In the early days of 2023, shippers are navigating a more favorable national freight market. As last year wrapped with a gradual loosening of capacity and lower spot rates, the industry is settling into a deflationary period.
Due to retail sales, manufacturing output, and imports decreasing in Q4, freight demand continued to contract across the board and created a softer market in Q1. This softness is expected to persist throughout 2023 — but the market will inevitably turn tighter, making now the perfect opportunity for shippers to plan for the next market cycle.
“If the market does shift sooner than later, ill-prepared shippers might have a bad year,” said Steve Moore, head of TM operations south at Uber Freight. “The question is: What are shippers doing with their time right now? This could be the difference between having a good 2024 or a bad 2024.”
Volatility is the new normal in our industry, making it crucial for shippers to stay ahead of market curves. Here are three strategies shippers should implement right now to maximize on lower rates and best prepare for the market rebound:
Don’t be afraid of the spot market — strategically sort your volume
Shippers should migrate an acceptable amount of volume to the spot market and take advantage of it, Moore said. With supply and demand in positive equilibrium right now, risk is mitigated — making it the perfect “lab” environment where shippers can explore new strategies.
As spot rates are currently lower than contract amounts, shippers could explore the spot market in efforts to drive costs down. For example, larger shippers could consider moving some portion of freight to the spot market to take advantage of low rates while they still can. An example might be low-volume lanes or even a small percentage of high-volume static lanes.
Develop and deepen your shipper and carrier network
Shippers should be using this time to develop and diversify their portfolio. While upholding fruitful business relationships with incumbent carriers is vital to ensuring reliability and predictability across their supply chains, loosening capacity also means there’s more competition among carriers for freight. Shippers now have the leeway to test new prospects alongside their existing carrier base, according to Moore.
When the market grows tighter down the line, it can become difficult to bring new carriers on board. Prioritizing new carrier partners now is the ideal way to keep spreading out your shipping options and build an optimal partner portfolio.
Additionally, joining forces with other shippers can be a great way to improve network efficiencies. Setting up a network for collaborative shipping and investing in transportation management solutions helps support advanced multi-shipper collaborations for the long term. With a tech-first approach, shippers can boost their network and optimize shipments, maximize capacity and reduce transportation costs.
Revisit your supply chain tech stack to boost agility
Shippers should integrate key operational and technology changes in the slower market now instead of in the heat of a tight market later, Moore said.
Providers can use this time to update outdated TMS or run assessments on the overall health of a supply chain. By having a robust TMS in place, providers can utilize AI and machine learning to generate predictive analytics for better tracking and visibility across supply chains. In addition, these systems can deploy dock scheduling capabilities to help improve warehouse efficiency.
Tapping into managed transportation services can also equip shippers with customized solutions, enabling a unique supply chain operational approach and unlocking advanced decision-making abilities for bigger-picture strategy. For shippers looking for sustainable alternatives to complement traditional capacity, EV deployment can also be a priority for supply chains. Transportation management partners like Uber Freight can open access to our expansive network of digitally-enabled carriers with electric fleets, and further support shippers in unlocking the complexities surrounding electric freight transportation.
In today’s soft market, shippers can also rely on technology to easily source carriers in their marketplace network instead of taking tedious approaches like RFPs. This type of versatility will be especially important for shippers to develop now to navigate potential market disruption in the future.
Armed with these capabilities, providers can enable long-term solutions as efficiently and optimally as possible — no matter the state of the market.
The road ahead
When the market eventually tightens, shippers who implement these strategies will be able to operate more efficiently than ever before. Managed transportation partners like Uber Freight can help shippers maximize on all of these strategies and more. With over $17 billion in freight under management (FUM), Uber Freight empowers shippers to drive strategic improvements in cost and capacity. At the end of the day, shipper decisions can move in lockstep with the market and the right managed transportation partner can make that process a seamless one.
“Our end-to-end solutions, extensive customer portfolio, and broad shipper-carrier network increase shipper agility, efficiency, and stability amid market volatility that keeps propelling businesses forward,” Moore said. “It’s almost like an exclusive membership. When you’re a customer of Uber Freight, you have this very unique opportunity in the marketplace that can’t be achieved anywhere else.”
To learn more about Uber Freight’s managed transportation services, visit uberfreight.com and connect with an expert.