Dedicated fleets have always been a potential source of truckload capacity for shippers but have become even more valuable during the current tight market. After years of unprecedented premium spot market rates and low primary tender acceptance, shippers are evaluating where they can implement new dedicated fleets while maximizing the benefit of existing ones.

Dedicated fleets are often considered for their cost saving opportunities and the ability to guarantee service for high-density customers.

Maximize fleet value with lane fit and fleet sizing

While the goal of a local fleet is to run short hauls and return home, longer lanes should have a backhaul load to offset the cost of round-trip miles paid to the carrier. Investing in a dedicated fleet can be a long-term solution that provides endless value to your transportation management. To implement a dedicated fleet, a shipper must have freight density and consistent flow of volume in a targeted shipment area. Fleet management should target no more than 10-20% empty miles to meet industry standards for a regional fleet. Dedicated fleets can be evaluated for high-mileage lanes but should only be implemented if backhauls are heavy, consistent, and scheduled favorably for drivers while meeting utilization goals.

To help maximize fleet value and expand the potential fleet lane fits, shippers can partner with external networks to find more backhauls. Highly efficient shippers implement programs that provide backhaul solutions including planned continuous moves and dynamic continuous moves. Uber Freight’s Lanehub provides planned continuous moves by matching our dedicated fleet lane network to live RFPs that may have a useful backhaul out for bid. This allows shippers to effortlessly secure backhaul freight to reduce empty miles and optimize fleet utilization. Uber Freight’s Dynamic Continuous Moves is powered by AI and enables dedicated fleets to find backhauls without a permanent commitment to a given lane—allowing the fleet to fill empty miles on an ad-hoc basis. It’s important to maintain balance between prioritizing backhauls and picking up the driver’s next load—both need to be considered and optimized daily.

Shippers can also ensure less volatility in the load tendering process by taking advantage of Uber Freight’s committed capacity feature offered to carriers. This feature opens opportunities for carriers of all sizes, allowing them to lock-in loads across 1,000-plus dedicated lanes and plan their operations up to three months in advance. In tandem, shippers can also turn to Uber Freight’s direct API integrations to bring real-time pricing and instant capacity within their transportation management systems, leading to reduced overhead costs, increased revenue and flexible, scalable operations.

Other active fleet management success factors

Long-term success requires on-going monitoring of the fleet’s health to provide direction for continuous improvement, including considering the following:

• Engineered KPIs: Set and measure KPIs appropriate for each fleet type and fleet. Are turns or average miles per week the critical KPI? Percent backhauls by fleet? Do seated trucks count? Modify targets two to four times per year for realistic, but challenging targets.
• Develop a dashboard for each fleet that reports utilization by truck, truck count, empty mile %, heavy haul %, and cost allows for a full picture of fleet performance. Every fleet in the network should be represented in one centralized view.
• Cost-out Initiatives: Be creative when thinking about what cost-out initiatives to implement. Consider using drop trailer space at the shipper and receiver locations for more efficient loading and unloading. Is a third shift available for the driver to begin slip seating? Other popular cost-out initiatives include: equipment utilization (average weight/cube per load), dwell time, domiciled trucks, scheduling optimization, backhauls and collaboration.
• Fleet Administrative: Manage fleet contracts as living documents and update as necessary. Audit invoices to contracted rates to ensure costs are accurate.
• Fleet Lane Fit Analysis: Regular continuous improvement calls and monitoring KPIs are necessary to get the most out of your dedicated fleet capacity and to determine which lanes are the best fit. Review quarterly or semi-annually with a detailed analysis.
• Preferred Mode: Dedicated fleets should be viewed as a preferred mode. Fleet trucks should be prioritized in routing guide placement, appointment setting and provided drop space to maximize efficiency.

To learn more about Uber Freight’s dedicated fleet support, dedicated fleet assessment, and dedicated fleet engineered KPI dashboard services connect with an Uber Freight Consulting leader.

Learn more about dedicated freight.

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As the industry experiments with sustainable alternatives to complement traditional capacity, this pilot will provide stakeholders with valuable insight into the logistical complexities of electrifying freight transportation. It will combine Uber Freight’s expansive network of digitally-enabled carriers with WattEV’s innovative electric fleet and charging infrastructure network. CHEP will be the first shipper to participate in the pilot, prioritizing electric capacity on the Southern California route.

“Our business relies on heavy-duty road transport, which is one of the biggest challenges to transition our value chain to net-zero emissions by 2040, CHEP’s long-term decarbonisation goal. This first electric truck pilot in the U.S., in partnership with Uber Freight and WattEV, is a step in the right direction as we move towards a net positive impact. We are proud to partner with our carriers and our customers as we together scale up electrification opportunities and deliver on our shared decarbonization goals,” said Marisa Sánchez Urrea, Director of Global Supply Chain Decarbonisation at Brambles, CHEP’s parent company.

The pilot builds on WattEV’s mission to develop a nationwide network of heavy-duty charging facilities that will serve fleets of electric trucks. Via the Uber Freight platform, CHEP will be able to book, schedule, and complete loads, track status and load KPIs, and manage paperwork all in one place.

“We are proud to be a zero emission transport solution of choice for Uber Freight and their customers,” said Salim Youssefzadeh, CEO of WattEV. “Combining our transport business and our Truck-as-a-Service model, we are able to use Uber Freight’s digital platform to serve the shippers and their customers with our zero-emission truck routes and services.”

As electric trucks hit the road, environmentally-conscious shippers and customers are turning to electrified capacity to meet their transportation needs and achieve their sustainability commitments. In addition to the benefits of zero emissions and the absence of engine noise and fumes, widespread adoption of electric trucks will decrease the reliance on non-renewable fuels with volatile prices and reduce maintenance costs.

“Electric trucks are finally here, and we’re proud to partner with WattEV to offer Uber Freight shippers even more ways to move freight more sustainably,” said Uber Freight Head of Sustainability, Illina Frankiv. “Electric trucks will have a profound impact on logistics, and we’re excited to build the technology platform to enable their seamless integration into supply chains”

Uber Freight’s expansive network is uniquely positioned to navigate the logistical complexities of integrating electric vehicles into shippers’ transportation strategy. By partnering with EV carriers and charging network providers like WattEV, and shippers every step of the way, Uber Freight is the proven network of choice for shippers and carriers to integrate emerging technologies into their supply chains.

Contact us to learn more about the Southern California pilot and electrifying your supply chain strategy.

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By: Lior Ron, CEO, Uber Freight

We’re proud to share a significant milestone in our journey that began last summer when we announced that Uber Freight and Transplace were joining forces to enable a new era of logistics management. Today, the two organizations are officially together under one name, Uber Freight, the logistics platform and partner built to help shippers and carriers stay ahead in a rapidly evolving world.

Logistics is the backbone of the economy. It’s a highly complex ecosystem that inevitably – and for many, behind the scenes – touches nearly every aspect of our lives. It’s the mechanics behind shelves being stocked, online orders arriving on doorsteps a mere days after purchase, and the movement of the goods we rely on day in and day out.

But a changing world has revealed vulnerabilities across our industry. We’re facing a pandemic-driven e-commerce explosion that’s influencing customer expectations around delivery timing, a looming truck driver retirement cliff, and market rate volatility unseen in decades. The fragile systems we rely on to continuously move goods are showing their age. Simply put, the logistics industry was built for a world that we no longer live in.

However, in times of strain and uncertainty come opportunities for reimagination and innovation, and at Uber Freight, we know there’s never been a better opportunity to reimagine how goods move.

Our newly combined organization brings Uber Freight and Transplace products and services together under the new Uber Freight Platform, a first-of-its-kind logistics solution and partner that unlocks unprecedented supply chain reliability, resiliency and optimization. Backed by market-leading technology, our offerings for shippers now span across digital brokerage, transportation management systems, and fully managed transportation and logistics solutions, as well as carrier applications and drop freight programs.

So what does the new Uber Freight look like?

First off, our managed transportation services and digital brokerage solutions will continue to operate separately from one another. As a strategic partner to shippers and carriers of all sizes, we’re committed to complete transparency and accountability when it comes to identifying the best recommendations, options and opportunities for a shipper’s transportation needs, be it a one-time load or a fully managed program.

Our platform is now designed to optimize the operations for shippers of all sizes. You could be a business simply looking to modernize with advanced digital brokerage solutions or instant real-time pricing via an API. Or you’re growing and scaling and require a more comprehensive transportation management system and network view all in one place. And if you’re an enterprise shipper that requires an end-to-end managed program backed by industry-leading domain experts, we have that. Uber Freight empowers you at every stage.

We’re focused on unlocking value and addressing some of the industry’s biggest pain points:

• Transparency is baked into every product and experience from real-time pricing to facility insights and everything in between.
• We break down the complexities and daily challenges that face both shippers and carriers and provide always-on visibility and insights.
• Our technology, including LTL Pooling and Shipper Collaboration, moves goods more sustainably, while also increasing business efficiency and impact.
• We’re building the framework for the future by introducing customers to the industry’s cutting-edge technologies such as autonomous driving solutions.

Our marketplace technology, now behind all of our core logistics solutions offerings for shippers, unlocks deep efficiencies and rich insights across $17 billion of freight under management, as well as access to one of the world’s largest networks of digitally-enabled carriers with 135,000 carriers operating across services throughout North America and Europe, including intermodal, cross border, expedited and more.

I can’t overstate that none of this is possible without the carriers who actually move the goods. We strive to improve the carrier’s quality of life every day with technology. By democratizing access to freight, increasing driver productivity and reducing operating costs, carriers leveraging our technology make every hour on the roads count, plan with flexibility and certainty, and are empowered to succeed.

Today’s news would also not have been possible without all the hard work both teams have done to change the logistics industry as we know it. In combining the best of Uber Freight and Transplace, we bring together the industry’s leading technology, solutions and talent, while empowering employees with the resources to further invest in our customers, our communities and our environment.

Our mission is to reimagine the way goods move to help communities thrive, and today marks the next chapter of an incredible journey for our vision, team and community. We’re excited for the road ahead and look forward to seeing you on it!

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More than 500 people attended the conference at La Cantera Resort & Spa, which featured keynotes and discussions highlighting the state of the freight market after more than two years of volatility—and how shippers can evolve their logistics to better prepare their businesses for future market disruption and build more dynamic supply chain networks overall.

Here are a few highlights from this year’s event:

Powering the future of logistics

Attendees heard firsthand from Head of Uber Freight, Lior Ron about the vision to change logistics for the better. Ron’s opening keynote speech highlighted Uber Freight and Transplace’s mission to invest in innovation and further evolve their joint, scalable technology platform that powers shippers’ supply chains.

“The logistics industry was built for a world we no longer live in and it needs to adapt to a fast-changing environment. It’s not about predicting what’s next, but equipping [shippers] with tools that allow [shippers] to deal with volatility,” said Ron. “Transplace and Uber Freight merging will transform logistics to help shippers be nimble and ready to adapt to any supply chain challenge. It will be a logistics platform and partner built to help you stay ahead of a rapidly evolving world.”

Ron also stressed the importance of shippers and carriers working together—connected through a digital freight network—to build a better future for the industry. And a mission statement set the tone for the rest of the event: Our goal is to reimagine the way goods move to help communities thrive.

Technology solutions grounded in transparency, visibility and impact

Steve Barber, Senior Vice President of Platform at Transplace, and Raj Subbiah, Head of Product at Uber Freight, highlighted how the company will help shippers shift from a reactive to a proactive logistics strategy by using technology.

To provide more transparency to shippers, Uber Freight’s marketplace offers on-the-spot access to capacity and exact carrier costs; the ability to fully automate carrier sourcing or manually control the process; and procurement tools that use shippers’ historical bid data and carrier performance to help customers expand their carrier network and plan for different scenarios.

Technology will also provide more visibility by allowing shippers to personalize and manage dashboards that show shipment status and risks; real-time tracking of multiple shipment modes using APIs; and access to carrier feedback on facilities, which shippers can use to make necessary changes.

There’s a clear vision for the impact this technology will have on the future of freight. Scaling these solutions will allow more than 100 countries to use any shipping mode of their choice, from LTL to autonomous trucks to ocean and air. And Uber Freight has set goals to cut carbon emissions among shippers and carriers, specifically by reducing deadhead miles by 25% and reducing truck idling time by more than 40%.

Taking action on the future of logistics

There are many steps shippers can take—particularly around sustainability, technology, data and scenario planning—to adapt their logistics strategies for the future, as was spotlighted in a number of Deliver mainstage and panel sessions.

Creating more sustainable supply chains is critical to reduce freight’s environmental impact. Uber Freight Head of Sustainability, Illina Frankiv in conversation with experts from multiple Fortune 500 shippers highlighted why sustainability is a core component of their transportation strategies, their short-term and long-term goals to reduce carbon emissions and steps all companies can take to measure their environmental impact and efficiently implement more eco-friendly practices.

The importance of including new technologies and automation to complement manual shipping operations was also a major throughline at the conference. The evolution of autonomous trucks, in particular, was a key talking point.

Olivia Hu, Head of Autonomous Trucking Strategy and Business Development at Uber Freight; Joanna Buttler, Director of the Autonomous Vehicle Program at Daimler Trucks North America; and Charlie Jatt, Head of Commercialization at Waymo, discussed the opportunity to transform transportation and logistics with the introduction of autonomous trucks. Joanna and Charlie highlighted how autonomous trucks could improve transportation capacity, safety and efficiency, as well as an industry roadmap for eventually seeing a rollout of autonomous trucks at scale that will operate side by side with human drivers. To support the vision, Deliver attendees also had a chance to see the technology in action—an autonomous Waymo truck drove around the event venue during the conference’s second day.

Technology and data innovations to power shipper business operations and supply chain decisions were also captured during Deliver’s interactive breakout sessions. During a session spotlighting startups, Ian White, CEO of Koffie Insurance, and Elliot O’Connor, founder and CEO Frontier, discussed how shippers can effectively use technology in the hiring, insurance and drayage sectors of their business. Meanwhile, experts from Uber Freight and other Fortune 500 companies offered actionable steps for shippers to improve how they use data to inform logistics decisions.

Deliver’s ongoing theme of preparing logistics for the future naturally set the stage for the conference’s Q4 outlook panel. Chris Caplice, Senior Research Scientist at MIT; Mazen Danaf, Senior Economist and Applied Scientist at Uber Freight; Ben Cubitt, Senior Vice President of Consulting at Transplace; and Matthew Harding, Senior Vice President of Data Science at Transplace, touched on important insights for shippers such as how to navigate rate fluctuations, capacity challenges and procurement heading into a potentially soft market in the first half of 2023, and a tight market in the latter half.

Standout keynotes and giving back

Along with hearing from industry pros, Deliver attendees also had the opportunity to experience moving, exciting and informative keynotes from notable speakers including David Robinson, former player for the San Antonio Spurs, who discussed the highs and lows of his basketball career, and the importance of giving back to local communities in need; supply chain professional and Managing Director at EY John Polowczyk, who provided a firsthand account of how he came to lead the White House supply chain task force at the onset of the COVID-19 pandemic; and CNBC economist Marci Rossell, who offered insight on the most important long-term issues for the economy that should be top of mind.

Deliver 2022 was more than just a gathering about the future of freight and logistics, however—it was also about giving back. This year, we partnered with Feeding America and the San Antonio Food Bank to raise money and pack kid-friendly meals for families in need. We’re thrilled to announce that we packed nearly 2,000 meals and raised $75,000!

We’re grateful to all of the shippers, customers and speakers that made it to Deliver this year. While there will always be challenges and uncertainty, it’s clear that our industry is dedicated to building new strategies that will impact the future of freight for the better. Thank you for attending Deliver 2022, and we look forward to seeing you at next year’s event!

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By: Carlos Godinez, VP Business Development, Mexico

Amid international trade wars and global supply chain delays, businesses in the US are increasingly setting up shop in Mexico. This tidal wave of business expansion creates a plethora of new opportunities and with the height of produce season just around the corner, the cross-border supply chain will be impacted with an influx of activity.

It’s important now more than ever to create one united, optimized, and resilient North American trade corridor to support supply chains throughout the region. A seamless North American trade corridor features consistent freight distribution linked by major avenues, such as over-the-road gateways, container ports, rail and intermodal hubs as well as inland freight distribution clusters. These well-coordinated routes can help deliver goods in a timely manner, generate wider economic growth and resilience, and improve the overall quality of the supply chain. However, to achieve a fully optimized North American trade corridor, additional digital transformation is needed in cross-border logistics.

Current State of the Cross-Border Supply Chain

US-based businesses, primarily in the manufacturing sector, are expanding to Mexico for many reasons. Streamlined delivery times, easier shipping and lower labor and energy costs are just a few of the reasons. However, with more businesses now operating in Mexico, new challenges are arising, including complex customs delays and trade imbalance issues.

Increasingly high fuel prices have also created challenges for shippers. Mexico’s fuel prices increased from $22.16 per liter in January to $22.73 per liter in March, a 3 percent gain in just three months. And in April, the price of diesel averaged $22.98 per liter, which was a record high for the country. Shippers are struggling to keep up with the cost of rising fuel, which is an additional unplanned budget expense. In addition to the higher fuel prices, freight rate volatility and tight capacity remain present in the market. Import rates are also increasing as capacity remains tight for cross-border freight. Additionally, shippers are navigating high shipping volumes due to increasing demand and realignment of inventory levels that can create significant shortage or overage conditions.

As shippers navigate the mounting challenges, Free Trade Zones, an area where foreign and domestic merchandise is considered outside the US Customs territory, have risen in popularity. There’s increased interest from US-based businesses to bypass traditional West ports and take advantage of new rail bridges to connect Pacific ports, such as Manzanillo and Lazaro Cardenas. Shippers moving products from Asia to the South, Midwest and Eastern US are also taking advantage of the Free Trade Zone and Recinto Fiscalizado Estratégico (RFE) warehouses within Mexico customs territory.

The North American Corridor of the Future

To make this North American corridor a reality, shippers must embrace technology to optimize routes and navigate security challenges and regulatory developments. One way to achieve this is through Free Trade Zone activities. Shippers can introduce tools that support activity in the Free Trade Zones and RFE to defer taxes and duties. Partnering with a company that has expertise in managing activities, such as intermodal and rail solutions, warehousing and distribution, and customs compliance is key to cross-border shipping and keeping the supply chain moving.

Customs brokerage services also support an optimized North American trade corridor. Managing customs is a critical part of the cross-border supply chain and having a professional customs broker partner to navigate different regulations while providing shipment visibility and control is essential. These services can provide data insights on freight origin, customs clearance and final delivery, which can help to simplify the overall cross-border freight process.

It’s also imperative that shippers have real-time, highly accurate and transparent visibility of their freight at any given moment to ensure goods are delivered on-time and within budget. Having the latest managed transportation solutions will immediately give shippers the visibility they need to make sure their goods are safely and accurately moving across the border.

Within the cross-border supply chain, challenges with security, regulations and economic environment remain. It’s important for shippers to stay ahead of the curve by adapting to these challenges and utilizing the right technology platforms and solutions. By doing so, we can come together and create the logistics flow needed for a true North American trade corridor.

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It’s consumed our headlines the last two years—supply chain issues are running rampant across industries with chaos at ports, distribution centers, and along shipping routes. Manufacturing delays, raw material shortages and long-term effects of the bullwhip effect are contributing to the challenges, and now softening demand curves are leaving inventories at near-record highs.

Warehouses, an essential part of supply chain recovery, have been deeply impacted by the turmoil of COVID-19. They’re grappling with capacity overflows, supply and demand imbalances, and labor shortages; many are also redesigning fulfillment processes in reaction to growing e-commerce demands.

With all this turbulence, distribution leaders are trying to differentiate themselves in an industry fighting for qualified labor. Finding that wage competition only covers gaps temporarily, organizations are embracing the need to rethink their short- and long-term strategies to better manage inventory and capacity. And on the facility floor, developing a culture that empowers workers and prioritizes efficiency can optimize operations amidst disruptive environments.

Develop proactive, flexible inventory strategies for the short- and long-term.

The onset of the pandemic initiated several consumer behaviors that strained warehouse operations. Demand skyrocketed across industries as consumers panic-shopped for everything from toilet paper to frozen meat. Retail commerce shifted heavily to include a blend of click-and-collect and e-commerce fulfillment. Supply chains designed to accommodate 4-6% e-commerce rates began seeing rates closer to 15-25%. This placed a heavy burden on distribution facilities and warehouses to support this demand channel shift, moving work historically performed in retailer locations to distribution centers.

Now that we’re seeing demand and consumer purchase behavior normalize, facility leaders are shifting towards becoming more strategic and proactive. With warehouse vacancy rates at all-time lows and parking lots full of temporary storage, shippers are beginning to question past decisions to triple safety stock and acquire additional space in response to lags in global manufacturing.

Instead of knee-jerk reactions to keep safety stocks high, or abrupt overreactions to cull inventory, supply-chain operators need to pause and assess their inventory strategies and how they use existing space. Short-term solutions may include a needs-based inventory stratification with storage strategies, temporary racking strategies for surge inventories, and allocation processes that pass along lead-time challenges to margin-appropriate accounts.  Long-term solutions may include inventory strategies that ignore demand amplification signals, near or re-shoring sourcing strategies to alleviate supply constraints, and modular distribution center designs that allow channel flexibility.

Empower the front-line worker to increase efficiency.

Truck drivers aren’t the only in-demand talent in the shipping and logistics space—warehouse workers are also highly sought after. Unemployment in the transportation sector has seen a rapid decline over the last few years, beating pre-pandemic levels in April 2022. There’s no doubt that high order volumes and shifting customer demands have since pushed shippers to offer competitive wages and benefits to reduce turnover. Now is an ideal time to invest in workplace culture and training. Employers can help employees feel valued while expanding their skill set and improving warehouse functionality by offering them opportunities to learn and grow through coaching and other programs.

Part of this training should extend beyond culture and into methods for increasing efficiency and reducing waste to create a better work environment and a more effective strategy for warehouse management. Companies like Transplace offer Lean Enterprise Transformation solutions, which serve as guides to help teams work smarter—not necessarily harder. These solutions take an employee-centric approach to equip and empower the front-line worker to see and solve problems that impact their daily operations. This empowerment can have a dramatic impact on realized business results. Research shows that engaged employees stay longer while operating at higher and more meaningful productivity levels.

The worst may be over, but there’s still work to do.

Though the darkest days of the pandemic may be behind us, supply chain issues are far from over. There’s still a pressing need to optimize warehouse operations and build a strong foundation for shipping and logistics. Warehouses can re-establish the status quo from an industry and process perspective while also training and empowering employees to make decisions that maintain an optimized environment.

When shippers see warehouses as more than storage facilities, these facilities can be transformed into nimble, fast-moving velocity centers that drive value throughout the supply chain.

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By: Tracy Rosser, Executive Vice President of Operations

In the freight industry, we often contextualize fluctuations in market trends in terms of contract rates versus spot rates. When spot rates are beneath contract rates and trending down, or are significantly below contract rates regardless of trend, we consider that environment a deflationary market. The inverse is an inflationary market.

For the first time in over a year, current spot markets rates have dropped below the contract average, a rapid decline from January highs. This transition means a move from an inflationary market to a deflationary one. For shippers, that often means a change in strategy. It can seem like a daunting prospect after having recently adapted to inflationary conditions.

Coming off a high inflationary market, today’s slow-down is resulting in a huge gap between spot and contract rates over the course of the year. But shippers can still take advantage of the new market circumstances — and even recover some of the overspend in budget that was necessary to use when rates were high.

The key to taking advantage of any market shift in the middle of an RFP cycle starts with monitoring freight rates at a lane level. That means looking closely at all-in blended rates, contract rates, backup (LCP) rates, spot and contract benchmarks, and internal budget benchmarks — and comparing the lowest cost options. From there, shippers can identify opportunities in the following categories:

Lever #1: Be Intentional with Your Routing Guide

To capture value in a deflationary market, it is critical to be intentional with how freight is being covered through the routing guide, with backup carriers, or utilizing the spot market. To achieve the optimal results, start with understanding lane level costs for contract and spot, and then ensure the routing guide is set up correctly to take advantage of those rates.

If spot rates are less than contract rates, one approach is to limit the freight sent to contract carriers to what has been committed in the bid. Agility in changing the routing guide setup based on market fluctuations can help to reduce costs. For example, say a carrier has a commitment of five loads per week but nine are generated. If the routing guide is set to a limit of five, then the four remaining shipments will be able to automatically go to freight auctions for cost savings. The inverse applies in a stable or inflationary market, and the primary carriers should always get first right of refusal on loads.

Shippers should also remove backstop broker carriers from the routing guide unless they’re used for a specific service or deflationary price strategies with transparent margins. This allows more volume to flow to freight auction, since in a deflationary market spot rate is typically a more viable cost-savings option.

Lever #2: Address Existing Contract Rates

Assessing existing contract rates during hyper deflation is necessary, but it might mean a difficult conversation with an existing carrier or working with a new carrier altogether. Some shippers might feel bullish on making these changes — others might be more inclined to avoid disrupting existing relationships altogether. No matter a shipper’s risk tolerance, there are still levers shippers can pull to improve existing contract rates as those things that caused a carrier’s costs to increase during inflationary times typically have the opposite effect in deflationary times.

Lever #3: Develop a Low-Volume Strategy

As shipper requirements allow, align the low-volume strategy to the most optimal cost solution. Often, that means most low volume shipments should be covered by the spot market (see step 1). Shippers can also expand the definition of “low volume” (from, say, lanes with 10 loads/year to, say, lanes with less than 50 loads/year) to increase cost savings. Working with a network partner can also open more competitive market rates.

A more conservative approach is twofold: exploring opportunities in new lanes (establishing new routing guides through mini-bids) and focusing any adjustments to existing carrier contracts on poor-performing lanes. Throughout the process, closely monitor how routing guides compare to the market and be prepared to move to a more medium-risk approach if needed.

A medium-risk approach should also include strategies around new lanes and poor-performing lanes. In addition, for broker and non-core asset-based carriers, shippers can:

• Completely replace with more cost-effective carrier
• Reduce commitments to let more shipments flow to freight auction or other targeted network solutions
• Surgically renegotiate rates to bring closer to market

The most aggressive approach centers around finding margin with core, asset-based carriers. That includes more closely monitoring these carrier lanes and, if necessary, acting to completely replace an existing carrier with a more cost-effective one. There are also opportunities to renegotiate rates or reduce commitments to allow volume to flow to the spot market.

Lever #4: Optimize Spot Market Utilization

The spot market is always changing and reacts faster to market conditions than contract rates. For unpredictable freight in a deflationary market, it can be a viable option for shippers to find cost savings. Shippers can leverage freight auctions and automate shipments to go directly to auction, for example, to achieve equal or below existing contract rates.

Shippers can also use data to find opportunities that take advantage of available solutions quickly and effectively. Machine learning models can identify opportunities within a 2–3-day window, reducing transportation costs by $140 per load on average. Working with a transparent brokerage partner can also open access to more favorable network pricing. By having an always-on approach to the spot market, shippers can identify patterns, trends and opportunities for continuous performance improvement.

Moving Forward with Transparency and Flexibility

The current slowdown poses new challenges for shippers, particularly considering fast-rising fuel prices. Q2 2022 has seen record high diesel prices, with an average price of $5.56/gallon. Moreover, a high level of uncertainty in the market remains due to unknowns like demand inconsistency, the reopening of production and shipping in Shanghai, and lease defaults. (Read more about these factors in our market report, here.)

For shippers, a strategy that uses all the resources at their disposal is key. And it means, as market conditions shift, shippers can leverage different tactics to solve for specific conditions as they arise — including striving for rate transparency with partners so they can have visibility to market comparisons and margins. Whether we continue in a deflationary market for a period, or find ourselves in inflationary conditions again, shippers can ensure no shift takes their business by surprise.

Learn More About Freight Rates in 2023 here.

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What is International Roadcheck?

During this large-scale event, an average of 15 commercial motor vehicles and drivers will undergo North American Standard Inspections every minute at weigh and inspection stations, on roving patrols, and at temporary inspection sites. These inspections check critical vehicle components from brakes, tires and exhaust systems to van and open-trailer bodies, fuel systems and lighting devices. In addition, inspectors will review drivers’ operating credentials, hours-of-service documentation, seat belt usage, as well as check for alcohol and drug impairment.

CSVA Inspection Focus Area: Wheel Ends

This year’s inspection focus will be on wheel end components, which support the heavy loads carried by motor vehicles, maintain stability and control and are critical for breaking. According to the CVSA, “violations involving wheel end components historically account for about one quarter of the vehicle out-of-service violations discovered during International Roadcheck, and past International Roadcheck data routinely identified wheel end components as a top 10 vehicle violation.”

Plan Ahead to Avoid Delays

The goal of the annual roadcheck is to maintain safety for everyone on the road. However, these inspections can significantly impact capacity and service. Drivers may lose hours due to checkpoints, and may be placed out of service for noncompliance. In an already tight market, further delays can seem untenable. With the right preparation measures, shippers and carriers alike can minimize disruption:

1. Capture capacity by planning now
2. Expect higher spot volumes
3. Expedite rate approvals
4. Move sensitive freight before May 17
5. Adjust appointments and shipments ahead of the impact
6. Schedule non-critical shipments after May 19
7. Ensure vehicles and drivers are in compliance (find the CSVA’s full overview of wheel end inspections here)

Ensuring Preparedness on Roadcheck Day — and Every Day

Particularly when market conditions are volatile, a combination of planning, transparency and agility are critical for shippers to ensure minimal delays no matter what challenges arise. While the International Roadcheck might create disruptions, it’s an event shippers and carriers alike can anticipate and therefore minimize its impact. In many cases, shipping and logistics hurdles are unforeseen.

At Transplace, we work with our partners to drive logistics performance excellence through our technology, domain expertise and network scale whether the environment is predictable or unpredictable, favorable or unfavorable. We have connections with a diverse carrier base of air freighters, trucking companies, rail freighters and ocean liners. And with over $15 billion in freight under management, our network reach in North America is unmatched. Our carrier network and shipper insights enable flexibility and nimble decision-making to consistently improve supply chain performance.

To learn more about our capacity and network services and the ways we can support you in preparing for International Roadcheck, reach out to us today.

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By: Carlos Godinez, VP Business Development, Mexico

This year marks another difficult year across the global supply chain with tight capacity, increasing inflation and lack of reliability continuing to trouble the industry. Carriers are facing high volatility, uncertainty and demand, while shippers need increased confidence so they can find capacity efficiently and at a fair price. These issues are only expected to worsen in 2022, according to a recent S&P Global market insights report.

When it comes to cross-border collaborations, there is no shortage of challenges. The supply chain flow across the US and Mexico border operates as a black hole — low load visibility and shipment control on both sides of the border are frequent, making it even harder to ensure goods will clear quickly and seamlessly. Complexities in evolving international trade are rising, making it difficult to stay up to date on the legal, regulatory, and industry changes. Additionally, long customs clearing times, multiple customer processes for different ports and a lack of capacity hinders operations.

With inefficiencies and high costs impacting the US and Mexico cross-border supply chain, it’s important now more than ever to have visibility and control over freight operations. Digital transformation must be at the root of all business solutions to keep the cross-border supply chain moving.

Current State

As one of the top trading partners for the US, Mexico accounted for 14.4 percent of the total trade of goods for the US as of December 2021, totaling about $661 billion in trade, according to data from the US Census Bureau. This number will continue to grow in the future, as it has over the last 20 years since the NAFTA agreement was put in place, with companies in both the US and Mexico looking to expand cross-border operations. Just last year, companies such as Phillips Industries, Grupo Industrial Saltillo, Stanley Black & Decker Inc. and Whirlpool Corp. announced expansions into Mexico, which totals more than $200 million in investment and about 3,000 new jobs.

Despite the recent boom in economic activity, there’s a perfect storm of challenges brewing across the US and Mexico supply chain. Peak seasons are running longer and trucking companies in both countries are struggling to find drivers, with many drivers retiring or leaving Mexico to work for a US-based carrier by taking advantage of the B1 visa scheme. Because the volume and velocity of shipments has increased for companies in both countries, it’s also becoming more feasible to bring freight from Europe or Asia directly into Mexico through ocean ports, which decreases the amount of southbound flow from the US and capacity coming directly into the Mexican marketplace.

Digital Transformation’s Role

Uncertainties have become common in the cross-border supply chain. Being aware of security challenges, the current economic environment and regulatory issues are crucial to keep supply chains moving seamlessly across the border. To manage and address the complexities of the cross-border supply chain, digital transformation is essential to promote real-time end-to-end visibility from freight origin, to customs clearance and final delivery.

The first place to start is ensuring businesses have the proper technology systems to keep supply chains moving. Traditional transportation management systems have a long history of being out of date, often hindering a business’ ability to respond to delays or impacts to time-sensitive shipments. The next generation of transportation management systems allows shippers to control all aspects of their supply chains by harnessing data from multiple sources and applying them to deliver real, sustainable outcomes to logistics and supply chain operations. Active shipments, on-time arrivals and delays, and carrier performance are among the key performance indicators tracked with an up-to-date transportation management system.

Additionally, organizations must implement a “control tower” type of approach to transportation management. With a mix of shipment data, weather and traffic alerts, customs updates and compliance regulations, shippers can have a singular, all-encompassing, real-time view of their supply chain. Plus, being a cloud-based solution, the modern-day transportation management system can provide organizations with a data center application at a significantly lower cost of ownership.

Integrated solutions across ground, intermodal and ocean transportation, warehousing and distribution, US and Mexico customs compliance and transloading can make cross-border shipping easier than ever. Businesses can utilize customs brokerage and trade compliance expertise to create a single, controlled logistics solution with access to all US and Mexico points of entry to simplify global trade operations. In addition, remaining versatile in the ever-changing regulatory environment of cross-border transportation can allow for flexible, strategic processes to help mitigate risk, reduce supply-chain costs and gain visibility for logistics operations.

The cross-border supply chain never sleeps — at all hours of the day and night, shipments are moving, data is being generated for supply chain insights, security measures and regulatory requirements are being navigated and unexpected events that impact operations can arise. Digital transformation must be at the forefront of all logistics operations to guarantee visibility, flexibility and control of supply chains into the future

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