What is freight capacity management and why is it important?
The term freight capacity management has been thrown around more frequently over the past several years, and it’s no wonder. Capacity is, for the most part, tight across the board. The ongoing shortage of truck drivers hasn’t improved and demand for goods is still high, so staying ahead of the freight capacity curve is more critical than ever.
Definition: Freight Capacity Management
Freight capacity management encompasses the first part of overall freight management. The processes included under the freight capacity management umbrella are finding, vetting, and contacting suitable carriers, then the actual process of obtaining quotes, booking, and all the back and forth that goes between them.
For carriers, it’s about making the most of equipment and drivers. For shippers, it’s about getting freight where it needs to go and getting the best rate possible. For 3PLs and freight brokers, it’s about gaining a competitive edge through better relationships, smarter booking, and superior time management.
Why Is Freight Capacity Management Important?
The pandemic has presented several tough lessons in freight capacity management, proving just how important it really is. At the beginning of the pandemic when we saw supply chains break down, many carriers were left deadheading or hauling empty trailers home, creating unnecessary expenses. When supply chains began to rebound and then sprint to catch up to the pent-up demand, finding a truck at all became a serious issue. With a capacity management strategy, however, logistics partners can collaborate to weather the freight market’s ups and downs.
Benefits of Freight Capacity Management
1. It Focuses on Relationships
One of the most important benefits of freight capacity management is that it’s not just about getting the next load covered (or even getting the best rate on the next load). It’s about building relationships between shippers, 3PLs, and carriers that are beneficial to all parties.
When the next supply chain crisis comes along, those relationships may prove invaluable.
2. It Helps with Overall Procurement Strategy
While freight capacity management is just one part of logistics, a well-developed capacity management strategy has the potential to give way to smarter freight procurement decisions across the board.
It can help you identify the best carrier for the job at hand and which carriers you’d like to form a long-term relationship with. It can also help you identify which lanes and regions require more capacity and help you get loads covered. More visibility into carrier capacity can provide you with insight into early booking to avoid spot market rates. For shippers, it can help them decide the best time to ship, and they can pass that information onto retailers, who can use it to reduce stockouts and improve customer relationships.
3. It’s Smarter Than Load Boards, Especially When You’re Talking Big Picture
Although load boards are getting more tech-savvy every year, they lack the leading-edge tools that come along with freight capacity management solutions. Automation and machine learning algorithms help match the right carriers with the right loads by refining search results based on customizable metrics with less manual searching and inputting on both sides of the equation.
Capacity management differs from load boards in that it really leverages relationships, helping you build a network of carriers you can count on. It’s not just about the finding a qualified carrier to take the next load; it’s about creating more opportunities and stability for all the loads to come. What’s more: It allows you to get to know carriers on a deeper level that goes far beyond compliance.
Capacity concerns aren’t going anywhere in the next few years. That’s why freight capacity management solutions offer a better, smarter way to navigate the procurement process, no matter what the market throws at you.
If a capacity management solution sounds right for you, learn how FreightFriend can help you build and capitalize on your carrier relationships with smart tools like a dynamic routing guide, digital freight matching, a carrier CRM, and more.