3 Ways Capacity Management Can Help You Negotiate Better Rates
Improve margins and service to your shippers by finding better rates for your loads.
One of the biggest benefits freight brokerages see from capacity management solutions is the ability to negotiate with their carriers for better rates on loads. In today’s carrier-ruled market, where capacity is tight and rates are high, that’s more important than ever.
Getting better rates means you can offer shippers more competitive rates and improve your margins. Here’s how it offers more and more lucrative opportunities for negotiation.
1. Build a Broader, Deeper Capacity Network
Parade capacity management customers have access to a broader carrier network that has the capacity they need when and where they need it.
With Parade’s recently added feature, brokerages can see carriers that have shown an interest in their loads in the past, opening up a new category of potential capacity. These carriers have seen the types of loads you have and the rates you’re able to offer, meaning they may be a good option for future loads.
A more expansive capacity network means that brokerages have more options readily available to take a load. More carriers mean that brokerages are more likely to find a carrier willing to take the load at a lower rate.
Sometimes, it can even come down to finding exactly the right carrier for the load. Say a carrier has a backhaul scheduled in Chicago, in the same industrial park as your load, the same day your load delivers so they can head directly out to their next load with very few empty or deadhead miles. Rates on loads where a backhaul is not only available for the carrier but already scheduled for pickup oftentimes mean you can negotiate lower rates on the load itself. You’re helping your carrier by getting their equipment in place for the next load and they give you a break on the price in turn.
2. You Can Get Loads in Front of Carriers Faster
When carrier outreach is automated, the carriers in your network and those who have shown interest in your loads before can see your loads faster. That allows you to lock down their capacity faster and allow them time to get equipment set up where you need it and plan the truck’s next move. When carriers can string together moves with few deadhead or bobtail miles, they may be able to offer you a better rate.
When carriers can plan out their capacity in advance, they gain a level of security. They don’t have to worry about equipment or drivers sitting. Plus, loads stay off the spot market when they’re booked in advance, saving brokerages from paying spot market rates at the last minute to service their shippers.
3. Better Carrier Relationships Make It Easier for Brokerages to Negotiate from the High Ground
One of the biggest benefits of capacity management is the capacity data the program collects, stores, and organizes. When brokerages already know where their carriers have capacity and what kind of capacity they have, they can save time (for them and the carrier) and offer their carriers loads that they’re likely to be able to take, offering more meaningful communication.
Capacity management also makes carrier reuse much easier, allowing brokerages to build deeper relationships with their carriers. The more business a brokerage and a carrier do together, the better they get to know each other’s processes and the more secure both feel in the relationship. Brokerages know that they have a reliable capacity partner to handle loads in a specific lane or at a specific shipper and carriers can count on steady business from a brokerage.
When you have a good relationship with a carrier, they’re more likely to do you a favor and take a load at a rate that’s a little lower than they’d normally like. Carriers may also be able to offer a bulk rate, where they can charge less for a load because they’re taking several of them. When they know you’re able to put their capacity to work for you regularly, a lower rate on a regular run may serve them as well as hit or miss spot market loads at higher rates.
Want to learn more about how capacity management can help you achieve better margins through carrier negotiation? Reach out to the team at Parade for a demo here.