Paying an invoice or getting paid for the work you have done for a company can often be more difficult than moving the freight itself.  There are several companies in the industry that specialize in this process, but there are still a number of challenges.

InTek has a unique perspective to the freight payment process because we live the challenges of the freight settlement from both sides of the equation.

From the payment side, InTek is a non-asset service provider, so many times we are at the mercy of a payment process not going well while we collect on the freight we moved for a company.

From the processing side, InTek provides managed transportation services to companies of all sizes.

From this perspective, we feel we can offer additional insight that buyers can use in their discovery and decision-making process of how they will handle the freight settlement function.  We will go through our perspective by walking you through the following topics in detail:

• Freight Audit and Payment Challenges.
• Ramifications of a Poor Freight Audit and Pay Process.
• Best Freight Audit and Pay Company Listing.
• Additional Points to Consider

Top 6 Challenges of Freight Audit & Pay

• The volume of transactions can be overwhelming because of the one-to-one relationship between shipment and invoice.
• The amount of paperwork backup required to validate the charges compounds exponentially with the volume of shipments.
• The incredible amount of detail included on an invoice and tremendous variability from carrier to carrier makes it difficult to hone in on a repeatable audit process.
• Complexity of freight rates, along with various fuel charge and accessorial matrixes that are often not uniform across all carriers.
• The number of approvals required often cause paperwork to get lost in the cycle.
• The number of emails and phone calls associated with payment, whether collecting on an invoice or correcting an invoice often causes confusion with email-after-email that seems to run through an infinite loop without resolution in site.

Ramifications of a Poor Freight Audit and Pay Process

• Studies indicate the average invoice error rate in the freight industry is 5% to 8%, so if the freight settlement is not handled properly then a company risks spending more because of the errors.
• The carrier – shipper relationship can deteriorate because the carrier is not getting paid.
  • At some point, the carrier will refuse to pick-up freight because the shipper goes beyond credit terms.
• The credit score will be put under pressure because the carrier will report slow and no pay issues to the credit industry, which will make it difficult to find carriers to move the freight.

Prefer your “best ofs” in video form? Check out our similarly titled video, the Best Freight Audit and Pay Companies:”

This is due to a number of lingering issues including the pandemic; huge increases in energy prices; large fluctuations in the supply and demand for transport capacities; delays in port trans-shipment; and bottlenecks in hinterland transport. Furthermore, numerous countries are experiencing double-digit inflation.

Russia’s war on Ukraine also has effects on the supply and flows of goods, while disruption of supply chains and the West’s dependence on imports continues to intensify the debate about relations with China. Above all, there’s also the environmental challenge and the question of how to reduce CO2 emissions and deal with the costs for doing so.

And in the midst of these unprecedented challenges, industrial and commercial companies are analyzing their supply chains and searching for optimization tactics and alternatives. One possibility is to go back to more warehousing with the aim of greater stability in the supply of goods of all kinds—which has often not been running smoothly as of late. Still, the economy has no short-term alternative to international production and trade.

As we move forward, it’s clear that global supply chains will continue to not only need exceptional risk management solutions, but also improved climate friendliness. According to experts of the German Freight Forwarding and Logistics Association (DSLV), one thing is certain: the trend is to take every bit of CO2 reduction into account and leverage climate potential step by step wherever sensible and effective.

“Through innovative technology and efficient and digital processes, we need fewer resources and can reduce emissions. Switching to low-emission modes of transport, motors, and fuels is the most important way to further climate protection in the transport sector and logistics,” say DSLV experts.

Freight rates remain high

Just-in-time deliveries, a strategy followed for a long time, can often no longer be reliably guaranteed in many places. High-volume consigners have the advantage of market power to exert pressure on shipowners, port terminals, and transport companies to meet just-in-time delivery schedules.

In addition to delays in deliveries worldwide, the huge increases in freight rates caused problems for shippers last year. For 2023, consigners hope that freight costs will gradually taper down toward pre-pandemic levels.

However, Rolf Habben Jansen, CEO of Hapag Lloyd, pointed out at an online press event that the significant increase in fuel prices will mean that shipping lines will have to reckon with freight rates around 20% to 30% higher than two to three years ago. He expects that shipowners will face difficulties in long-term planning in general and will need to rely more on quarterly adjustments in services and rates.

Major seaports, such as Rotterdam, Europe’s largest port, will respond to increasing costs with moderate price hikes of around 2.5% to 3%, according to Siemons Boudewijn, COO of Port of Rotterdam Authority. Other ports are also expected to implement price increases for 2023.

Gradual introduction of a CO2 levy in the EU

Maritime shipping accounts for around 3% of global CO2 emissions, according to a report published in October 2017 by the International Council on Clean Transportation (ICCT). Around 60,000 larger merchant ships, including around 6,000 container ships, operate on the world’s oceans.

In October 2022, the International Chamber of Shipping (ICS) announced its goal of achieving climate-neutral shipping by 2050. In 2018, the International Maritime Organization (IMO) had already set the target of reducing emissions by 2050 to a level at least 50% lower than in 2008. The EU is planning to reduce CO2 emissions and to put taxes on shipping even earlier.

Within the framework of its Emission Trading System (EU ETS), a CO2 tax for ships of 5,000 gross tonnage (GT) and above is to be introduced in the EU in three stages from 2024 to 2026. Some shipping companies, such as MSC, have already informed their customers about additional costs in the future. Container shipping companies have estimated the added costs at about $192 to $202 for a 40-foot standard container on the Northern Europe-U.S. East Coast route.

DSLV’s experts point out that it’s important that the introduction of a CO2 levy in the EU region must not lead to any competitive disadvantages. Equal competitive conditions in international shipping are crucial for global trade. In the opinion of shippers and shipowners, the IMO should implement global regulation in a timely manner.

In the meantime, the development of alternative fuels for shipping is still in its early stages. The production, distribution, and market ramp-up of sustainable alternative fuels, as well as the expansion of shore-side power supply in sea and inland ports, are important steps towards reducing greenhouse gas emissions on the way to climate-neutral shipping.

Green shipping

Shipping lines are increasingly employing modern ships with significantly improved environmental standards as well as new propulsion systems and more environmentally friendly fuels. There’s no doubt that investment in climate-friendly transport chains is on the rise.

Among the world’s largest carriers, companies such as Maersk already offer their customers special “green shipping offers.” EcoDelivery, for example, takes climate-neutral fuels into account. These are, for example, waste vegetable fats and oils from the food industry. The CO2 saved is certified for the shippers’ carbon accounting, while a total of 3% of Maersk’s total cargo volume was carried with climate-neutral fuels in third quarter of 2022.

The EcoDelivery surcharge for a 40-foot container in major trades, such as the Far East and trans-Pacific, was around $200 to $300 per box in 2022. If you convert that to, say, the 30,000 T-shirts or 6,000-8,000 pairs of shoes that can fit in such a box, at $0.007 per T-shirt, that’s not a huge added cost per unit of product.

The number of consigners interested in EcoDelivery is increasing steadily, according to the shipping company. According to Maersk, customers already using EcoDelivery include H&M, Electrolux, Lenovo, and the Danish fashion group Bestseller.

The shipping company recently ordered 19 container ships powered by climate-neutral green methanol. From June 2023 to 2025, one feeder ship and 18 large container ships with slot capacities of 16,000 TEU and 17,000 TEU will be put into service under the Maersk flag.

The carrier is also moving towards climate neutrality landside and is building or leasing very low-emission warehouses and using electric vehicles at its own terminals. To date, 300 e-trucks are already in use, mainly in the United States, and a further 140 e-trucks have been ordered.

Now, what does this have to do with your logistics operations?

It’s simple. Your drivers are the superheroes and your planners are their support team.

Think about it. Your drivers are out on the streets battling traffic, roadworks, and whether to meet your SLAs. But who ensures that they get there on time to pick up and drop off shipments? Who ensures that your drivers make as few empty trips as possible?

Their support team, of course – a team made up of your logistics planners and the best decision-support technology.

While your planners don’t help save the world from evil villains, they have to manage daily disruptions in the form of vehicle breakdowns, port congestions, brutal weather conditions, and driver shortages. But the question is, are your drivers getting the most out of their support team? Do your planners have what they need to generate not just good, but great plans? Not yet.

The best support team in logistics planning

To get not just good, but great plans, you need to equip your logistics planners with the best decision-support technology – intelligent planning and optimization software.

An intelligent planning and optimization software like Quintiq is designed to help your planners make better decisions, faster. It frees up your planners to focus on refining optimized plans by applying their years of experience in logistics planning.

Imagine this: A shipment is due to be delivered and a rush order comes in. But your planners know that the shipment due today can be pushed till a day later because the customer has a good relationship with your company.

The best decision-support technology would give your planners insight based on due dates, volume, and drivers available. When combined with their experience and soft knowledge, this would enable them to achieve the ultimate goal: Maximize operational benefits and increase profitability.

What’s possible when you empower your planners?

By empowering their planners with the Quintiq planning and optimization software, some of the world’s leading logistics providers, including P&O Ferrymasters and DHL, have experienced these significant improvements:

Increase in resource utilization by 12%
Delivery performance up by 25%
Costs reduced by 12%
You and I know that even the smallest percentage can mean millions in savings. Join the ranks of leading logistics providers by empowering your planners to do more for your bottom line and be the best support team for your drivers.

Estimated at $320 billion, private fleets are the largest sector of the $680 billion trucking market and expected to account for about half of all Class 8 truck sales this year. In addition, private fleets operate three out of every four of the Class 4 through Class 8 trucks on the road today.

“And it continues to get stronger,” says Gary Petty, president and CEO of the National Private Truck Council (NPTC). “Most of our companies are currently adding capacity and adding drivers because they believe that for-hire carrier services are being compromised by capacity constraints and higher costs.”

According to Petty, successful private fleet managers say that there are three basic reasons they operate a fleet rather than utilizing for-hire services: They can ensure consistent quality customer service; they can gain direct control of transportation capacity; and they can control unpredictable cost curves in the for-hire sector.

However, as many private fleet managers will attest, operating a highly-efficient private fleet takes work. Increasingly, private fleet managers are operating a “blended” operation, alternating between their own trucks in some geographic regions and utilizing for-hire options in other lanes. It’s a continually changing matrix that depends on rates, capacity, and service demands, say the best private fleet managers.

Let’s take a deeper look at how the best private fleets are operating in an ever challenging environment of mounting federal regulations, tighter for-hire capacity, and rising driver costs that affect every operation managing a fleet of trucks.

Managing market realities

The business model of an effective private fleet is best understood in the context of a larger matrix of other transportation solutions. In addition to a private fleet, many manufacturers and retailers use for-hire trucks, dedicated trucking operations, intermodal rail, as well as third-party logistics providers (3PL).

Most private fleets use so-called “blended” operations, meaning that their fleets aren’t responsible for all of their inbound and outbound freight movements. Rather, they “blend” the private fleet with other transportation providers to create an optimized transportation operation.
In addition, many private fleets operate their trucks for their own business needs, but also have for-hire operating authority for back-hauls to help offset the higher cost of private fleet operations. In fact, nearly two-thirds of all private fleets have such for-hire authority.

The trick is to utilize that for-hire authority and private fleet capacity in the most efficient way—and fleet managers say that it’s not a constant equation. Private fleet capacity at one company might optimally be 40 percent of one manufacturer’s operation and 70 percent of another’s, depending on available for-hire capacity, geographic lanes, rates, and back-haul opportunities.

One manufacturer might utilize its private fleet mostly in an area where for-hire capacity is tight and then use for-hire options in another area where many low-cost, non-union for-hire carriers have excess capacity. A savvy private fleet operator can sometimes tweak capacity by using its private fleet to add capacity to the marketplace with an idea of eventually replacing for-hire trucks on certain lanes.

Of course, such flexibility usually involves having a savvy private fleet manager at the helm. According to the NPTC, that requires a commitment from upper management, which must be willing to absorb the higher cost of private fleet operations in exchange for the service, guaranteed capacity, safe operations, and other inherent advantages that can be created with a private fleet operation.

“Private fleets really have an opportunity to expand their influence on their parent companies,” says Tom Moore, senior vice president at NPTC. “What separates us is our willingness to pay drivers top dollars.”

Driver survey says…
In fact, private fleet drivers are often referred to as the gold standard for the trucking industry—perhaps because they earn the most gold. According to the most recent NPTC benchmarking survey done in 2014, average pay for a private fleet driver is $62,000, compared to around $43,000 in the for-hire sector. The best and most senior private fleet drivers earn nearly $80,000, a figure that, surprisingly, has remained at the same level for the past seven years.

According to the benchmark survey, years of service with the same company averages 14 years, while average age of a private fleet driver is 50.1 years—the oldest ever recorded by the survey, but still younger than the average 59 years old for a Teamsters-covered driver at a unionized for-hire less-than-truckload (LTL) carrier.

Private fleet drivers work an average 59 hours a week, up from the previous year’s 56 average, but more in line with the all-time peak of 60.5 hours a week recorded three years ago. Of those hours, more than two-thirds (39.4) are spent driving while the rest is spent on non-driver tasks such as loading (7.9 hours) and unloading (12.1 hours a week) the truck.

Union operations account for 30 percent of private fleet operations in the U.S. Interestingly, however, non-union private fleet drivers earn 7 percent higher gross wages ($64,277 vs. $59,599) than their union-covered counterparts, according to the NPTC survey. That could be because non-union drivers were far more likely to receive incentive pay (78 percent) than union-covered drivers (27 percent).

Whether union or non-union, driver turnover remains stunningly low in the private fleet sector, compared to the nearly 100 percent turnover at large, for-hire, non-union TL drivers. Private fleets reported turnover of 12.8 percent in 2014, which is up slightly from 11.3 percent the previous year and 10.9 and 10.3 percent the two earlier years.

The low turnover among private fleets is chalked up to higher pay and better working conditions, private fleet managers say. For instance, 73 percent of fleets with the lowest turnover report that they get their drivers home every night, while only 55 percent of drivers for fleets with the highest turnover say that they were home every night.

Another reason driver retention levels are so high among private fleets are their selective hiring practices. Private fleet operators say that their minimum age for hiring a driver averages 22.4 years with 2.4 years of experience.

Private fleet drivers are also paid differently. Compared with for-hire drivers who nearly universally are paid by the mile, only 42 percent of private fleet drivers are paid by the mileage they drive. Rather, 29 percent are paid by the hour and another 25 percent are paid by activity-based formulas.

Improving private fleet operations
Keys to the long-term viability of a solid private fleet operation start with operational support from upper management. That, in turn, flows through a private fleet manager who’s increasingly using sophisticated technology to increase safety and drive down costs.

That savvy use of technology can be used to manage driver behavior to push even greater safety performances. This is absolutely essential for private fleet operations whose corporate “deep pockets” can be an easy target for attorneys seeking large settlements in cases involving truck accidents and fatalities.

According to Federal Motor Carrier Safety Administration (FMCSA) data, private fleets are safer than the typical for-hire carriers. FMCSA data collected through its five-year-old Compliance, Safety, Accountability (CSA) program show that private fleets are nearly three times as safe as for-hire trucks.

Private fleet managers say that some of that can be chalked up to the greater experience levels of private fleet drivers. Those drivers often drive the same routes every week and become familiar with road conditions. Technology may also be a factor, with about 30 percent of private fleets reporting use of speed governors on their trucks to limit top speeds.

Another metric to assure private fleet success is the “right-sizing” of blended operations between private fleet capacity and for-hire use. “For the most part, the best private fleets have found the proper ratio,” says Petty. “If they see a falloff in service from their for-hire operations, then that likely means that they will increase their private fleet resources in those lanes.”

Viracon’s conversion
However, private fleets don’t always stay private forever. Analysts at investment research firm Stifel estimate that approximately 15 percent to 20 percent of private fleets “turn over” to for-hire carriage every year—with about the same percentage of for-hire operations going private.

Viracon, the nation’s leading single-source architectural glass fabricator, is one of the former. After running a private fleet of 26 trucks since 1985, Viracon made a strategic decision to focus on its core competency and get out of the transportation business two years ago. Troy Hansen, director of material for Viracon, says that it was a combination of issues that lead to the decision, including the growing need for capital to keep its private fleet operating.

“When we made this choice, we were heavily into a downturn in the commercial market,” says Hansen. “We were looking to expand in our manufacturing core competency; however, competing for dollars got really difficult. Liability was another thing, as were the ever changing
compliance issues.”

With aggressive schedules and high volumes of inventory to be shipped, Viracon needed a large carrier to service the network and satisfy shipping requirements. According to Hansen, Schneider took its project implementation plan and personalized it for Viracon’s 12-week transition. Key components included taking ownership of Viracon’s current equipment; qualifying existing drivers and mechanics to meet its business demands; recruiting new drivers and mechanics to replace those who chose not to transition or did not qualify; and assuming responsibility for Viracon’s truck maintenance facility.

According to Hansen, Schneider was able to deliver a solution that transitioned Viracon from its private fleet structure to a dedicated service provider without sacrificing its reputation for safety, outstanding performance, and high customer service standards. This private fleet conversion was completely done in the 12-week period.

Because Viracon had always maintained its own equipment, the company was committed to the lease on its Owatonna, Minn., maintenance facility where five long-term mechanics were domiciled. In undertaking the facility, Schneider hired those mechanics, accepted the monthly fiscal responsibilities of leasing the facility, and continued to service the fleet’s equipment at that facility.

“We just signed a two-year extension, adding 10 more trucks and 15 trailers to the fleet,” says Hansen. “I knew we could expand the service, and the expansion will help us best serve our customers with additional capacity.”

Bob Elkins, senior vice president and general manager of Schneider’s dedicated services, adds that constant communication was critical. Weekly status calls maintained the project’s timeline, action items, and other transition details. Now Schneider provides a dedicated on-site manager and other support personnel.

“The process we’ve set up includes a 100-point inspection checklist that starts well upstream,” says Elkins. “We ensured the knowledge transfer before any execution takes place. As in any transition, there are things that require flexibility and adaptability; but it went extremely well.”

According to Hansen and Elkins, the new solution provided 98 percent on-time deliveries during the transition. The move also helped Viracon to maintain cost-per-mile during the transition before shifting the focus to cost improvement. And at the same time, the company actively worked to find customers with flatbed freight to maintain the company’s backhaul fill rate and backhaul revenue.

“Each and every one of the Viracon associates went through our qualification process and went through our own training,” says Elkins. “Looking at incumbents and taking on as many associates as possible to provide that tribal knowledge to help with that transition was the key to success.”

When the futuristic concept of “fleet management” emerged a few years ago, it promised to leverage the Internet of Things, real-time data, and other buzzwords to bring all the pieces together to cut costs, streamline operations, improve safety and more. The sky was the limit, and the humble warehouse workhorse would finally get the treatment it deserved as such a fundamental component to productivity and profitability.

“We’re done with the hype,” says John Rosenberger, product manager for iWarehouse Gateway and global telematics for The Raymond Corp. “Everyone now accepts that there’s an advantage to fleet management, but it’s like a gym membership. If you don’t go, what value are you getting out of it?”

Like a gym, the umbrella of fleet management includes a lot of options, and few people need them all. Sure, January 1 could be the first day of your quest to become an Olympian, but it’s best to set more modest goals. The industry has spent the last few years learning this lesson—often the hard way—and the approach to forklift telematics and fleet optimization programs has adapted accordingly.

“OEMs and third parties that provide fleet management have all rushed to be able to offer everything,” says Greg Simmons, business development manager for Mitsubishi Caterpillar Forklift America’s national account fleet services team. “As we get a couple years into it and customers have tried some things, they’ve taken a half step back to return to the fundamentals. One size does not fit all, so we see a trend to apply small pieces of the fleet management solution set to one area that helps move the needle for one customer. That’s what matters most.”

Finding the needle in the payback
By some estimates, less than 30% of lift trucks are equipped with telematics, according to Steven LaFevers, director of aftermarket solutions for Yale Materials Handling Corp. The rest haven’t bought into fleet management solutions because they haven’t found one with the right balance between cost and immediate concerns.

Instead of a large initial investment in a base telematics solution followed by the added modules and functionality, LaFevers predicts more focused solutions that handle only battery management, or just operator checklists, or just technologies that target operator behavior. Although they might strike the balance of price and impact, all of these elements will require the same consistency of discipline as any fleet management solution.

Sometimes known as a transportation management solution or transportation management software, a TMS provides visibility into day-to-day transportation operations, trade compliance information and documentation, and ensuring the timely delivery of freight and goods. Transportation management systems also streamline the shipping process and make it easier for businesses to manage and optimize their transportation operations, whether they are by land, air, or sea.

Why it’s important to have a transportation management system

Transportation management systems play a central role in supply chains, affecting every part of the process—from planning and procurement to logistics and lifecycle management. The broad and deep visibility afforded by a powerful system leads to more efficient transportation planning and execution, which results in higher customer satisfaction. That, in turn, leads to more sales, helping businesses grow. With such a dynamic global trade environment that we live and transact in, it is important to have a system that will allow you to successfully navigate complicated processes around trade policies and compliance.

Who Uses a TMS?

Close to 32 million sqm of logistics space was taken up in 2022. This was only 6% less compared to the 2021 record year, highlighting market resilience in the face of economic headwinds.  With supply still lagging demand, a large number of markets recorded double-digit growth in prime headline rents.

On the other hand, investors are proceeding cautiously as pricing uncertainty slows transaction activity.

Discover the whole story by downloading our full market update below. 

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Air cargo can help organizations optimize their supply chain in three important ways. It allows the speed needed to deliver time and temperature sensitive products, provides reliable access to remote and developing locations, and can offer the best combination of service and price.
Become familiar with air cargo options: next flight out, consolidation, and deferred services. There is no one-size-fits-all air cargo solution. An experienced provider will help determine which type is best for supply chain efficiency.

Ancillary services such as customs clearance and distribution/delivery sourcing may not be top of mind when considering freight options, but they move in concert with the speed of freight and are key to ensuring on time delivery. An experienced provider keeps these in mind when advising the best options for a business—helping translate an optimized supply chain into lower overall transportation spend.

Quick response to market demands

Market response

With air cargo, shorter lead times for inventory replenishment are realized and a company can quickly respond to holiday or seasonal demands, as well as reduce inventory carrying costs. All of that adds up to a supply chain that offers efficiency coupled with flexibility — providing customers the agility necessary to contract and expand with market needs.

Time and temperature sensitive products

Air cargo also provides the perfect way to extend shelf life for both time sensitive and temperature sensitive products. It gives another way to increase inventory life and decrease potential losses.

These quick response times also come in handy when dealing with unforeseen events, like factory delays or urgent customer demands. Addressed early, these situations can provide an opportunity to position companies as the problem-solver instead of the problem. Working with a provider who can seamlessly shift from one service to another, depending on needs, offers an advantage over the competition.

Value of technology in air cargo services

It is very important to find a provider that offers seamless access to multiple services along with true visibility from a single platform. With the use of Electronic Data Interchange (EDI), a top-notch provider can offer current updates about shipments, 24/7.

Benefits of air cargo in emerging markets

In emerging markets, air cargo can often be the only reliable method to connect customers with goods. As part of a seamlessly connected global supply chain, air cargo can facilitate growth into new markets.

It’s also important to realize that in today’s global marketplace it’s not just about being fast, it’s about being first. Having the flexibility within the supply chain to be first to market offers many advantages. Whether a company is looking for a service that’s fast, first, or simply flexible, air cargo can fill a critical role in making sure that a supply chain is meeting business objectives and serving customers’ needs.

Keeping overall spend in mind

Freight costs are just one factor to consider when evaluating freight service options. Inventory carrying costs, and the sales opportunities associated with being first to market, are important considerations for shippers. The increased use of more fuel-efficient cargo fleets has changed the cost equation.

Finding a provider who offers access to the benefits of mode-neutral routing can widen shipping options. Mode-neutral routing allows a provider to put a company’s needs first by selecting the service that best suits the specific shipping requirements and expectations. This allows for tightening the supply chain — focusing on overall spend rather than specific costs. Saving a few dollars here and there on air cargo does not make sense if delaying time to market increases inventory costs or unnecessarily lengthens the cash-to-cash cycle.

Simply choosing services based on price alone can negatively impact the supply chain. In any economic climate, shippers should remember to calculate the cost, door to door, keeping in mind the right blend of spend to the best benefit to their overall business concerns.

That’s why taking advantage of a mode-neutral relationship with a multimodal shipping provider is a smart business move in today’s ever-changing global market.

4 reasons to rethink air cargo in a supply chain

1. Quick response to market demands
2. Global visibility on a single platform
3. Better access to emerging markets
4. Increased value from a supply chain optimized with the right air service for any specific business needs

The market, however, is cyclical, and trucking remains the most relied-upon freight transport mode in the U.S., with trucks moving some 12.5 billion tons of freight valued at more than $13.1 trillion, according to the newly released Bureau of Transportation Statistics 2022 Transportation Statistics Annual Report.

“I think this year we will see a lot more normality in the market or a lot more seasonality,” explained Dean Croke, principal analyst at DAT Freight & Analytics. “From the time of the pandemic through the end of [2022], we saw little seasonality in the market. There were hints of seasonality, so you saw a little bit of a bump in rates because of the building season in the spring, but the whole peak season never materialized.”

“I think seasonality will emerge this year, but the overarching economic factor right now is higher interest rates and talk of a recession or whether we may already be in one,” Croke added, noting the industry may have already gone through a freight recession of sorts.

Although Croke and the team at DAT forecast that the first quarter of 2023 will be particularly tough for trucking because of waning consumer demand and lower import volumes, the top 50 lanes in DAT’s network are averaging about $2.30 a mile, with most carriers operating above break even. Currently, costs for a long-haul small-fleet carrier or owner-operator are between $1.70 per mile and $2.05 per mile, depending on the length of time in the industry, equity levels, and insurance costs, according to DAT’s 2023 Freight Focus market update.

There are also potential boons to look forward to due to anticipated increases in infrastructure spending this year.

On Jan. 4, the U.S. Department of Transportation’s Federal Highway Administration announced its first round of large bridge project grants from President Biden’s infrastructure law’s bridge investment program. This program is one piece of the administration’s investment in highway bridges and invests nearly $40 billion over five years to help repair or rebuild 10 of the “most economically significant bridges in the country along with thousands of bridges across the country,” according to the administration.

“When they start building and the ground thaws in the top half of the country, you’ll see a lot more materials move related to infrastructure spending,” Croke told FleetOwner. “That eventually flows over into long-haul trucking and flatbed, but also short-haul trucking for things like aggregate, gravel, steel, concrete, and asphalt, which will require a lot of petroleum products to help build the roads and bridges.”

“If you’re a short-haul, regional carrier, I think it’s going to be a wonderful year, as it is every year because that market doesn’t really change,” Croke added.

According to the BTS report, a high percentage of truck freight in terms of both value and weight is moved over relatively short distances—fewer than 100 miles. The report points out that trucking was the leading transport mode for all distances in 2020 by value, even for distances greater than 2,000 miles. In terms of tons, trucking was the preferred mode to destinations from below 100 miles and up to 749 miles.

But what about those high operating costs?

The annual transportation statistics report from BTS tells commercial trucking companies what they’ve been experiencing for nearly two years now. In 2021, the costs for rail, truck, and water transportation services reached their all-time high level, suggesting an increase in the costs businesses face for providing these services.

Truck transportation service saw the largest price increase of 12.8% from 2020 to 2021, followed by water (7.5%) and rail (4.9%), the report points out.

Inflation remained persistently high at 8.2% year-over-year in September, dropping slightly in October. In addition, diesel prices dropped in late summer but stayed above $5 per gallon throughout fall. The Fed raised interest rates for the sixth consecutive time in November, marking the fourth time the hike was 0.75%.

“This suggests that there will be a recession of some degree in 2023,” according to DAT’s market update.

While nearshoring may be a great way to gain access to specialized resources, important things must be considered before embarking on such an endeavor. It is important to evaluate the potential complexity of working with a different culture and language and the cost of adapting existing processes and teams to the new environment. In this article, we will explore what exactly nearshoring is, the differences between nearshore and offshore, and how businesses can benefit from it.

What Is Nearshoring?

Offshoring your company’s tasks or operations to a nearby provider can be an advantageous business model, often referred to as nearshoring or regional outsourcing if the chosen destination is within the same region.

By nearshoring, businesses can cut labor and transportation costs while gaining access to a deep bench of talented professionals. Moreover, they can easily transcend any language barriers or cultural differences encountered with offshore outsourcing.

What Is Nearshore Outsourcing Main Function?

Nearshore outsourcing is the perfect solution for businesses looking to expand operations beyond their own locations and hire skilled workers while maintaining an exceptional standard of service. By partnering with a nearshore outsourcing company, companies can access qualified staff from countries situated nearby without compromising productivity or quality.

These Are the Benefits of Nearshoring

Nearshoring has several agile methodologies, making it an excellent option for businesses looking to outsource specific processes or job functions. These consist of the following:

• Lower costs in labor, transportation, and other expenses.
• A greater level of trust between the client and provider due to cultural similarities.
• Access to skilled personnel who are more familiar with the latest technology.
• Reduced risk of data loss due to compliance requirements.
• Improved communication and collaboration between teams.
• The ability to scale up or down quickly and easily.

When Did Outsourcing Begin?

The concept of outsourcing dates back to the 16th century when wealthy British landowners began sending clothing production overseas to India to save money on raw materials and labor costs.

Soon after these steps, other countries followed and began an outsourcing system of manufacturing jobs. Towards the end of the 20th century, large organizations sought to lower costs without compromising on product or service excellence–resulting in the widespread popularity of outsourcing among multinational firms.

The concept of outsourcing dates back to the 16th century when wealthy British landowners began sending clothing production overseas to India to save money on raw materials and labor costs.

Soon after these steps, other countries followed and began an outsourcing system of manufacturing jobs. Towards the end of the 20th century, large organizations sought to lower costs without compromising on product or service excellence–resulting in the widespread popularity of outsourcing among multinational firms.