It’s no secret that shippers are in the driver’s seat when it comes to freight rates. Obvious economic conditions have forced carriers to lower prices in hopes of filling trailers and riding out the recession.
Is this the best time to renegotiate rates? Many shippers think so; carriers are reporting dramatic increases in bid requests. LMS has also seen increased interest in its reverse-auction freight bidding tool, TOTALBid. After all, shippers are trying to shelter themselves from the same storm. Companies are scouring operations in a desperate search for cost reduction opportunities and cutting freight rates seems like a no brainer.
Regardless of market conditions, shippers should rebid annually, especially if they’ve added new lanes that have not been subjected to a bidding process. Bids also create an opportunity for shippers to update routing guides and solidify backup carriers.
But yes, I think now is an especially good time to talk rates. Capacity is loose and the market is competitive. However, the idea is not to beat down carriers. Remember – carriers are our supply chain partners and without them nothing moves.
So what can shippers do?
Identify core carriers and talk to them. Call them, meet with them, check on their business. Ask: How can we help each other?
When offered reduced rates, use them. Give these carriers your business.
Create carrier-friendly routes, i.e. continuous moves, so they can reduce empty miles and keep trailers moving.
Cutting costs is important, especially now, but shippers can’t afford to be shortsighted. Economic indicators are slowly improving and it may not be long before carriers return to the driver’s seat.