You want to get the most from your transportation budget but just don’t know the best way to do so. In an industry as nuanced as the transportation industry, we know that maintaining your bottom line can be difficult. Being vigilant about giving your transportation partner proper lead time, can really help you reach your goals.
At ATS Logistics, we’ve been speaking to customers just like you every day since 1989. We understand the price you pay for your shipment matters and we’re here to help you get the most out of it.
In this article, we'll be talking about what lead time is, how it affects shipping costs and how you can find ways to save.
What is Lead Time?
Lead time is the amount of time that you give your freight broker to find a carrier for your shipment prior to its pick up date and time. Lead time is one of the top factors influencing the accurate pricing of your shipment. As soon as you tell your transportation provider that you need a shipment moved, they begin their work to ensure its successful transit.
Since these providers are often located outside of your corporate structure, keeping them up to date with your shipping schedule is very important. Doing so will help to facilitate the smooth fulfillment of your supply chain.
Why Does Lead Time Impact Shipping Cost?
Like many other things, the successful and on-time shipment of your freight is dependent on planning.
Think of the lead time you’re giving to your transportation provider as equivalent to the time-off taken by an employee. It is always easiest when an employee grants notice to their supervisor prior to departure. This helps to ensure the creation of a smooth plan of action for the duration of the employee’s absence.
The notice you give to your transportation provider is no different.
Because the transportation industry is so complex, your transportation provider must be given adequate time to make arrangements for your freight. During this time, your partner is:
- Testing the current market to determine the most accurate price for your load
- Communicating with the potential carriers who best fit your needs
- Planning the best route of shipment for your freight
- Communicating with the recipient of your shipment to ensure coordination
The best insurance — when it comes to the successful delivery of your freight at the best price within your desired time frame — is providing proper lead time to your transportation provider. Any time your transportation partner needs to scramble to place your shipment, you should expect to pay more.
How Much Lead Time Should You Give Your Transportation Provider?
It’s always best to err on the side of caution when thinking about the amount of lead time to give your transportation provider. This is especially the case in today’s transportation market.
Dictated by supply and demand, today’s market is in the hands of the truck driver. Right now, there are consistently not enough trucks on the road to keep up with the steady rise of demand. Because of this, truck drivers are booked out for days in advance, making it difficult to fit last-minute loads onto their packed schedules.
Simply put, the more lead time you can provide your transportation provider, the more likely it is that they will be able to find a driver for your goods — especially one suited to move your specific type of freight.
In general, it’s best to provide warning at least 72 hours in advance of whatever shipping date you have in mind. This gives your transportation provider ample time to fulfill their duties prior to your load’s departure. In turn, this will mean more money in your pocket and less stress on your supply chain.
Anything less than 72 hours’ notice reduces your transportation provider’s options. As you inch your way closer to the same-day pickup mark, the costs of delivering on time begin to rise.
As a general rule of thumb, you should expect to pay $500-$600 more for your shipment if same-day pickup is needed. Couple this with the cost of “buying a truck” (which we’ll discuss below) and the cost of shipping your freight can get expensive quickly.
What Happens When You Need to Ship on Short Notice?
Although the more lead time you can provide the better, we understand this isn’t always possible. Sometimes things come up and you’re left with inventory that you need to move on short notice.
In instances like this, a good transportation provider will be at the ready.
Although you will need to pay a steeper fee, moving your freight on short notice is far from impossible. While this is not always the case, in some situations your transportation partner will need to “buy a truck.” Buying a truck is essentially the process of overpaying for a truck. Oftentimes these are trucks that either weren’t planning on hauling a load that day or who will need to forgo another load to haul yours.
These situations are ideal for truck drivers as they gain the ability to name their price. Generally, you should expect to pay up to an additional $500-$1,000 just to find a truck that is willing and able to move your freight at the last minute. As the urgency of your shipment rises, on short notice, so does the price.
Note in the instance of these short-notice shipments, it becomes more difficult to plan for contingencies that may pop up during shipment. Should something go wrong, your transportation partner will have a harder time meeting your deadlines. Additionally, the vetting of your carrier may become more tricky given your quick time frame.
Once again, the more lead time you provide, the better the outcomes you should expect.
How You Can Ensure Adequate Lead Time
Luckily for you, there are several ways to ensure the necessary amount of lead time for your transportation provider. Most prominent among these is communication.
Like everything else in business, having solid communication between all stakeholders is incredibly important. Make sure you communicate with your transportation provider ahead of time. Convey the exact time frame you’re shooting for, the capacity you’ll need and the final destination for your freight. When appropriate, communicating your level of flexibility for pick up times over multiple days can help ensure that you get the best price possible for that time frame.
Aligning your schedules will significantly impact the price you pay. Over time, this communication will become a lasting, stable partnership you can rely on.
Working with a quality freight brokerage can come in handy during times of short notice. The largest freight brokerages leverage carrier networks numbering in the tens of thousands. This extensive network allows these freight brokerages to find the carrier you need with less notice than working with an asset-based partner would require.
Another common way to cut down on the costs associated with lead time is to wait. Consider storing your inventories until they can be moved, either in-house or at an external facility. Your transportation provider may even have warehousing options you can utilize until your customers are ready.
By storing your freight and giving your transportation provider time to respond to your demands, the safe, on-time delivery of your freight becomes more likely. In turn, this allows you to pay the best possible price for the shipment of your load.
Keep Making Progress in Your Shipping Journey
Although booking the shipment of your freight using a transportation partner can be costly, the greater the lead time you can provide, the better. Communicate with your transportation provider well ahead of time so that when the date of your shipment arrives, everyone is on the same page.
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As always, please don't hesitate to reach out with any questions you may have. We are here to make sure that you have all the information you need to make the best decision for your business.