Today’s most effective shippers integrate transportation partners early in their planning cycle, which helps make them strategic elements of their business. By integrating shipping at the earliest stages of product planning, you ensure that manufacturing execution matches shipping execution, which results in better supply chain efficiency and satisfied customers.
From a shipper’s perspective, committing to an annual freight plan with their carrier at the beginning of the year offers several distinct advantages in stability, cost control, and improving your operations.
Predictability and Stability
- Capacity and Rate Planning: Carriers base their capacity planning and pricing on historical shipments from their customers. However, when you engage a carrier in an annual plan, the carrier can adjust equipment, people, and schedules ahead of the need. If, as a shipper, you are bringing a new product to market, expanding your facility, or increasing output, the carrier can be ready with a solution right when you need it. For example, suppose you have one drop trailer going to your facility and need to increase it to three once a new manufacturing line is complete. In that case, the carrier can ensure they have reworked equipment allocation in their network just for that scenario. Discussing your needs over 12 months enables tailored rates and provides stability for budgeting and the supply chain. LTL carriers are defined by available capacity – measured in the number of service centers, equipment, and people. Having the capacity when and where you need it most is a critical up-front conversation with your shipping partner. Having the discussion ahead of time will prevent a last-minute scramble to find capacity within the carrier or quickly find capacity with another carrier at the last minute if it is available.
- Transit Times: Consistent carrier partnerships facilitate efficient scheduling and optimized delivery times, making inventory management easier and ensuring a happy customer on the receiving end. It’s also important to understand what lanes your LTL carrier excels in and how quickly you can expect to get your product to market.
- Relationships: Regular collaboration with your LTL carrier fosters stronger relationships, leading to improved communication, personalized service, and quicker problem resolution. Being able to pick up the phone, send a quick email or text message, or engage online is much easier when there is an established bond between the shipper and carrier.
Cost Savings
- Tariff Discounts: Shippers and their carriers often discuss discounts from the tariff agreement or base rate. These discounts are determined by the type of freight you ship, the volume of shipments you have, and the duration of the agreement between the two parties.
- Operational Efficiency: Efficient operations through load and route planning and optimized workflows can contribute to long-term cost reduction. Your LTL carrier should meet your custom needs as a shipper, such as pick-up times and locations, spotting a trailer, and offering specialized services like expedited or guaranteed delivery for time-sensitive or retail shipments.
- Reduced Uncertainty: Shippers should focus on their core business activities and have peace of mind regarding their LTL carrier. Eliminating the need for frequent bids and negotiations saves time and resources, while having the promises your carrier made in your joint planning meeting allows you to ship confidently.
Improved Operations
- Visibility and Control: Transparency into carrier capabilities and capacity planning enables better forecasting and proactive adjustments to shipment schedules. Carriers should be able to offer technologies, such as APIs, to help with this process.
- Innovation: Collaborative planning opens doors to exploring new shipping methods, technology integration, and sustainability initiatives. For example, many productive freight plans include consulting a packaging expert to evaluate how your freight is packed and palletized. It’s essential that a representative from your carrier sees your freight and understands the nuances of how it will be transported. The carrier can give you an honest evaluation of improving packaging to save on costs and claims.
Should I consider a joint planning session with my carrier?
An annual freight plan with a joint planning session at the start of the year could be your game-changer. These meetings aim for open communication to foster a deeper understanding of your needs and your carrier’s capabilities.
Brainstorming sessions lead to innovative solutions tailored to your specific challenges. This results in enhanced flexibility, optimized operations, and a productive partnership built on mutual trust and understanding.
An annual freight plan with a joint planning session offers shippers a win-win proposition. It provides stability, cost savings, improved operations, and a solid foundation for a long-term, mutually beneficial partnership with their chosen carrier.