After nearly three years of a global pandemic, supply chain interruptions, labor shortages, and lingering economic uncertainty—manufacturers, shippers, and logistics providers have learned to plan for the future with calculated caution. As global costs rise, supply is increasing across most industries due to a drop in demand. As many individuals and companies prepare for a potential recession, they’re determined to minimize losses by preemptively cutting costs.
Estimates have shown drops in sales for this year and a potential 5-10% slowdown in business, so many companies are searching for cost-saving avenues aside from or in addition to their usual practices—and looking for alternative options and improvements for shipping and logistics is a prime road to travel down first.
While short-term solutions may dampen the effects of a recession or economic downturn, implementing lasting procedures that strengthen your supply chain, logistics, and operations will help weather potential storms and reinforce resiliency for future economic hiccups.
To help you get there, here are three tips for successful chemical logistics budgeting.
Tip 1: Save with Benchmarking
Freight rates are declining, especially dry van shipping, and clients want to ensure they’re paying cost-competitive rates. Therefore, shippers must actively pursue the most affordable and efficient modes of transportation. Benchmarking is a critical tool that all logistics professionals should leverage annually, if not every quarter, to achieve this goal.
Benchmarking from CLX Logistics helped a client with 19 million in freight spend save over 18% of costs after the cost-saving potential of a mode switch was revealed through benchmarking data analysis.
Benchmarking compares your current shipment rates against market averages, rates paid by peers in your vertical, and against other modes of transportation, i.e., air versus rail or truckload.
This data helps determine the most cost-efficient mode and can help identify other areas of opportunity, such as locally sourced materials, instead of relying on distant or international procurement.
Market volatility determines how long freight rates remain valid and are typically updated yearly. We recommend quarterly benchmarking for 2023 and updating your modes of transport if necessary due to the predicted economic uncertainty.
CLX Logistics’ procurement team will find the most efficient custom-fit solution for your freight. Contact us for a benchmark today to get started.
Tip 2: Make Flexible Shipping a Premium Service
In the chemical vertical, most companies are driven by meeting and exceeding client demands, and fast shipping is a demand worth paying a premium for. This expectation is why flexible shipping options should be available at a higher cost to ensure you meet margins. Your clients expect expedited shipping options, especially in a recession when minor hiccups can have major consequences. Structure your service offerings to charge for faster shipping so that this expedited offering doesn’t impact your bottom line. This price recovery creates more flexibility in your budget should any economic hiccups interrupt your operations.
Setting rates is complex, as every company’s needs are unique. Talk to our team to determine the right shipping charges for your logistical needs, capacity, and capability.
Tip 3: Regiment Shipping Lead Time
While easier said than done, providing longer lead times in times of uncertainty is crucial to avoid mistakes and ensure proper procurement, brokerage, and on-time shipping. Faster and enhanced communication between shippers and their logistics provider once an order is placed, will lead to better pricing and expedited delivery. You’ll also build better relationships with your clients when communication is enhanced and you exhibit the qualities of a trusted and reliable partner.
CLX Logistics helps clients establish a proper lead time cadence that is custom fit to match their needs and capabilities. Get to know CLX Logistics and see what we can do for you.
Chemical Logistics Budgeting Best Practices
To properly budget for 2023 while incorporating our three tips for success, we recommend a tactical approach that begins with leveraging CLX LaneLogix™ for benchmarking your current freight rates and processes and utilizing the gathered data to adjust modes, shipping prices, lead times, and any other necessary adjustments. Our experts will help you create a resilient operation and budget for the economic uncertainty of the upcoming year.
Our supply chain procurement process, extensive rate database, and automated RFQ tool benchmark current rates against best-in-class shippers before placing online carrier bids. Following the auction process, we use CLX LaneLogix data to determine the best carrier mix and savings based on service levels, capacity commitments, and rates.
Our industry-leading technology and expert logistics professionals will simplify your procurement processes, reduce operational costs, and create significant savings across all global modes of transportation. We recommend quarterly benchmarking to ensure you continuously operate with the best rates as the market ebbs and flows.
Data-driven adjustments using CLX LaneLogix and CLX Gravity, our analytics platform for improving transportation, will ensure that your operations remain steadfast and your budget is protected.
CLX Gravity improves analytics through comprehensive data integration capabilities that combine internal and external sources. The intelligent curation, organization, and analysis of key data points provide data-driven insights to build and sustain a recession-proof supply chain.
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With these powerful tools at your disposal and our expert assistance, CLX Logistics will help your unique company develop a best practice, data-driven approach for properly leveraging benchmarking data to make flexible shipping a premium service and better regiment lead times. We’ll ensure your 2023 budget is prepared to keep your logistics and shipping operations uninterrupted.
While economic uncertainty and a potential recession are never easy to navigate, the experts at CLX Logistics have the tools, knowledge, and dedication to ensure our assistance will strengthen your 2023 budget through data-driven preparation.
Ready to begin budgeting for 2023 with CLX Logistics? Contact a managed transportation expert today.Back to Resources