By John Westwood | Senior Manager, Transportation | Chainalytics |
Many organizations find themselves losing budget accuracy due to increases in contracted rates and fluctuating spot rates on ocean container lanes. The lack of visibility needed to ensure the accuracy of your ocean freight management presents additional challenges for shippers who utilize this mode of transport. Unsurprisingly, many organizations have their transportation spend spread across several modes such as truckload, LTL, parcel, intermodal, and ocean. Due to a larger focus on domestic spend, international spend, and especially ocean Full Container Load, often falls to a secondary concern.
For organizations who periodically need ocean transport, this can prove problematic as rate competition and a shipper’s ranking amongst carriers is directly tied to the number of containers an organization controls and ships with that carrier. Additionally, the ocean industry continues to be affected by mergers and acquisitions, which limits competition and leverage. With these developments, smaller organizations who need ocean transport find themselves paying elevated rates due to a lack of buying power in the market.
With this volatility in mind, organizations must consider methods available to receive the best possible rates and access to category expertise and intelligence. Here are a few tips to help smaller shippers gain competitive value amongst ocean transport providers:
Collaborate to Gain Marketplace Leverage
With a consortium partnership, organizations benefit from marketplace leverage through collective volumes and receive incentives typically granted to large shippers such as fixed rates for ocean and guaranteed capacity with the carrier of choice, thus gaining visibility in a crowded market.
Utilize Business Analytics
Utilizing centralized business analytics provided through dashboard technology allows organizations to possess a better understanding of their spend and helps companies measure and drive better results.
Alleviate Stress through Risk Management
Implementing a consistent strategy consisting of pre-arranged service agreements and contracts free from peak season surcharges and general rate increases allows shippers to minimize negative outcomes while keeping them on budget.
Seek and Pursue Strategic Partnerships
Gaining access to other shippers for idea sharing through an independent trusted advisor allows organizations to work together in a model that provides positive results for all parties involved. By partnering with other companies to leverage the market through a buying group, organizations gain “big” shipper value regardless of the size of the organization and quantity of their shipments.
Partnering with an organization with direct contract with ocean lines creates value through the leverage of contract rates, multiple carrier options and contract length terms, and unnecessary fee avoidance while inheriting additional free time at port entry points. Also, organizations gain predictable freight costs through below market ocean rates that are free from peak season surcharges and general rate increases.
Additional advantages of collaboration can be found through category management opportunities previous unavailable due to unfavorable terms and conditions, isolation from other shipper strategies, and estimated limitations of quantity and destination. Partnership advantages also include a contract management and rate searching tool, track and trace capabilities, and EDI integration providing a full time resource to dedicated carrier errors and corrections. Successful adoption of a category management service allows rate audits to be double checked between freight bills and contract rates.
For organizations seeking a strategic partnership, Chainalytics’ Ocean Buying Group (OBG) offers a no fee, no volume commitment, no operational change solution to help shippers gain additional value and savings within their transportation budget. Our combination of industry expertise and technology partnerships provide clients with the contract management, visibility, and rate protections their supply chain requires to sustain competitiveness in today’s marketplace. Join Chainalytics’ Ocean Buying Group today to get the peace of mind your organization deserves. For more information on the OBG,Contact Us.
John Westwood is a Senior Manger for Chainalytics’ Transportation competency and has 17+ years experience in transportation sourcing and logistics management. At Chainalytics, John specializes in assisting global organization implement transportation procurement strategies as well as international transportation spend management.
Read more about the Chainalytics Ocean Buying Group
