Key Insights for Guiding Your Transportation Strategy


Overview

The trucking market always experiences cycles between supply and demand that yield times of oversupply and undersupply. Each cycle’s various factors bring unique experiences affecting the peaks and valleys of balance, the transition experience, and the time it takes to complete the cycle.

US truckload cycle

Participants and analysts in the trucking market pay close attention to regulatory, economic, capacity (labor and equipment), and weather-related influences to have a sense of both the current, and unfolding, market cycle.

By understanding these shifts, there are always opportunities you can take to prepare for future market changes. No matter your industry, company size, or overall transportation spend—you can use these four transportation market insights to guide your development of a strong, resilient logistics strategy.

 


Forces affecting supply and demand

Understanding where the freight market is in its cycle—and when it will shift again—starts by understanding which market forces are impacting how much capacity is currently available.

These external influences ebb and flow over time, each contributing to tension and slack in capacity. Ensure your transportation strategy is strong by accounting for many different situations, yet remains flexible when disruptions quickly shift the balance—making capacity more or less available than anticipated.

Longer lead times are key for unpredictable shipments

Shipments that are relatively predictable can have shorter lead times. Recent research conducted by C.H. Robinson, MIT, and TMC, a division of C.H. Robinson, confirmed that lead time matters when tender patterns are less predictable.

Our research shows that lead time can be as short as one to two days where the demand pattern was highly predictable. This high level of predictability allows service providers to plan for capacity in these lanes even before the tender is received, which makes them more likely to accept the freight.

However, increasing average lead time to between two and five days on lanes with demand variability can increase first tender acceptance and keep truck transportation costs at or nearer plan.

American truckload capacity is highly fragmented

Approximately 59% of carriers in the United States own and operate their own equipment. This causes available capacity of equipment in the United States’ truckload market to be highly fragmented.

It’s critical to understand when and how to engage carriers of all sizes—from 4,000+ truck operations to owner/operators, no matter your shipping needs. Segmenting a freight portfolio by the attributes of the freight, affords for alignment with the market’s capabilities and interests. These transportation strategies contribute to the best experience any market can offer.

Short dwell time contributes to better service and pricing

Anecdotal evidence suggests carriers have shippers they prefer to haul for and consignees to deliver to. The defined characteristics of these “favored shippers” have been debated for some time. Initial qualitative research suggest that “favored shippers” benefit from better pricing and service.

Research from C.H. Robinson, Iowa State University, and TMC found that one of the most important shipper characteristics in becoming a “favored shipper” is being aware of and reducing dwell time for carriers. Appointment scheduling, live loading and unloading in under two hours, and drop trailers are a few ways to decrease dwell time.

Understand the market and guide your transportation strategy

No matter your industry, company size, or overall transportation spend—it’s important to keep these insights top of mind for a strong, resilient transportation strategy:

  • Market forces ebb and flow over time, pay attention to how supply and demand changes affect the strength of your transportation strategy
  • American truckload capacity is highly fragmented, understand when and how to engage carriers of all sizes
  • Lead time matters, especially when tender patterns are less predictable
  • Favored shippers and consignees have low dwell time, proactively reduce dwell time for better pricing and service

The transportation marketplace is constantly changing, as are freight rates. Work with a provider like C.H. Robinson that can reliably meet all of your logistics services and technology needs today and in the future.