For nearly 18 months, manufacturers have been braced for recession, even as they hope for a bottoming of the U.S. economy and a soft landing. They’ve gotten neither.
Manufacturing demand remains fragile as customers work down post-COVID-19 inventories. And economic uncertainty — whether from a spike in gas prices, a bad monthly jobs report, or a drone attack on Red Sea shipping — creates headline-driven volatility that can further weaken demand. Truckload capacity, meanwhile, continues to tighten, as capacity exits the market.
When such uncertain conditions prevent manufacturers from putting the next year’s contracts out to bid, truckers face problems finding loads. For the many small owner-operators who entered the market during the pandemic, this could mean struggling to cover fuel, insurance and rising driver salaries.
As shippers and dedicated truckload (TL) truck operators head into the contract bid season, here are five essential tactics manufacturers can use to reduce transportation spend.
1 Unlock Control Tower Visibility to Enable Optimal Bid Timing
Timing is everything in managing transportation spend. When shippers guess wrong about when the market will turn, they risk spending the rest of the freight cycle reacting as capacity and rates repeatedly move against them. Stakes are especially high this year, amid tightening capacity and rising costs. Shippers and their trucking providers need to come out of bid negotiations whole; a zero-sum game helps no one.
Manufacturers should monitor the freight cycle and be deliberate about the timing of bid tenders, to achieve the optimal balance of cost and service. Seek transportation management solutions that draw on a wide range of shared data about capacity, demand, and pricing, which in turn will offer your team a richer set of information from which to make decisions, putting control in your hands. Control tower visibility into markets and spend can help the team get a better sense of the big picture, and spot more nuanced demand signals earlier. Look for a tool that enables customers to develop and run contract bids of any size from one platform. Some options even offer pre-configured routing guides and rates.
2 Monitor the Freight Cycle to Build Spot/Contract Strategy
Data-driven market insights don’t just help shippers make smarter decisions about when to send out bid tenders: they also help build robust, reliable transportation management strategies. When the right tools and partnerships align, manufacturers can spot key indicators early. These indicators could include bookings, seasonal and regional capacity, container import forecasts, or tender offer and acceptance rates.
Manufacturers should use data to put a realistic, well-timed spot/contract strategy in place before bid cycle shifts. A solid spot/contract strategy allows shippers to find rate and service synergies that generate stable revenue, asset utilization and pricing. Generating a mutually beneficial and transparent relationship with partner carriers can help ensure further stability and success.
3 Balance the Technology/Asset mix
Supply chains ultimately rely on physical assets: people, workflow, equipment assets and freight. But modern shipping experts know that the successful management of these assets — especially optimization and automation — requires a robust technology platform for transportation management. Both assets and technology need to operate in harmony for success.
Amid capacity concerns, this interplay is especially important. Even after surging demand during the pandemic, the net gain in outbound freight tenders after four years was only 11%. The market today has around 700,000 registered motor carriers, 91% of them small operators with six or fewer trucks. Operating authority applications began declining last fall, while a third of owner-operators told a 2023 survey they expected to be gone by year end if the market didn’t turn — and so far, it still hasn’t.
Technology can’t instantly create an available truck and the right equipment positioned when and where needed in a crunch. But it can help shippers prepare operations and establish efficiency. Load matching and lane balancing tools can help, especially those with automation capabilities. For even higher cost efficiency and agility in dynamic circumstances, some managed transportation partners can help pool loads across a large network of shippers and carriers.
4 Keep an Eye on Nearshoring/Reshoring
After an eventful few years in global trade — from tax cuts and tariffs in 2017-2018 to the pandemic to trade tensions with China — nearshoring and reshoring of manufacturers’ transportation operations have accelerated in recent years. These tactics help shippers create resilience, shortening supply chains, moving manufacturing closer to end users and mitigating risk from supply disruption.
With Mexican government investment incentives expected to lure $18.5 billion in new investment in 2024, truck and equipment capacity is moving toward border areas from other regions. While this trend makes nearshoring and reshoring more available to shippers, it also adds to the scarcity of capacity. Infrastructure and border crossing constraints have also brought congestion delays at Texas and California gateways, increasing the need for better visibility and planning around regional equipment availability and imbalances. Look for tools that offer improved real-time visibility to help your operation respond to nearshoring’s effects.
5 Curb Emissions and Fuel Consumption
Global supply chains account for 80% of an organization’s greenhouse gas emissions on average — and stakeholders agree it’s time for that to change. A broad consensus of retail customers, lenders and investors, local communities, and regulators are demanding that shippers and transportation providers limit their carbon footprints. Major logistics companies are on board, leading the way toward greener freight operations.
Sustainability efforts don’t just ensure regulatory compliance and improved brand reputation: They help shippers save on fuel spend and build more cost-efficient operations. Start with a baseline assessment of end-to-end emissions. Be familiar with measuring and reporting processes, compliance requirements and data limitations to fine-tune business rules. And start a reporting cycle with vendors around sourcing and circularity.
Ultimately, green logistics pays off in repeat customers, increasing bid invitations and revenue opportunities in new markets. Make decarbonization efforts easy by investing in a transportation management platform with a built-in emissions and sustainability dashboard, to monitor progress and milestones. With end-to-end connectivity and information-sharing among partners and vendors, these tools can automate reporting, and even use AI to eliminate deadhead and wasted miles while improving delivery times.
A strong sustainability element in your transportation toolkit will help your team create continual process improvements. For example, harnessing mode shifts to rail on lanes with a predictable delivery schedule can generate significant transportation savings and reduced carbon impact.
Uber Freight Meets Customers Where They Are
As the leading end-to-end enterprise suite powering intelligent logistics, Uber Freight offers an AI-optimized network to connect shippers with highly customized services and solutions.
For manufacturers looking to outsource transportation to a strategic partner, Uber Freight’s managed transportation team has decades of combined experience managing companies of all sizes in all market conditions. To learn more, contact Uber Freight today.
Resource Link: www.uberfreight.com
