Your Guide to Managing Carriers and Spot Quotes

The past 24 months have been challenging and, as a supply chain professional, you know this better than anyone else. You’ve seen the pandemic’s economic impact first-hand by battling labor shortages, supply uncertainties, inflationary forces, and limited carrier capacity — all while trying to solve for a dramatic increase in consumer demand and online buying behavior.

You’ve echoed the frustrating words “find me space” to carriers you've contracted rates and availability with to no avail and, as a result, turned to expensive off-contract rates to keep up with demand.

When Will Everything Go Back to Normal?

Or as normal as it can be in transportation logistics? The harsh reality that leading supply chains recognize is this: the problematic conditions require strategic action, and the wait-and-see strategies employed to just-get-by won't work moving forward. With intense pressures and massive constraints on capacity for carriers, waiting won’t get us anywhere.

So What?

We know that carriers hold so much negotiating power, and sitting on inefficient processes is proving to be costly for shippers given the economic climate. It’s time to face this critical question: Do you have a plan to manage processes that affect your transportation costs and carrier relationships? Prioritizing and executing a sophisticated carrier management strategy is important. What should this look like now and in the future?

Let's Talk About Carrier Management

Carrier management is a division of transportation that enables businesses to monitor and manage carrier performance through carrier scorecards, contract and rate management, and claims management. While on the surface this may sound like what your freight audit and payment (FAP) platform provides, which includes invoice processing, payment automation, eliminating duplicate invoices, accrual on bills received, but not paid, etc., carrier management takes it a step further.

Carrier management helps organizations take a proactive management approach to carrier relationships so they're no longer reacting to higher prices, capacity conversations, and other issues that only widen the leverage carriers have over shippers. It leads to insights that are critical to decision making and improves collaboration with your logistics service providers.

There are three key functions of carrier management:

1. Carrier Scorecards: Track each of your carrier’s performance with key performance indicators that align with your company’s goals on a regular basis for optimal visibility. This ensures alignment of focus on what matters most to influence performance beyond capacity and cost.
2. Contract and Rate Management: Invoices that align with your contract terms are critical — you can catch fees and other charges that don’t align with your carrier contracts through this function of carrier management.
3. Claims Management: Claims handling and resolution are often more important than businesses realize. Efficiently handling disputes and claims is necessary for your carriers to have a good experience and give you a competitive advantage.

Now What?

You’ve seen the challenges, understand the importance of making sophisticated carrier management a priority, but how should you adapt your strategy given the ambiguous transportation logistics climate we find ourselves in?

Here are three key carrier management strategies to consider implementing into your organization that will improve carrier relationships and help mitigate future risks:

1. Deploy a multicarrier strategy. Diversify your carriers so you have a backup plan in case capacity falls through or other issues arise.
2. Prioritize technology for operational excellence. Integrate technology into operations to help make data-driven decisions when accessing the right balance between carrier capacity and cost to ship, detecting the emergence of future bottlenecks and helping you get to the real root of the problem.
3. Outsource your carrier management. Carrier management can be a daunting task and pull you away from other important strategic priorities. Outsourcing a trusted partner to manage your carrier relationships, escalate and resolve invoices that don’t honor the contract, and empower you with data to make better strategic decisions gives organizations the freedom and flexibility to focus on what matters most.

Chris Cassidy is the executive vice president of global sales and partnerships for Trax Technologies, the global leader in transportation spend management solutions.