Shipping Capacity Issues: Will it affect my business?

"Overcapacity" has been the name of the game in shipping for the past year. Small parcel companies have maintained "peak season" rates for months, and LTL carriers are experiencing similar high volumes. With the pandemic's acceleration of the eCommerce compound annual growth rate to 14%, it's no wonder carriers are experiencing an issue of "too much demand."   

For retailers experiencing incredible online growth potential, supply chain disruptions are the most significant barriers to reaching 2021 growth goals. Furthermore, overcapacity issues affect every shipper at some point during the year, whether the reason is holidays, gas shortages, natural disaster seasons – the list goes on. But, not to worry – with the proper shipping strategy and a lot of awareness of potential troubles, you should be in the clear all year long.   

In this article, we are going over the most common issues experienced during overcapacity and how your business can handle it with a bit of help from Freight Club. 

Pricing increases  

High shipping capacity usually means higher pricing for shippers. 

This can come in two forms:   

• Pricing premiums for new carrier clients  

• General rate increases (GRIs) for existing carrier clients  

If you’re a new carrier client, these initial offers can be a large barrier of entry to shipping. If you’re an existing client, GRIs on top of already high rates can hurt your margins. 

Don’t fret – thanks to Freight Club’s volume and long-standing relationships with over 30 LTL carriers, we can add more volume to our network while maintaining the best rates. Freight Club’s strong relationships allow us to even delay GRIs for months in many cases. If you’d like to check it out, get a free quote here.   

Less or no availability  

All carriers have limits. With overcapacity, carriers often find themselves meeting these limits and unable to handle all shipments. In many cases, they may even reject new clients.  

So, you’re a new eCommerce business, and you can’t seem to snag a carrier contract – what now? The answer is simple – leverage Freight Club’s pre-existing relationships with 30+ carriers. This extensive network of carrier options does more than enable you to start shipping – it allows you to avoid carriers who cannot handle your shipments.  

Increased damages 

Noticing higher damage rates? Increasing pressure on carriers leaves packages more susceptible to damages. There are two things that you can do to keep damages from getting in the way of business:   

• Damage prevention   

• Insurance coverage  

Damage prevention is key before anything else. Reduced damages are another added benefit of having an expanded carrier network with Freight Club – you can choose the ideal carrier for each SKU, not just for an entire product line or inventory. If you are unsure what carriers are best for your products, you can always ask a Freight Club shipping consultant. 

Insurance coverage is another essential measure to take when ensuring damages do not affect your margins. Opting for carrier insurance often will not cut it, with low payout rates, long wait times, and poor coverage. When damages happen, make sure you're covered. Freight Club provides optional insurance coverage provided by UPS Capital. With an over 97% payout rate and a payout of up to 4 times faster than included LTL insurance, our UPSC insurance is an ideal option for shippers.  

Support delays 

Due to the high volumes of shipments (and subsequent issues as listed above), carriers' customer service teams are also at capacity. During this time, you may find it difficult to get directly in touch with the carrier's team, especially if you are not a very high-volume shipper who is a high-priority client for carriers. 

This is where having an excellent shipping partner is a massive benefit to you. At Freight Club, our customer service team has direct lines of communication with our carriers, many of which give us priority access so we can get you answers quickly and fix any problems that arise.  

In addition to this benefit, Freight Club is built for complete transparency and simple self-service, so you can avoid the time you spend with Customer Service. Easily track your shipments through our Track Shipment portal and file overages through our Claims Management portal. 

Conclusion  

Capacity issues in the shipping industry can be frustrating – but a savvy shipper knows that they are inevitable, and with the right shipping strategy, they are no big deal. By expanding your network and using a trusted shipping partner like Freight Club, you can be sure your shipments will be your carrier’s top priority and avoid damages, unavailability, pricing increases, support issues, and more.