Uber Freight Procurement Planning for 2023

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Procurement planning for 2023 After more than two years of freight industry volatility, shippers are finally seeing signs of stability. Freight rates are decreasing, capacity is expanding, and shipping demand is tapering off headed into Q4. While there is still some disruption, sparked by factors like driver shortages and fluctuating supply levels influenced by inflation, the new normal for shippers is no longer defined by a daily grind of having to react to an unpredictable freight market. Heading into 2023, shippers have an opportunity to refine their supply chain operations so they’re well equipped to navigate any future disruption. And a key factor to building a robust supply chain network design is establishing an agile procurement strategy—one that’s cost effective and unrestricted, and allows shippers to toggle their resources to address freight market issues (current and potential) impacting their network. 2

Procurement planning for 2023 All procurement roads lead to automation When it comes to sourcing and hauling freight, The long-term goal for the industry will be the traditional procurement process of using RFPs widespread automated procurement which, and signing annual contracts for rates can be time in turn, will free up supply chain executives consuming and fragmented. Shippers have found and transportation planners to put their time it nearly impossible to scale the process and don’t and resources into other shipping needs (like have enough visibility into data on factors like expanding carrier relationships and supplier and carrier performance and shipping warehouse networks). lanes—making it all the more difficult to gauge last- minute adjustments to procurement tactics. RFPs Achieving agile procurement in the short term, and bidding will still have a place in the future of however, requires a multifaceted approach that procurement, but the execution will evolve as the allows shippers to effectively deploy different Agile procurement market shifts to more automated approaches. types of procurement when needed. In 2023, is the ability to know when and how to shippers can think of an agile strategy as a layer leverage any type Automating as much of the process as possible cake model—one that consists of real-time, spot, of procurement— is critical—it unlocks flexibility, helping shippers contract and dedicated procurement, where from real-time and better address market disruptions and achieve shippers choose which approach to use based spot to contract the scale and visibility the traditional process has on their business needs, customers’ needs and dedicated— depending on historically lacked. Larger shippers may still opt and the state of the market. Knowing when to business needs for traditional bids in the future, but can also use leverage each, and how to strategically manage and the state of the automated models when necessary (such as the overall mix, is the key to agile procurement. market. needing a new lane) during the contract term. Achieving agile procurement will involve And for smaller shippers or those with inconsistent embracing technology solutions that provide freight volumes, opting for completely automated flexibility, investing in data-driven decision making solutions could help them make the most strategic and focusing on procurement segmentation for and cost-effective procurement decisions. numerous transportation scenarios. 3

Procurement planning for 2023 Tech solutions enable and cost transparency, are key to helping shippers evolve their procurement strategies. access to capacity and Shippers can also benefit from using platforms dynamic procurement that provide real-time pricing quotes, help them competitively source capacity using APIs, and seamlessly carry out shipments. Additionally, the ability to place parameters on pricing and make adjustments to pricing priority for specific loads Opting to use marketplaces with on-the-spot will help shippers achieve the best business access to capacity and services to manage and outcomes. execute procurement inherently leads to more agility. But shippers have been slow to adopt While traditional brokerage services might not be modern tactics due to factors like the cost of equipped to keep up with market shifts, instant technology, complexities of integration and and real-time solutions help shippers navigate commitment to legacy strategies. procurement as efficiently as possible, no matter the state of the market. New research, however, points to a gradual uptick in adoption of instant pricing and sourcing When the market is tight, shippers are still capabilities among shippers in response to able to operate efficiently by automatically supply chain challenges and a competitive 96% sourcing capacity and having access to a vast freight market. A 2022 survey of logistics leaders of shippers have carrier network—which they wouldn’t get from found that 96% of shippers have invested in invested in new traditional brokers—that drives competition for new technology and strategies to power freight freight procurement their freight loads. And when the market is soft, procurement performance because of the technology and shippers can take advantage of decreasing pandemic, while 66% said that automating strategies during the rates by easily sourcing carriers in their procurement has become a high priority. pandemic marketplace network instead of taking tedious SOURCE: approaches like RFPs. This type of versatility will SLEEK TECHNOLOGIES be especially important for shippers to develop Marketplaces that offer immediate access to capacity through an expansive network of truck now in order to navigate potential market drivers, and also enable real-time procurement disruption in the future. 4

Procurement planning for 2023 Developing a comprehensive data strategy informs procurement approaches Access to reliable, real-time performance data use live shipment data to analyze carrier bids is essential for shippers to make procurement and better measure the effectiveness of carrier decisions that will benefit their businesses. But performance to determine the best carriers and factors that have disrupted supply chain networks procurement types for their operations. since 2020, such as out-of-region shipments and unique demand patterns, have created As an example, many shippers use contract unreliable data for shippers. In a volatile market, procurement because it offers capacity and price shipping trends can change drastically from security, as well as the benefit of better service quarter to quarter, making it more difficult for born from long-term relationships with carriers. But shippers to decide what performance data will having access to accurate and recent data could be the most useful to inform future tweaks to their reveal situations such as fluctuating increases in procurement process. freight volume or inconsistent shipment timing that don’t align with contract terms, which could inform Shippers can improve upon their existing the need to use spot procurement as the rates are procurement data management and analytics driven by the market and ideal for accommodating strategies by working with third-party logistics last-minute shipment needs. partners—who have access to vast amounts of performance data and tools like predictive Being able to accurately and efficiently measure analytics—to gather the most useful information KPIs such as on-time pickups and deliveries, carrier in order to understand what is and isn’t working in availability and approved routes helps shippers their current process. make more informed decisions about what tweaks to procurement execution and costs will pay off for By leveraging partners that understand the their business—which, in turn, will lead to better ROI nuances of freight procurement, shippers can for shippers navigating the market well into 2023. 5

Procurement planning for 2023 Prioritizing segmentation will augment Shippers that focus on enhancing their bid data with robust classification (lane, customer a flexible approach to procurement and carrier) and performance data (network, lane, customer and carrier KPIs)—which can be accomplished internally and with the help of a third-party logistics partner—within their portfolio will ultimately have better knowledge of their Not all carriers are created equally, and this is where network requirements and more options in their segmentation comes is important to an agile procurement procurement transportation scenarios, which will strategy. The more granular shippers get with defining inform their future bid strategy. And segmentation the different modes of transport available, as well as Segmentation is ultimately anchored by a flexible and creative their customer and carrier types, the more tactical their helps shippers arm approach to procurement—one that is rooted in themselves with procurement process becomes. knowledge on adaptation, where shippers are in tune with how the transportation the market fluctuates, how those changes impact Factors like lanes, volumes and service requirements can factors that require customer needs and operational needs, and how entail a different carrier type, and establishing what works certain carriers—and specific procurement types will perform under best for each scenario leads to a more performance-driven this knowledge is certain conditions. critical to support an strategy. For example, based on the attributes of their load, a agile and digitized shipper determines they need to use drop-and-hook freight. procurement Overall, the ability to skillfully navigate future market In this case, securing an asset-based carrier that owns their approach. disruption will depend on shippers’ willingness to equipment, via contract procurement, would be the best embrace more instant procurement solutions and decision to ensure efficient transport. to use any procurement type when necessary. By collaborating with trusted partners that can prove In another scenario for when the market is tight, shippers could the effectiveness of modern approaches such as have a plan in place to deploy dedicated procurement where automated bidding, access to market benchmarks truck assets such as equipment and drivers are provided to and industry best practices—and that can support them. Opting for a dedicated fleet would provide shippers with a strategy where all procurement types are more control over their shipments, from being able to customize available to use efficiently—shippers will establish a their equipment to having guaranteed capacity and full visibility foundation for a more agile procurement process into shipping operations. in 2023 and beyond. 6