Choosing freight carriers is not the easiest of tasks, so it’s understandable why companies often overlook the need for a freight review, even when such an undertaking is long overdue.
If your company uses any kind of carriers or freight service providers, this post is intended to reassure you that despite being a potentially onerous project, a freight review at the right time can save your company a whole lot of cost, prevent you from falling behind your competitors, and help to ensure that your customers don’t start reviewing your suitability as a supplier.
Read and Heed the Signs that Freight Review is Due
But how do you know when it’s the right time to conduct a freight review?
There are certain tell-tale signs that can and should be heeded. These can be loosely grouped into the following categories, each characterised by symptoms that might indicate the need to change your freight arrangements:
- Your company has outgrown carrier capabilities
- Your company’s operations have changed (business model, supply chain network, throughput)
- Changes have taken place in your carrier’s business
- You’ve lost touch with (or have never really explored) developments in the freight service market
Let’s now look at each of these categories from a slightly lower level, with emphasis on signs and symptoms that should alert you to the possible need for a freight review.
Signs That You’ve Outgrown Your Carrier’s Skills and Resources
When companies look for freight transport providers, they often base their search and selection process primarily on the needs of the moment.
Smarter organisations project their potential growth and longer-term strategies into the selection process, but many (too many) tend to take a transactional perspective, with the aim of finding providers quickly and without fuss. Inevitably though, a company’s shipping needs change over time and a carrier that once was able to serve those needs adequately, may no longer be able to do so.
This is especially true if the shipper is not a large customer of the carrier or if shipping needs are unconventional in comparison with the bulk of the carrier’s customer-base.
It’s not always easy to identify when your business has outgrown a carrier’s capabilities, but if your freight arrangements have typically been made from a short-term perspective, well… that’s a sign in itself.
Have You Conducted a Freight Review Previously?
If your company has been using the same carriers for the last three years or so and haven’t yet conducted a freight review, it’s probably a good idea to get one under way, especially if your business has changed perceptibly during that time.
Otherwise, it’s important to take cues from your customers’ demeanour and note that an increase in complaints might indicate that previously acceptable standards (and the carriers responsible for meeting them) are in need of an upgrade.
Are Your Carriers Keeping Up?
If you find yourself requesting incumbent carriers to provide you with more capacity, to be more flexible, or to meet tighter schedules and deadlines, it will either be because you’re experiencing deterioration in carrier service levels, or because your expectations (driven by those of your customers) are increasing.
In the latter case, the response from your existing carriers should drive your decision whether or not to think about a full freight review. If the majority of your carriers—or at least the most important ones—respond satisfactorily, and go on to maintain the higher standards you’ve asked for, all may be well for now.
If not, and you start to find yourself chasing around for spot hire and expediting deliveries, even after new standards have been agreed to, it might be a sign that your current service providers are not really committed to a service upgrade, or are simply not able to execute.
This is not at all the same situation as a fall in service levels would indicate, and the onus isn’t necessarily on your incumbent provider/s to shape up. It’s more likely a sign that you should conduct freight review, if only to assess whether you need to cultivate more strategic freight partnerships with the inclusion of service level agreements.
Operational Signs that a Freight Review is Due
Of course, even if your company’s business needs have not changed a great deal, your operational methods, capacity, and network may certainly have been subject to change over time. Again, this should be seen as a good reason to consider a freight review, to establish if your current freight partners are still able to provide the best service at the right price.
Over time, your supply chain will alter and even if you don’t directly see the need to realign freight services, it may well exist. Without a freight review, you may be running your supply chain in ignorance of the fact that your carriers have become a weakness.
Of course at some point the wake-up call will come, but why wait until things are going tangibly awry to question whether you’re still getting what you need from your freight service providers?
A freight review will generally be a good idea in the event of significant changes in your supply chain. Any of the following changes for example, should be taken as a catalyst to re-evaluate your freight carrier arrangements:
- Significant growth in your business (one or more large new contracts or a significant growth in your customer-base)
- Mergers or acquisitions
- Introduction of new products or services
- Relocation of network nodes (distribution centres, warehouses, cross-dock locations)
- Significant change in shipping volume or mix (could be growth or decline in sales of certain products)
In the event of any of the changes suggested here, your current freight providers, rates, or rate structures may no longer be optimal. A freight review will give you the opportunity to open negotiations with your current carriers, or perhaps to seek providers that can offer more value or meet your needs more effectively.
Signs of Change on the Carrier Side
Just as your business and your supply chain will change as time goes by, so will that of your freight carriers. Transport companies can grow, downsize, or change policies and practices. Such changes may or may not impact the service you receive.
The important thing to note is that markets are never static, and a freight review will help to show up new dynamics which might have gone unnoticed in the hustle and bustle of day-to-day business.
Watch for the following signs that a carrier may no longer be the best fit for your business:
- Deterioration in service levels (late pick-ups, late deliveries, inappropriate vehicles)
- Freight rate increases (without any promise of service improvement)
- Changes in freight-rate structure
- Reduction in available freight capacity (shipments being turned down)
- Carrier acquired or merged with another company
- Communication becomes more difficult
- Issues arising from technological incompatibilities
- Your primary service provider increasingly subcontracts your shipments to a third-party
Any of these signs are potentially ominous, making it worthwhile to conduct a freight review, just to be certain your shipments are still in the best of hands.
When You Haven’t Had Your Eye on the Market
Over time, as economies grow and technology advances, the entire freight-service market evolves, stimulating the entrance of new players in the logistics arena, the emergence of new business models and the arrival of new ways to procure freight transportation.
To overlook these developments is to potentially miss out on opportunities for cost, service, and quality gains. All markets are subject to economic, environmental, and legislative dynamics, and from time-to-time are also affected by technological disruption and other forces of change.
If your company hasn’t been keeping an eye on what’s happening in the freight carriage market, you’re at a disadvantage against your more diligent competitors.
The good news is that even if you haven’t been monitoring the freight market closely, it’s not too late to spot the signs that a freight review might make sense. A little bit of research will reveal all you need to know. For example, you don’t have to look too hard to see how pervasive e-commerce has become in the logistics-service environment.
Are You Juggling With Multiple Carriers?
E-procurement for instance, can be particularly helpful if your company utilises a high number of different carriers, as is common in the food/beverage and chemical industries. If you operate in such a sector, it’s probably impractical to evaluate every single carrier as part of a freight review.
In this case your review will be more likely to focus on how you select and procure freight transportation, especially if you haven’t already started to make use of online, algorithm-based purchasing tools. Of course an e-procurement application won’t yet suit every shipper, but without a freight review you’re not going to know if it could work for your enterprise.
Are You Getting Less Value than You Would Like?
Aside from the emergence of labour/cost-saving platforms for transportation procurement, carriers themselves are changing the way they serve their customers. They must change, because more and more market entrants are innovating to offer better services, with value rather than price as the carrot.
In fact, many freight service providers are seeking not only to bag a share in your shipments, but to act more like an outsourced transportation partner, with commitments to work strategically and become an integral part of your supply chain.
If your company could benefit from the 3PL approach, but doesn’t want to outsource its warehousing, these customer-centric carriers offer a way to consolidate shipping activity across a smaller number of freight contractors.
Could You Use More Specialised Carrier Services?
In a similar vein, recent years have seen an upsurge in specialist niche freight providers, any of which might be able to meet specialised transport needs better than the more traditional carriers.
You might benefit from the services of a carrier specialising in certain product types (like fresh produce, chilled or frozen transport, chemicals), or transport-modes (such as air freight, sea freight, rail, road or inter-modal). Other niche carriers concentrate on specific network elements, such as international shipping, line-haul freight services, or last-mile/route-trade distribution.
With a greater choice of more narrowly focused services to choose from, there’s never been a better time to conduct a freight review, if only to evaluate what the market is offering of late.
Of course, with the diverse array of services available today, freight arrangements are no less time-consuming to make and manage than they’ve always been, unless you are successfully employing technology to ease the burden.
Would You Like to Ease the Burden of Managing Freight?
If you don’t want to consider technology investment but are struggling to manage a large number of carriers, you might even want to let someone else take over the freight procurement task for you.
Some logistics companies will take care of all the nitty-gritty for you, from finding truck space at the right rates, all the way through to scheduling and customer-service responsibilities. They can even help you with other aspects of logistics, such as warehousing, in the event that you need some extra capacity or wish to rent some space out.
Don’t Leave a Freight Review Until It’s Due
As you’ve hopefully seen, there are a number of factors that drive the need for a freight review, but rather than waiting for perceivable signs of trouble, knowledge of the possible threats should be enough to warrant action.
It’s true that a freight review can be quite labour-intensive and time-consuming, but there are ways to make it less so, or at least to prevent over-stretching your own precious human resources.
At Logistics Bureau, we offer a range of freight review and benchmarking packages, each guaranteed to deliver benefits valued at five times the package fee. So whether you’re seeing the signs that a review is due, or you just want to assess your freight arrangements before those signs appear, we’re here to help.
If you think your company could benefit from our deep industry knowledge and expertise in freight management, or just want to find out a little more about our freight review services, contact us today and we’ll let you in on all the details.