12 Considerations for Transportation Procurement Decisions

Transportation teams are honing in on a critical operational lever to pull in 2024: forging new partnerships to increase efficiencies. This comes as no surprise amid soft freight demand, where total shipments across the Breakthrough Ecosystem declined 4.8% year-over-year in February. However, conventional transportation procurement methods with limited visibility can hinder transportation teams from seeking optimal carriers for their network, particularly as shippers seek emissions reduction opportunities.

These two interconnected forces are playing out against a backdrop of historic transformation within the freight market. The logistics industry has been reshaped by recent mergers between major carriers, significantly influencing partnerships. This consolidation has catalyzed a change for transportation teams to strategically engage with new carriers — ensuring resilience and a competitive edge in a market that is expected to turn in the latter half of 2024.

Why are new transportation and carrier partnerships the priority?

Transportation leaders generally view carrier consolidation as a favorable trend. According to Breakthrough’s 2024 State of Transportation report, approximately one-third of shippers and carriers anticipate increased efficiencies (38%), more stable pricing (35%), and improved service quality (32%) through 2024. This has created an environment where transportation teams are exploring new carrier partnerships as a critical priority to stay ahead of the curve.

Challenges of Transportation Procurement 

However, within this optimistic outlook, lies the stark reality of challenges in regional carrier procurement. The lack of relationships with asset-based carriers in certain geographies poses a significant challenge—a concern that has been highlighted by 57% of shippers. Likewise, the scarcity of data on average negotiated industry-specific linehaul rates (54%) serves as a barrier to well-informed decision-making, obstructing transparency in carrier procurement conversations and impeding competitive positioning. Further complicating the procurement process is the availability, or lack thereof, of specific equipment types in certain geographies (48%). These challenges underscore the need for transportation teams to pivot, innovate, and cultivate partnerships with newfound agility and insight.

What to consider when making transportation procurement decisions

Conventional procurement methods won't meet the needs of today's dynamic transportation landscape. Thus, forming new asset-based carrier partnerships becomes a strategic necessity for shippers to navigate upcoming challenges caused by extreme weather events, geopolitical tensions, and macroeconomic factors. In light of these evolving challenges, shippers need to redefine how they identify and engage with new carriers. Here’s some transportation procurement criteria to consider:

• Insurance capabilities
• Safety scores
• Minority- and women-owned businesses
• Level of risk
• Financial stability
• Quality of service
• Sustainability technology
• Alternative fuel equipment
• SmartWay score
• Carrier reliability
• Carrier experience on the given lane
• Equipment types in certain geographies

Building these partnerships will require a keen focus on developing a deep understanding of regional nuances, securing access to clean and comprehensive linehaul rate data, and ensuring the availability of equipment in a particular region to keep up with a shipper's carrier procurement needs.

Capac-ID: multi-dimensional and data-driven for transportation procurement

Transportation procurement leaders are well-positioned to establish new partnerships to increase efficiency. By using a comprehensive productivity platform, like Capac-ID, they can quickly and easily identify trusted carriers that check their transportation procurement criteria. The platform offers an added advantage by providing teams with visibility into shipper transacted linehaul rate benchmarking and actionable recommendations to enhance their freight management strategy. This insight enables procurement leaders to forge strategic partnerships with carriers throughout the year.

Discover what Capac-ID can do for your transportation network!