Could fourth-quarter bidding offer savings for shippers?
September 29, 2022
The transport market remains highly volatile. Lingering issues such as driver shortages, high inflation, and record fuel prices continue to plague the industry with no sign of relief in sight. According to some transport industry sources, the fourth quarter of 2022 could be an ideal time for shippers to begin bidding. The theory is that this could translate to cost savings for shippers. But would fourth-quarter bidding truly offer any relief?
“In my shipping career, we never ran a bid in the third or fourth quarter,” says industry veteran Joe Lombardo, whose illustrious career includes top supply-chain roles with companies like Nabisco and Nestle. He is now the founder of transportation consultant firm Ege Avenue Associates. For Lombardo, the fourth quarter was traditionally a time to focus on matters like shipping capacity and fulfilment. His relative surprise at the notion of fourth-quarter bidding goes to show how much the industry is changing as of late.
How will market slow-down and high interest rates/inflation affect bids and requests for proposals (RFPs)? Watch the latest episode of the Stay In Your Lane Podcast to find out.
Lombardo considers some of the major upcoming impacts in the industry, including regulatory hurdles that are reshaping the industry to only complicate the current market. Assembly Bill 5 (AB5) in California reclassifies contract workers as fulltime employees. This shift means that many truck drivers who were previously hired on a contract basis are now deemed full-time employees—along with all the associated costs to employers. This shift will force many smaller carrier operations in the state out of business, further taxing an already stressed supply chain.
Another key area where the industry’s woes are felt most acutely is the rising cost of equipment. The expense of maintaining, operating, and replacing equipment is going up. This upward trend impacts everything from the cost of new tires to new fleet vehicles. Even with high prices, backorders on new equipment continue. Trucks ordered today could still take up to nine months to see delivery.
These hits to carriers could force shippers to turn to the spot market after experiencing broken contracts with their usual partners. Though the spot market is still down overall, some lanes are reaching an unsustainable price point, forcing shippers into a difficult position.
Unpredictability is leading to major shakeups for many shippers. Bidding, which might normally take place in the first or second fiscal quarter, is instead taking place in the fourth quarter of 2022 for many operations. This shift is occurring as shippers seek to drive cost savings.
Will Q4 bidding lead to savings for shippers? Find answers in the latest episode of the Stay In Your Lane Podcast.
With so much turmoil in the field of transport, shippers can’t be blamed for seeking novel cost saving solutions. Will Q4 bidding offer the relief shippers are seeking? Some industry experts are skeptical.
“Myself, I don’t think there’s going to be any big savings,” says Lombardo. “I just don’t see it with all the cost drivers that are hitting the carriers.”
Shippers and carriers both face challenges in light of rising freight transport costs. Consistency and transparency among transport partners is more important than ever. For dependable 3PL brokerage services to help your operation navigate these trying market conditions, trust the transportation experts at Triple T. Learn more about our award-winning logistics services.