Supply chain leaders continue to focus their efforts on finding the right mix of assets used, market positioning and carrier freight pricing strategies. For carriers, it’s all about balance. Yes, there is the balancing of palletized shipments into full truckload shipments to ensure a truck is loaded properly. However, this is about a different type of freight load balancing-the balancing of assets. Improper consideration of the whole market’s demands and available capacity will lead to upset and delays. As such, carriers need to know a few things about freight load balance scoring and how to assess market conditions to avoid delays, balance their fleets and maximize profitability per load.
Defining freight load balancing
Freight load balancing means capturing the data needed to make proactive decisions regarding where to send trucks, which moves have the strongest profitability opportunities, and when to reject a tender based on that data. It all goes back to the need to recognize what’s happening within the market to ensure a carrier can live up to its contractual obligations, retain drivers and proactively manage asset utilization.
Carriers need balancing to meet market capacity demands
While this might seem like a relatively simple process during regular economic cycles, it can become a harbinger of future failures during times of disruption. When the freight market meets expectations and is less volatile, it is easy for shippers and carriers to not look at inefficient processes or their transportation procurement strategy. Conversely, when a freight market is in the carriers’ favor, revenue may be increasing, but it’s critical to keep operating costs top of mind while revenue soars. In ignoring the waste, in good times, carriers will most likely see that they will experience increased costs that are not as evident as the top-line revenue is growing. It’s critical that carrier executives are not only focused on the data to reduce operating costs in rockier freight markets but also in great freight markets.
That level of content resides in a vacuum though. When the market shifts, carriers will be on the other side of the equation. As such, they may be less likely to offer the most competitive annual contract freight rates due to shippers’ willingness to stick with spot freight rates in the past. Simultaneously, market dynamics that put carriers in control of rates can seem like a win-win. However, shippers will remember the attitude of carriers in the future. And they may grow to expect a better deal and push hard for extra cost reductions in annual contracts. That’s where the idea of freight load balancing adds the most value. It helps carriers plan the best use of their assets to meet the demands of shippers. And in turn, shippers or freight brokerages can consider their assets, maximizing profitability to build a stronger supply chain that expands throughput.
Tips for applying data to balance freight load pressures on the network
Any strategy for improved freight management, execution, or load allocation must rely on real-time freight data. In today’s world, a delay in data processing and analysis will lead to massive opportunities for overlooked industry dynamics. As a result, the freight rates accepted for tenders could be severely lower than actual market conditions. Obviously, during periods of high-demand, as seen throughout 2020, carriers are likely to take and accept as many loads as possible. After all, shippers are going to pay for transport. However, the tide will change again. And the only way to thrive through the lulls – as a carrier – is to grow more strategic, enabling ongoing transportation asset optimization through data. A few ways to apply data to enable this level of strategic positioning include:
- Tracking granular market conditions that may deviate from nationwide industry trends.
- Identifying the markets with the greatest demand on backhauls, allowing carriers to set higher pricing rates on freight loads for those areas.
- Recognizing when and how ocean import activity will translate into increased demand on the trucking market.
- Optimizing routes based on wait times to avoid overbookings at individual warehouses and facilities located in high-activity markets.
- Knowing the expected rates from both dry van and reefer loads based on historical, invoiced and tendered data.
Become a better carrier with freight load balance scoring and data-driven decision making
When carriers start thinking about long-term strategic value, it’s important to know where to look in the data treasure chest for the best opportunities. Assigning a freight load balance score to each load to provide a measure of the acceptability is the crown jewel of proactive asset allocation and making accept-versus-reject decisions for tendered loads. Stop winging it; let FreightWaves SONAR data-fueled insights do the talking. Request a FreightWaves SONAR demo by clicking the button below to learn more.