The spike in truckload shipping costs in 2020 brought extra attention to transportation budgets and operations. Given all the uncertainties that still exist in the marketplace, how can you successfully plan and execute on a new transportation budget?
Transparency and adaptability are keys to success in 2021. That means making sure senior executives have the clearest view possible into the volatilities that define freight industry.
In many cases, executives are not aware of all of the complexities involved with transportation, though they still expect the highest level of service at the lowest possible price. With so many other important issues on their agenda, the time available to thoroughly explain the intricacies may be limited.
Two major areas that need to be stressed.
1. The unique nature of carrier contracts
While contracts with motor carriers are binding in price, they aren’t in volume provided by the shipper or capacity supplied by the carrier. Shippers are not financially punished if they fail to reach a promised volume level, just as carriers are not expected to accept all loads. While failing to meet either criteria doesn’t carry any financial penalties, it can damage the business relationship.
2. The diseconomies of scale for truckload
Finance departments are accustomed to commodities where, if you procure more a larger quantity, the per-unit cost goes down. This is not the case with truckload carriers. Since a carrier needs to operate its assets across a balanced network, increasing the number of shipments on a lane will lead to a higher price per load.
The ability to share dashboards and forecasting data allows senior executives to more quickly consume the most important information, allowing you to use valuable facetime on only the most pressing matters.
Read “Solving for Uncertainty: A Guide for Variable Transportation Budgets” to learn more about analytics that make reporting easier.