Roughly once every decade, massive disruption in the transportation and logistics marketplace makes front-page news. This is one of those years. Make the most of it.
Ocean freight rates are at historic highs driven by supply-demand imbalances. Port congestion and container shortages have added insult to injury. Airfreight rates have been volatile, but trending much higher overall, since the early days of the COVID-19 pandemic. Domestic US transportation markets are hot, leading carriers to inundate their customers with general rate increases and surcharges. In short, 2021 is the year that freight rates for all modes of transportation have soared far above pre-pandemic levels. Those rates will likely stay that way through the middle of 2021.
In a less anomalous year, a significant increase in freight expenses would send shippers to their freight-procurement battle stations. Their logisticians would benchmark lane rates, consolidate spend, issue multi-round RFPs to large pools of potential providers, identify carriers hungry for volume at discount prices, negotiate hard on rates and surcharges. There’s a lot to be said for
the effectiveness of those tried-and-true freight procurement strategies, and shippers should certainly continue to fight the good fight.
But 2021 is different. Shippers need to think hard about—and seize the opportunity to address—the fundamental drivers of freight expense. Take this once-a-decade opportunity to address the underlying conditions, not just treat the symptoms of freight cost inflation.