Portfolio Approach to Freight Procurement

This guide outlines a portfolio approach to freight procurement, focusing on the management of transportation relationships between shippers and carriers. It explains the significance of balancing spot and contract procurement strategies to mitigate the risks associated with market volatility and service uncertainty. The document details the concept of 'ghost lanes,' which occur when contracts are established but no actual volume is realized, leading to inefficiencies for both shippers and carriers. It highlights that a significant percentage of full truckload (FTL) contracts go unused, emphasizing the importance of strategic procurement processes. The guide also discusses the implications of new lane contracts and their pricing in relation to spot market rates, indicating that shippers may be overpaying due to uncertainty in demand. By adopting a more strategic approach, shippers can optimize their operations and improve relationships with carriers, ultimately leading to cost reductions and better service outcomes.