The transportation industry has been seeing ups and downs in a regular fashion. Transportation rates are a big issue for companies in many countries. With sudden and unexpected increase in transportation rates due to things like labor strikes, increased insurance cost and drivers rates, companies are facing lots of difficulties in managing their finance with respect to transportation. According to an expert’s advice, you should follow three things that would help in avoiding higher rates.
The first idea is to benchmark your rates. This benchmarking would help you know where you stand in the market. According to various studies, it has been found that most small, medium and large shippers do not benchmark their rates and depend on the internal benchmarking only. With effective benchmarking, a shipping company would know the chances and risks and will help to negotiate better.
The second thing is asking operating ratio from your current carriers for your business. If you have a better relationship with the carriers, then ask them to share more information about the operating ratio. This would help to understand the rates for drivers, who are handling your freights. If the operating ratio is 100, then there will be big increase rates. Else, if the ratio is somewhere about 80s or below, then the chances of increase in rates would range from small to moderate.
Lastly, if the increase in rates is pretty high then do not wait till the carrier companies raise their price. Be proactive and manage the costs effectively. By following the above ideas, it is sure that shippers could avoid paying higher rates.