The freight market is highly volatile and unpredictable. When running a business that involves logistics and shipping, these changes can appear as fluctuations in the available shipping prices and capacity.
The already volatile nature of the freight market resulted in further issues during the global pandemic. Border closures and lockdowns caused a global slowdown in the supply chain for various products, reducing shipping demand, port traffic, and turnover.
Additionally, the restrictions resulted in port congestion and delays in the loading and unloading of cargo. Despite the pandemic’s negative consequences, it has accelerated innovation, particularly in the shipping industry. All of these factors contribute to the already unpredictable nature of the freight business.
The seasonality of products can cause fluctuations in shipping volumes, which various factors can cause. Remember that the seasonality factor can impact high-demand consumer products during the holiday season.
Before and during the peak trading seasons, expect a high demand for space on ships, leading to an increase in freight rates. Similarly, there’s extra space on shipping vessels during the low seasons, which results in lower freight rates. Freight rate fluctuations have an impact on all businesses.
Why Should I Work With A Freight Broker?
Generally, shippers and carriers who fail to work with a freight broker might find it challenging to navigate the volatile freight market. If you’re running a business involving shipping and logistics, consider working with freight brokers.
A freight broker arranges the freight shipping between a carrier and a shipper. Working with a freight broker has the benefit of adding value and flexibility to your supply chain, which gives you a competitive advantage.
Working with a dependable freight broker to efficiently manage your shipping and logistics functions is a good idea if you want to navigate volatile freight markets.
Ways To Navigate Through Volatile Freight Markets
Apart from working with a reputable freight broker, here are some tips for navigating the volatile freight market.
1. Know Your Industry
It’s critical to understand the core nature of your business and the products, sales peaks, and troughs in the various geographic regions you cover.
It would be best to make an effort to fully understand the competition, especially their products, shipping services, and modes of transportation, to name a few. Once you gain an insight into these elements, you can come up with ideas you can integrate into your business model.
Remember that understanding your business can greatly help you make the right decisions, especially when facing fluctuations in the freight market.
2. Maintain Maximum Transparency
Although the supply chain is regaining momentum after the pandemic’s significant downtime, the freight market remains volatile to a certain degree. Make it a priority to look for ways to work through the costs that the freight market’s volatility brings if you want to keep your company competitive.
When working with freight brokers, they’ll typically look for lower capacity loads for shippers who cannot fill an entire truck.
An alternative is to lock in rates for a set period to mitigate the fluctuation in the market. Transparency is advantageous because it allows carriers, shippers, and brokers to monitor the market and make informed decisions.
3. Increase Capacity By Collaborating With Other Carriers
Finding capacity expansion options is one way to navigate a market’s volatile phases successfully. You have many options because there are so many carriers in the freight market, including those who aren’t affiliated with large corporations.
Freight brokers typically work out strategic sourcing of carriers to ensure accessibility to a higher truckload capacity. It greatly improves overall capacity when you decide to work hand in hand with local carriers while utilizing existing databases.
4. Utilize Technology To Improve The Flow Of Goods
Another option in dealing with freight market volatility is to maximize the available technology. Taking advantage of current innovations can help improve goods flow and response times.
All levels of the supply chain can easily access data thanks to transparency and technology.
In general, it’s critical because it ensures a constant flow of goods through the supply chain. Improving the flow of goods can boost productivity by ensuring faster deliveries and response times, which will positively impact overall customer service.
5. Maintain Continuous Communication
Timely communication plays a crucial role in ensuring your business maintains a competitive edge. Even though the global pandemic appears to be nearing its end, e-commerce sales continue to rise. Most consumers still prefer to purchase products online, right in the comfort of their homes. Maintaining open lines of communication is critical in this situation.
Once an increase in demand doesn’t show signs of decline, clear communication is the key to ensuring your customers stay happy since they know that their packages are in the right hands while keeping employees up-to-date with the latest data. Real-time data is also useful for speeding up resolutions if problems arise during transportation.
Keeping your business afloat in a highly saturated industry is possible by moving through freight market volatility under the guidance of a freight broker. Although the unpredictability of the freight industry will always be a factor owing to changing times, being prepared to confront any unforeseen ordeals with a brokerage by your side will considerably assist in moving through potential challenges.
With the help of a reliable freight broker and knowing about these valuable pointers in navigating the volatile freight market, you’ll have peace of mind that everything is in order while keeping your business operations on the right track.