Are Long Term Logistics Contracts really helping Shippers?
It is a well-known fact that many companies enter into long-term transportation rate agreements in the pursuit of cost consistency and ease of daily operations. Many of them eventually realized that it is a myth.
The long term rate of the contract does hold good when the trucks are procured in the off-season. But, when there are peak seasons like Diwali or month-ends, we end up
1. Paying that extra amount because vehicles are not available
2. Go for a larger vehicle at extra cost or more
3. Increasing the initial costs to take care of these inequalities
We often see logisticians who say that when transporters fail to provide vehicles as promised, they debit the transporters of the differential amount. And they ignore the fact that even those debits are also added in by the carriers when they finalize the contract rates.
Many other times, management applies the notion that the costs of logistics are too low to monitor when compared to other costs. But, they fail to realize that these small costs quickly add up in long run and also affects customer satisfaction.
How to better manage one’s daily transport needs:
To automate this daily negotiation process of quotes for trucks heading towards various destinations, CtrlT through their brand-new tools for large and medium-sized companies are providing various range of Supply Chain Technology Solutions.
These tools extremely reduce the time of the price negotiation process, making rates easier to negotiate even if they change very often.
Most logisticians know that the transporters take market vehicles daily, regardless of the contract period of the customer requirements. Therefore, to cover variations of the market, it is understandable that transporters are hedging their costs while quoting rates for long-term contracts.
However, tools such as CtrlT give service seekers and service providers the opportunity to enter short contract periods so that rates are not hedged and are more practical. Thus, it is a win-win proposal for the entire ecosystem.
Furthermore, the benefits of automation such as data science can be effectively applied to enter into rate forecasting analysis. These leads reduce manual dependency, making transportation purchases more scientific. If you are interested to know more on how to buy Freight at near Market Rates, reach out to us at www.ctrlt.in. We would be happy to help you solve your freight management needs.