Freight Brokers and the Holiday Rush: How to Manage Increased Costs

The holiday season is an opportunity as much as it is a challenge for freight brokers. On one side, demand for shipping surges as businesses do everything they can to meet the demand of consumers. Conversely, it's usually characterized by increasing transportation costs, reduced capacity, and strained logistics networks. Freight brokers become very important during this time to help businesses control costs and at the same time ensure timely deliveries.
These issues can be reduced, if not completely resolved, with strategic planning and networking on the part of the brokers, therefore making this holiday rush beneficial for all parties: shippers and carriers alike.

Holiday Rush Impact on Shipping Costs
As it has also been documented, there is skyrocketing demand for freight in these periods that rockets the spot market rate during holidays. According to DAT Freight & Analytics, it's not uncommon to see a 30% surge in spot market rates compared to slower months of the year. Put on top of that, tight capacity and shrinking delivery deadlines also work against business and broker profits.
1. The retailer will need to restock faster for the consumer demands.
2. E-commerce companies must handle last-minute orders with expedited shipping.
3. Food and beverage companies see a spike in shipments of perishable items to populate holiday feasts.
In the absence of effective strategies, shippers risk ballooning costs and delivery delays, which can lead to dissatisfied customers and lost revenue.

Strategies to Help Businesses Manage Increased Costs
1.Prioritize Strategic Carrier Relationships
Freight brokers with established relationships with carriers can secure better rates, even during peak demand. By working closely with a network of reliable carriers, brokers can offer their clients access to capacity that might otherwise be unavailable.
Brokers should prioritize carriers with proven track records for on-time delivery during the holidays. Carriers offering volume-based discounts or flexible terms are ideal partners during this period.
Source: According to FreightWaves, transportation costs can be as much as 15% lower when long-term carrier relationships are maintained compared to just using spot market solutions alone.

2.Leverage Load Consolidation
When smaller shipments are combined into one larger shipment size, it can be cheaper for a business. This is called load consolidation, where truck capacity is maximized and empty miles are minimized.
Brokers are able to study shipment schedules for clients and identify any opportunities for consolidation. For example, taking shipments from different retailers that are bound for the same region can greatly reduce costs.
Stat Source: Studies by the Journal of Supply Chain Management show that load consolidation reduces transportation costs by 20-30% while improving the efficiency of delivery.

3.Optimize Routes Using Technology
Route optimization software enables brokers to plan the most efficient delivery paths that reduce fuel costs and transit times.
Advanced TMS uses data analytics to identify traffic patterns, weather disruptions, and the shortest routes. Real-time tracking also helps brokers address potential delays proactively.
Stat Source: According to McKinsey & Company, companies that use route optimization tools can achieve up to a 15% reduction in logistics costs.

4.Provide Flexible Shipping Options
Flexibility in the shipping terms, such as relaxed delivery windows or alternative modes of transport, helps the business save money.
Deferred Shipping: This option may be availed by companies with non-urgent shipments, where lower rates can be negotiated.
Multimodal Transport: Brokers can combine trucking with rail or air freight to find cost-effective solutions.
Stat Source: According to the National Retail Federation, flexible shipping solutions can cut the overall logistics cost by 10-25% in peak seasons.

5.Communicate Proactively w/ Clients
Clear communication helps to manage client expectations and avoids misunderstandings.
Brokers need to update their clients frequently about the market trends, availability of capacity, and opportunities to save costs.
Stat Source: In a survey conducted by Gartner, 87% of businesses identified proactive communication as a key factor when selecting their logistics partners.

The Value Freight Brokers Bring During the Holidays
Freight brokers play a vital role in connecting shippers with carriers during this very busy period. By harnessing years of experience, technology, and relationships, they can offer:
1. Reliable capacity within the tight market.
2. Guidance to clients on how to work their way through changing rates with cost-effective options.
3. Minimize risks of delays, improving customer satisfaction and loyalty.

Final Thoughts
The holiday season is a high-stakes, high-reward time of year in the logistics industry. Increased shipping costs and capacity constraints are inevitable, but with the right strategies, freight brokers can turn these challenges into opportunities.
Strong carrier relationships, technology, and customized solutions will help brokers drive cost management, service quality, and business success during the high season.

Sources
DAT Freight & Analytics
FreightWaves
Journal of Supply Chain Management
National Retail Federation
Gartner