Like the roller coasters of your childhood, markets have ups and downs. Some of the twists and turns come out of nowhere, others you can see coming ahead of time. The root of any market fluctuation is supply and demand. Your mind may jump to weekly changes in commodity markets or following that year’s harvest of corn, sugar cane, or soybeans, to name a few.
Freight Market Challenges
The freight market is similar to the ingredient markets. It too has its ups and downs. Weather, seasonality, market related capacity, corresponding rate changes, and fuel costs all affect changes to the freight market. There are a fixed number of trucks available to move orders and often their ability to move will go to the highest bidder.
Weather events like blizzards, hurricanes, and other natural disasters can increase transit time or stop trucks and carrier hubs in their tracks. Once back up and running, demand continues to rise as additional freight moves are added to the queue.
Seasonality in the south and southeastern states when there is an increased amount of harvested produce will draw drivers to move the material before it goes bad. Seasonality can also be seen in the increased traffic at ports during Quarter 3 and Quarter 4 when holiday items are coming into the USA and need to be moved to a store near you.
All of these factors, and more, are vying to increase freight costs. So, as a food manufacturer, how do you decrease freight charges? Is it realistic to increase the amount of product purchased to decrease your freight cost per pound? Can you purchase your current inventory from less suppliers? What if you’ve already done those things. What is next? Time to get creative!
We pick up this month’s story with two customers sharing a similar problem: How to decrease freight charges when they both have done all the obvious solutions.
Surprisingly, the two customers brought a similar idea to their St. Charles Trading, Inc. sales representative. Knowing that St. Charles Trading uses a preferred freight carrier for their orders, would SCT be interested in also picking up and delivering any PO’s that were not placed with St. Charles Trading, Inc?
The sales rep immediately reached out to the preferred carrier with the customer’s question. They were sure that the carrier would love the freight move. They were also confident that the carrier could combine the freight move with the customer’s St. Charles Trading, Inc. order on the same trailer for delivery together.
After some brief collaboration between the St. Charles Trading sales representative and the preferred carrier, a solution had been reached. The customer would continue to place their St. Charles Trading, Inc. PO’s with their customer service representative as normal. If they had an outside shipment that they would like delivered on the same trailer, they would pass along the pickup details. St. Charles Trading, Inc. would loop in the preferred carrier and, come delivery day, all items would be at the customer ready to be unloaded.
The customer no longer had to spend the time or money to secure a carrier for this non-St. Charles Trading material. For a nominal freight charge, SCT’s preferred carrier would make all the arrangements with the outside supplier and deliver the material on the same truck as the customer’s St. Charles Trading, Inc. order. One email to St. Charles Trading, Inc., and two orders would arrive at their designated dock at the same time.
Fluctuations in markets should not be feared when the challenges they may create are ripe with solutions. In this story the solution came from an idea our customers had. The relationship created between our customers and the St. Charles Trading, Inc. team is paramount. It is a back and forth of ideas with goal of problem resolution, no matter the cause.
What problems can we solve for you? Let us know.