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The 2024 freight market is volatile and market incentives for forwardrs, BCOs and carriers are out of alignment. Learn how Freight Right can help you uncover long-term stability and reliability in the challenging freight market.
The recent freight contract season revealed many agreements were not upheld, with forwarders blaming carriers for space issues and carriers rapidly increasing rates. Freight All Kinds (FAK) rates doubled from $3,000 in April to $6,200 by June, with fixed rates also rising sharply. This unexpected surge disrupted logistics plans and strained companies financially. Carriers often ignored low-rate contracts, favoring higher spot rates.
The lack of penalties in service agreements fueled mistrust and opportunism, making sustainable agreements elusive. The negotiation phase saw unrealistic offers, especially from large forwarders, leading to overpromising and subsequent trust breakdowns, complicating future negotiations.
This season saw frustration due to unrealistic offers from large forwarders, who presented low rates and later failed to meet logistics promises. No major contracts were finalized early, and deceptive practices led to trust breakdowns, higher costs, and delays for businesses relying on promised rates.
Today Freight Right is introducing Strategic Contracting™, a robust solution aimed at ensuring long-term stability and reliability in the fluctuating freight market. This approach combines transparent contract terms, index-linked rates, and the use of freight derivatives to manage price volatility.
By prioritizing fair profit margins and accountability, Strategic Contracting™ enables both forwarders and carriers to maintain profitability while honoring service commitments.
The growing number of clients adopting this innovative method underscores the need to move beyond annual negotiations and embrace sustainable practices that build trust and cooperation in the logistics sector.
The freight contract season once again underscores the fragility of agreements in this volatile industry. Sustainable partnerships necessitate transparency, fair profit margins, and mutual accountability. By adopting a strategic approach and implementing solutions such as accountability, index linking, and freight derivatives, shippers and carriers can better navigate these challenges, securing more reliable agreements and fostering a healthier, more stable industry landscape.
Book your discovery call today to learn how to source fixed & competitive rates and more equitable contract terms from your freight partners.