Why Do You Want to Shop Transportation?

by Mike Starling

Think of this as a strategic question rather than your typical, knee-jerk, gotta-find-a-way-to-cut my-freight-costs reaction. Can you do that? Or doesn't  “transportation” and “strategic” fit together anywhere in your vernacular?

Here’s some fodder to chew on; in case you hadn’t noticed, things are changing rapidly out there in the transportation wonderland. The economy is bad and times are hard. Carriers are going kaput or getting swallowed by the industry big boys—call it “consolidation,” if you will. Rates are a reflection of carrier survival economics, balancing available capacity (notice I didn’t say, “owned capacity”) vs. shipper demand, and as much as this might piss someone off, “what the traffic will bear,” no pun intended. Are you seeing more than one rate increase annually? The only area where you don’t see consolidation is the parcel/small package carrier arena (though the regionals have made inroads), but the big two still dictate terms to hapless captive shippers who can’t do without their services.

Now, what do you have to gain if you shop transportation? Well, first of all, you can group carriers by mode for close-up comparison. Then you have the opportunity to gain insight into current market rates (not only freight rates, but all those wonderful assessorial charges published in their rules tariffs) carrier service capabilities use to include the often overlooked “value added” soft services you might be able to take advantage of. You also have the opportunity to get feedback from other shippers who use a particular carrier and can tell you about their reliability, payment terms, financial stability, etc.

Finally, you have the opportunity to sit back and reflect on your current and projected transportation needs and requirements and have the luxury of now knowing 1) what’s available and 2) what is the benefit of using carrier “X” vs. carrier “Y.” Strategically, you have armed yourself with valuable information that can be used in “what if” scenarios for network or operational service support, or God forbid, operational cash flow planning purposes to develop the plan that is right for your company to achieve its stated business goals.

Now, that’s a STRATEGIC reason to shop transportation. But there is more - now you need to consider what Freight Terms to use to support your Transportation Strategy, taking a holistic view of the organization.

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