LTL Capacity Crunch? TMS to the Rescue
LTL capacity crunches occur when truck space and lane fulfillment demand substantially exceed supply. The transportation industry has always experienced cyclical LTL capacity crunches, but current conditions may represent a “perfect storm.”
Factors currently affecting LTL shipping capacity in North America include:
- Holiday ordering began early this year to avoid inventory shortages and stockouts
- Labor shortages throughout the supply chain, impacting cost as well as output
- Natural disasters, including wildfires and floods (with hurricane season approaching)
- The slowdown in truck production as a result of semiconductor shortages
- Lingering impacts of COVID-19
The capacity crunch results in uncertainty of available equipment, inconsistency in rates, difficulty in maintaining a fulfillment strategy, and a negative impact on the customer experience.
Preparing for Tight Capacity
LTL carriers are traditionally used when low capacity and volume don’t require a full truckload. The problem is that LTL carriers are already slammed, which affects both ability and pricing.
Right now, LTL carriers are more likely to focus on boosting the margins they can achieve on their capacity rather than taking on the risk and cost of increasing their capacity – especially given the shortage of drivers and factory production of new trucks.
Companies must focus on specific aspects of their strategic planning and forecasting to prepare for shipping capacity crunches.
A Transportation Management System (TMS) streamlines and centralizes freight shipping needs, from carrier and rate search to tracking and shipment management. A TMS helps your company gain internal and external visibility and creates a more efficient, agile system, with the goal of matching the right carrier with the right lane, allowing the carrier to be profitable and move the freight they want while saving you money at the same time.
Flexibility is key. Give your transportation partners a larger window to execute and deliver shipments whenever possible. Consider providing customers with supplementary solutions such as different modes of transportation.
Accurate forecasting and ordering require precise inventory control. An increase in raw materials or finished goods that is returned to stock areas until time to ship can help prevent product shortages when capacity is tight.
Small businesses, in particular, can streamline the search for freight solutions by taking advantage of the infrastructure offered by 3PLs, including a more extensive network and a wide range of technology solutions. The right 3PL provider can be a solid partner to make the shipping process as simple, transparent, and cost-effective as possible.
Overcoming a Capacity Crunch
One of the best methods of managing your LTL transportation through a shipping capacity crunch is by upgrading your technology. With a dynamic Transportation Management System, you can maximize your LTL options and work more efficiently with your carrier base.
The right TMS will improve service, connection, transparency, communication, forecasting, reporting, and decision-making. You can connect to carriers, rate indexes, load boards, and more to maximize contracted and spot rates on one platform.
Shippers will increasingly need all of this functionality in the future.
- Every carrier is going to price differently. Shippers will want to use the right carrier in every lane.
- As rates continue rising, shippers need to be able to shift modes – for example, transitioning LTL shipments into truckloads with multiple stops.
The right TMS can handle all of that. Technology that was once reserved for mega-shippers with giant IT and transportation budgets now makes sense for just about any business that uses truck transportation, whether truckload or LTL.
Functions once carried out by experienced engineers – rate, route, and mode optimization, among others – are now accessible to just about any route planner or logistics manager.
Now’s the time if you’re not using a dynamic, cloud-based TMS. Companies that fail to digitize their transportation management and sourcing won’t be able to keep up. A fully connected solution can help you simplify processes, maximize carrier options, and save money.
Are you ready to overcome your capacity crunch by implementing a dynamic, cloud-based TMS? Redwood Logistics works directly with leading software developers that specialize in providing global solutions for the logistics and supply chain industry.
We help businesses customize their TMS solutions to improve shipping efficiency, save money on freight movements, and improve customer communication. Contact Redwood Logistics today.