Why Mode Optimization Is Important For Your Supply Chain
Choosing the right transportation mode for your shipments
Transportation modes are typically divided into four main categories: road, rail, ocean and air. But each of those can be further broken down to provide even more ways for shippers to move their freight. And each mode offers different advantages depending on the shipment specifics. The trick to maximizing the benefits you receive is optimizing your supply chain to use the best option for each shipment every time. To do so, you need to understand how different modes can help you meet your business objectives and work with a supply chain partner to create a flexible and scalable strategy that helps you stay successful no matter what the market is doing.
Mode optimization: Weighing what’s best for business
Both inbound and outbound freight will need a primary transportation solution that provides the right balance of cost, speed and service options. This can be a single mode or a multimodal approach, but the goal is to find the optimal way for shipments to travel under normal conditions. Your transportation provider can help you determine the best option for achieving this, but certain freight characteristics and your specific goals can make some solutions better choices than others.
Size, weight and commodity type all influence how much it costs to move a shipment on different modes. Smaller, heavy shipments are typically better suited for less-than-truckload (LTL), while large amounts of freight are usually more cost-effective to ship via full truckload or intermodal. Ocean is generally cheaper than air for international shipments, but capacity and other market factors can affect rates for all modes throughout the year.
How much time do you have between when you need items picked up and when you need them delivered? If time is of the essence, a fast option like expedite may be the right solution. If you have a little more leeway, intermodal could be the way to go. Your transportation provider can discuss specific transit times for each mode to help ensure your products arrive on time.
Some modes offer more service options than others. If freight requires additional security, a specific temperature range or other specialized options, that can dictate the mode you use. Be clear about expectations when booking a shipment to make sure you’re selecting the best one.
Staying optimized in a fluctuating market
While a primary transportation solution is key to moving freight efficiently, true mode optimization also requires contingency plans for times when conditions aren’t normal. Depending on your industry and the areas you’re shipping to and from, the “best” mode will likely change during the year based on seasonality in your business and the freight industry as a whole. This is where mode shifting (using a different transportation option) becomes important. Knowing how freight will move if capacity tightens in your primary mode or if shipment volume skyrockets during your peak season will ensure you’re never scrambling to find a last-minute solution.
Having an optimized strategy in place can help your business:
Avoid unexpected price changes
If capacity is tight in your primary transportation mode, prices can increase to help offset demand. But if you’re prepared to shift to a less congested mode, you can potentially save money compared to what you would have spent to ship your standard way. Conversely, you may be able to shift to a mode with lower-than-average pricing even if your primary option is still readily available. Understanding how prices fluctuate during different seasons and having a plan in place for any changes will help you create a more accurate freight budget.
Prevent delayed transit
When capacity is extremely limited, shipments can stack up on your dock while you wait for equipment to become available. This may lead to missed delivery appointments, retail chargebacks and a poor customer experience. Sometimes the best solution is to get freight moving through any available mode and then switch back to your desired transportation option when the shipment reaches a location with more capacity. This should keep freight more on schedule and help you balance costs better.
Meet customer expectations
An agile supply chain means your customers always get the service they expect. Being able to shift modes as conditions change and knowing what to expect can help you stabilize product pricing, proactively communicate with your customers, and meet the promises you’ve made to them. This in turn creates a better brand image, which can help you keep customers and grow your business.
Learn more about shifting from truckload to another capacity source to see how it works.
Find efficiencies and shift modes seamlessly with a reliable logistics partner
Ensure your shipments are moving correctly by working with a logistics provider that will learn your business and prioritize your needs. The ArcBest managed solutions team will work with you to optimize your transportation modes, shipping routes and logistics processes to help you find operational efficiencies and cost savings. Explore our managed services.