Data from various sources indicate that truckload capacity is starting to tighten. For example, here’s some data from Wolfe Research published earlier this year:
When capacity gets tight, shippers tend to leverage the spot market more. But there’s always the risk of service or safety issues when you go that route. What are some best practices when it comes to finding a reliable carrier using the spot market?
I asked Hope Federer, Senior Solutions Consultant at MercuryGate, that question in a recent episode of Talking Logistics. Here’s an excerpt of what she said:
A lot of shippers and 3PLs are taking a similar [risk management] approach, really focusing on their carrier due diligence [process]. If you have to go out to the spot market and potentially bring in a [carrier] that isn’t part of your network already, really staying true to your corporation’s due diligence — your checklist for an authorized and approved carrier — [is important].
The service ratings, the BASICs [Behavior Analysis and Safety Improvement Categories], your views on the combination of the BASICs…the carrier’s financial status…a lot of those things come into play. But it’s not just that — it’s time sensitivity [too]. If you’re going out to the spot market, you’re really under the gun to get your freight covered, so having that gray area — the ability to waiver some of your stringent due diligence [requirements] — really comes into play.
But the best practice is to continue to focus on your corporation’s due diligence [process] and then [move forward] from there.
When it comes to finding spot capacity, a lot of shippers still “dial for diesels” — that is, they pick up the phone and call a bunch of carriers. Over the years, however, software vendors have enhanced the spot procurement capabilities of transportation management systems (TMS), thus enabling shippers to better integrate the process with their overall operations. “You’re looking at two different approaches to the spot market: going out and finding posted capacity and then posting your available loads,” explained Hope. Watch the short clip below for her comments on how a TMS can streamline and automate those approaches.
Here’s a snippet of what she said:
Transportation management systems today have the ability to interface [with third-party load boards] and bring in available capacity that has been posted…If your TMS is truly robust, it’s going to take that posted capacity carrier and bump it up against your carrier network…if that carrier is already in your network [of approved and authorized providers], you right there have already reduced your risk.
Watch the rest of my conversation with Hope for additional insights on this topic, then post a comment and share your perspective!
