Setting a transportation budget for 2021 seems like a daunting task after the roller coaster that was 2020. While many companies will surely keep their budgets low, logistics and transportation experts anticipate a rise in short-term contracts, extending existing agreements, and early planning.
What are 3 key things to consider when planning your transportation budget in 2021?
1. Rates will increase
As a direct reflection of conditions created by COVID-19, there has been a dip in pricing across all main transportation modes: parcel, LTL, and truckload. Parcel and LTL rates recovered from their top positions at the beginning of 2020 while truckload rates continued their descending course that had begun prior to 2020. Rates are expected to grow, eventually. Parcel giants UPS and FedEx have recently announced a 4.9% General Rate Increase, but the real cost to shippers is expected to be much higher. LTL rates are predicted to grow 2-5%, while contract rates are to climb 3-5%. Expect spot market rates to increase 5-7% range and intermodal rates to rise close to 10%.
2. Advanced planning
Open communication and planning ahead will bring more savings potential to companies this year. While fewer businesses will be open to working with new partners and signing long-term deals, it is still essential to stay connected with your existing network of suppliers, carriers, forwarders, etc. Forecasting lanes and volumes can have a massive impact on the ultimate transportation costs. Route optimizations can save great amounts of transit time and consequently reduce the overall transportation spending. For example, DHL saves 10 million gallons of fuel annually from route optimizations alone.
3. Investing in technology
While it may seem that it’s not the time for significant investments, many companies plan to invest in process management and technology for the long-term outcome. Transportation flow and operations management appeared to define the entire transportation industry and businesses will increasingly look for ways to set up a stable and robust fundament. Technology provides better forecasting, risk management, smooth operations, and ultimately, cost savings and higher profits.
Make sure you stay ahead of the game in 2021 with GoShip’s transparent rates and qualified carrier network! Get a free quote today and start saving!