Carrier Capacity and Its Impact on the Supply Chain

Thanks to an increase in e-commerce and an abundance of freight, we are in the middle of a very carrier-friendly negotiating environment. LTL freight volume is exceptionally high, while carrier capacity is low. LTL carriers are in high demand and they are doing their best to meet the needs of all shippers. However, since they are feeling the constraints and are also dealing with the driver shortage, carriers are able to demand a little more from freight shippers. 

How to Combat LTL Carrier Capacity Constraints

Ratings Increases: Due to the freight demand, LTL carriers are raising their rates across the board. With the uncertainty of the pandemic and not knowing how long the ecommerce boom will last, it is hard to predict what the market will look like one year from now. As such, we are seeing a number of LTL carriers that will not commit to yearlong pricing contracts. They have switched to quarterly rating negotiations or dynamic pricing models that allow them to move prices up and down as capacity demands and to best optimize their networks.

To combat higher costs, shippers need to be transparent with their preferred carriers and offer freight in the lanes that are profitable for their carriers. Building relationships with your carriers is the best thing shippers can do to enable best costs now and in the future. Additionally, shippers need to be able to rate shop. Utilizing freight-pricing APIs makes this easier as they will be able to get real-time rates and book shipments right away. If a shipper can add a few days to the transit time, it will also likely result in a lower rate. 

Shipping Delays: Because of the driver shortage, more freight being shipped, additional restrictions at delivery warehouses and inclement winter weather across the nation, shipment delays have increased in recent months. 

Shippers won’t have much control over transit times, so the best option is to build in additional days on guaranteed delivery. If a shipper’s customer does not require expedited or guaranteed shipping, simply don’t offer it. Build a cushion of at least a day or two into a promised delivery date to account for bad weather or truck backup at the delivery location. 

Moving Forward

The best way to deal with carrier capacity issues to be transparent, know the freight, delivery destinations and customer needs. Utilize technology like freight-pricing APIs to compare rate quotes, analyze shipping data, increase visibility and transparency, and access in-lane rate reductions when and where available. 

Contact Banyan Technology today to learn more about how LIVE Connect™, our LTL aggregator API platform, can help you overcome capacity challenges and improve your shipment visibility.