How to Optimize Logistics After Signing a Contract

In the face of current market declines, diligently monitoring performance after signing a freight contract is more vital than ever. According to DAT, trucking rates have seen a nearly 20% drop year-on-year. These numbers underscore shippers' need to enhance their logistics post-contract. That’s true whether it’s a new or long-standing procurement and logistics plan or they’re contracts with single owner-operators, dedicated fleets, or larger carrier companies. Regardless, shippers need to verify and maintain performance in every owner-operator lease, carrier agreement with owner-operators, or other procurement means. 

Mind the DIM Weight

Dimensional (DIM) weight, often used in freight transportation, is a pricing technique that takes into account both the size and weight of a package. To calculate DIM weight, shippers multiply a package's length, width, and height (in inches) and then divide that result by a standard DIM factor. 

This number can vary depending on the carrier and whether the shipment is domestic or international. Once the DIM weight is calculated, it is compared to the package's actual weight. Carriers will then charge based on whichever weight is higher - the actual or the DIM weight.

Understanding DIM weight is crucial for logistics optimization. It directly impacts the total shipping cost, regardless of the type of freight contract you've signed, be it a contract with a single owner-operator, a dedicated fleet, or a larger carrier. Properly accounting for DIM weight can help avoid surprises in shipping costs and better manage shipping budgets.

Watch for Additional Handling and Peak Surcharges

Each freight contract comes with its unique set of charges. Once you've signed your contract, monitoring additional handling and peak surcharges becomes crucial. Seasonal changes, for instance, can lead to significant shifts in shipping volume. Such fluctuations can affect the overall shipping cost, especially during peak shipping periods, due to heightened demand and increased resource usage. 

On the other hand, added handling charges can be influenced by various factors. These can include but are not limited to, the physical characteristics of the shipment, such as size, weight, shape, and any specific handling requirements. For example, fragile or oversized goods may incur extra costs due to their need for specialty shipping and handling procedures.

Maintaining a keen understanding of your contract, whether with an owner-operator, a dedicated fleet, or a larger carrier, can help you anticipate these costs. Accurately accounting for these potential charges allows you to manage your budget effectively and avoid unexpected expenses.

Leverage Freight Data Analytics to Understand All Contracts

Data from your contracts can provide invaluable insights into your operation and opportunities for improvement. Freight data analytics offers a comprehensive view of your contract's performance and provides vital insights for informed decision-making. This understanding extends from individual owner-operator lease agreements to broader contracts with large or intermodal carriers.

Identify Opportunities for Alternate Fulfillment Strategies

As varied as the types of contracts, a variety of alternate fulfillment strategies also exist. These strategies can provide diverse and potentially cost-effective solutions, including cross-docking, zone skipping, and hub injection. Exploring these opportunities is crucial to optimizing logistics after the contract is signed, regardless of the size or type of your fleet.

Stay in Touch With Network Partners and Keep Business Relationships Alive

Regular communication with your account manager or contract partners is invaluable. This line of communication ensures you're getting the best out of your contracts and your logistics are running smoothly.

Get Strategic With Inventory and Owner-Operator Lease Use

Effective inventory management and strategic shipping planning are crucial, regardless of whether you're working with an owner-operator, a dedicated fleet, or leasing onto a larger carrier. Just-in-time fulfillment can reduce inventory storage time and avoid excess carrying costs, but it depends on clear visibility into your full network.  That includes every stage, from drayage through final mile delivery to knowing where to store your goods.  

At the heart of this lies contract logistics, predominantly focused on warehousing. Different types of contracts may offer varying levels of warehousing flexibility.

Consider Spot Market Opportunities in Each Owner-Operator Lease

Every freight contract with an owner-operator, a dedicated fleet, or a larger carrier brings potential spot market opportunities. Even if the partnership is expected to be short-term, leveraging spot market opportunities can offer significant benefits.

Additionally, all freight is bought and paid for on spot, and the spot market can often feel like the more expensive option. However, there will always be unique markets, such as a given lane, where the cost of transportation may be lower than in your other markets. As a result, keeping this information front and center in every owner-operator agreement and available for review is crucial to helping you know how to reposition your inventory, leverage third-party warehouses, and get more coverage at an optimal price. 

See Optimal Freight Procurement Processes After the Sale With GEODIS

Optimizing logistics post-contract signing is crucial in today's challenging market conditions. Whether your contract is with an owner-operator, a dedicated fleet, or a larger carrier, keeping these factors in mind can help you navigate and thrive, turning potential challenges into successful opportunities.

Of course, any plan for truly optimized logistics also means knowing when to kickstart the procurement process again and send additional bids to new partners where possible. GEODIS can help you achieve these goals and keep your procurement pipeline full of potential carriers and providers across the United States and abroad. Connect with a team member to get started today.