As everyone knows, it is very difficult to time the stock market. While we are all aware of the old adage, “buy low and sell high”, in reality, this is not easy to do.
When it comes to freight rates, it is sometimes problematic to select the right time to put a company’s freight out for bid. The last few years have been particularly challenging for shippers. After the Great Recession, carriers have been adding capacity in a prudent and deliberate way. Gone are the days when carriers build transport companies and hope that shippers will come. In addition to managing their fleet capacity, carriers have also been challenged with the struggle of recruiting qualified drivers.
Consolidation in the trucking industry has been very prevalent in recent years. In Canada, companies such as TransForce have acquired large chunks of the small parcel, LTL and truckload sectors. There are simply fewer carriers for a shipper to choose from. Carriers have gained pricing leverage over the past few years.
While this has been going on, the rail sector has had their own service issues and has not been able to pick up some of the shortfall in truck capacity. Government regulations have also made it more costly to run a truck fleet. Taken together, these developments have led to upward pressure on freight rates.
As we approach the end of 2015, a window of opportunity has opened for shippers seeking to limit their freight costs in the New Year. The economies of Canada and the United States appear to be slowing. Trucking companies have made their fleet purchases and have prepared their 2016 budgets. They need revenue certainty to meet their budgets and satisfy their shareholders. They would like to enter the New Year in the knowledge that they will fill their fleets with consistent, quality revenue.
Now is the time for shippers to conduct their small parcel, LTL and truckload freight bids. Shippers are currently in a good position to negotiate favorable freight rates and fuel surcharges and place them under multi-year arrangements. Just as carriers have budgets to meet, so do shippers. Conducting a bid now allows a shipper to cast a wide net and test the market for freight rates. It allows the manufacturer or distributor to limit freight cost increases or even achieve decreases that will help improve their bottom line. Since the window of opportunity can close quickly and without warning, take advantage of current economic conditions.
If you need help in preparing a conducting a freight bid, feel to phone or e-mail us at dan@dantranscon.com. Dan Goodwill & Associates has conducted many successful freight bids over the past twelve years and we would be happy to help you. To learn more about us, visit www.dantranscon.com.