname.lastname@example.org.