Truckload Shortage: How to Get Low Rates with a Third-Party

We are currently in the middle of a nationwide truckload shortage that is expected to worsen in the near future. The American Trucking Association has estimated a nationwide shortage of over 30,000 drivers that is expected to increase to almost 240,000 within the next seven years. This puts shippers in a tough position where there are not enough trucks available to handle their loads, giving carriers the upper hand when negotiating rates and leaving many to wonder if their rates are truly competitive. Furthermore, in order to reduce turnover and encourage new drivers to enter the business, trucking companies are being forced to increase pay rates and the increased cost will undoubtedly be passed down to shippers.

Fortunately, shippers do have some leverage here. Working with a freight broker or a third party logistics provider (3PL) can give you access to a vast network of carriers and the ability to compare rates among them. Here are a few ways that working with an outside partner can help you save money:

More Options

Most companies have one or two carriers that they rely on to do all their jobs. This is fine when the market works in favor of the shippers with low rates and plenty of trucks on the road. However, whenever capacity gets tight, those dedicated carriers gain the upper hand.

Shippers can level the playing field by working with a 3PL who will provide hundreds, or sometimes even thousands, of carriers to choose and compare freight rates from. This gives shippers instant negotiating power if a carrier tries to increase rates or refuse service in a specific lane. A 3PL that specializes in multiple modes of transportation are especially valuable in building truck capacity across multiple routes.

Expert Service

Freight brokerages and 3PLs offer more than access to trucks and equipment. They also help shippers to establish long-term relationships with trustworthy carriers. Reliable brokerages that help carriers eliminate deadhead miles earn trust from those companies which is passed on to the shippers. This leads to several benefits such as quicker service, smooth shipping, and fewer damages.

Increased Efficiency

A recent survey by Morgan Stanley found that most shippers expected capacity to remain very tight for the remainder of 2015. This means there is no end in sight for the ever increasing cost of truckload shipping.

A freight brokerage or 3PL can give shippers greater control over their transportation costs and identify ways to make supply chain operations more cost-efficient. Recently, more small-to-mid-sized companies have turned to 3PLs to handle certain aspects of their logistics operations. After about a year, transportation costs begin to decrease in most cases.

Specialized Knowledge

Logistics can be very complicated and overwhelming for a smaller company attempting to manage its own supply chain. The best brokerages and 3PLs have greater efficiencies and expertise than most shippers can develop themselves. This prompts many shippers to outsource transportation functions to a third-party.

As long as freight demand continues to grow, shippers must prepare for rising costs or find ways to alleviate them. A third-party provider can offer more than just transportation; they can improve efficiencies and provide options to shippers. While changes in the transportation industry are inevitably on the way, utilizing 3PL services can help businesses move forward despite the current truckload shortage.