The Ever-Changing Routing Guide: How to Stay Flexible When the Market’s Volatile
A positive sign that came out of a recent shipper survey we performed with FreightWaves is finding out that companies recognize the importance of not letting their routing guides get too old.
(You can read the full report here: Good Data Beats False Confidence)
The responses to this important question from the survey show that most shipping operations (>92%) make adjustments to their routing guides at least once a year, with half doing so at least once a quarter. Overall, this shows a high level of engagement which is a good thing.
Looking closer at the responses illustrates a few things. First, it demonstrates that companies are being consistently proactive and continually working towards improving their carrier base. At the same time, however, there could be other reasons why companies routing guides have to be so fluid. Many of the updates companies are making could be to address a lack of capacity available from existing partners or a need to replace under-performers. In other words, some companies may be doing so less out of a desire to improve an already high-performing operation with a simpler goal of just trying to get freight on the road.
The complete answer probably lies somewhere in the middle. So in the interest of digging a little deeper, the obvious next questions are: Are most shippers taking the right approach with their routing guides given all the factors that impact its effectiveness? And as a follow-up, what can be done better to prevent the need to revisit and update something so important constantly?
Here are questions that can help identify some of the potential causes behind a routing guide requiring a lot of updates.
Are there frequent routing guide changes because the initial bid process was poorly run and did not correctly identify the best partners?
Are there circumstances in the marketplace that have forced companies to look for new carrier options that are out of their control?
Has a shipper’s business changed, and therefore, its needs are different?
Are companies taking an approach to ensure their status as a “shipper of choice” or finding carriers do not want to work with them?
There can be other reasons, but there’s a good chance these questions can point to some common reasons shippers are finding the need to update their routing guide too often. And obviously, there are issues here both within and outside the control of any logistics department.
Embracing the Market for What It is
It may just be a symptom of the problem for shippers finding a need to update their routing guides more than should be necessary. And its solution for many companies is creating processes that make their routing guide more flexible from the beginning. This enables the adaptability necessary to deal with the need for changes, regardless of the reason. The approach known as dynamic pricing provides such benefits.
Strategies like dynamic pricing are a process made possible when shippers engage with partners who can provide the necessary balance of service performance, capacity, and cost. A routing guide set up in such a way gives companies confidence their rates are always competitive and the certainty of coverage. Shippers with a strategy are doing better in this tough marketplace. The answer is to create a way to build a dynamic routing guide that ensures rates and capacity without the need to jump from provider to provider.
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