Three strategies to reduce the risk of truck transportation
Release time：2022-10-11 17:13viewed：times
Three strategies to reduce the risk of truck transportation price fluctuations in the five Central Asian countries
Recently, due to the intertwining of multiple factors, the international road transportation costs from Xinjiang to Central Asia have shown an unstable trend, causing unpredictable disruptions for both shippers and consignees in their production, distribution channels, and market strategies. This situation is not unprecedented but rather a reflection of the normal dynamics of international logistics supply and demand. Seasonal changes between peak and off-peak periods often come with fluctuations in freight rates, differing only in the magnitude of the fluctuations. Regardless of the scale, relevant enterprises need to flexibly adjust their strategies based on their own circumstances to mitigate the adverse effects brought about by the variations in Central Asian road transportation costs. Against this backdrop, we propose three strategies from the perspective of logistics supply, aiming to enhance the resilience of shippers and consignees against freight rate volatility:
1. Lock in Transportation Resources in Advance. Currently, the Central Asian road transportation sector has adopted a model similar to international maritime shipping, supporting the advance reservation of transport slots, particularly prevalent in LTL (Less Than Truckload) services. For example, Xuzhou Ate International Logistics Co., Ltd. offers a fixed weekly schedule for its China-Uzbekistan LTL line, encouraging customers to book transport slots one week in advance to ensure that goods can be loaded and shipped as soon as they arrive, reducing waiting times. For FCL (Full Container Load) shipments, it is also recommended to use an advanced booking model to ensure seamless cross-border operations. This strategy helps alleviate delays caused by freight rate volatility and port congestion.
2. Optimize Transport Scale and Timing. The root cause of the fluctuations in Central Asian road transportation costs lies in the imbalance between supply and demand. To reduce the risk of price volatility, companies should consider appropriately scaling up their transportation volumes, such as upgrading from LTL to FCL when necessary, or increasing the frequency of shipments. Original FCL users may also increase their shipment frequency based on conditions. Additionally, businesses should take advantage of market cycles by pre-arranging cargo volumes during the off-peak season, akin to how manufacturing companies maintain safety stock levels, albeit constrained by warehouse capacity. The circulation industry should also establish a safety inventory mechanism, balancing capital occupancy issues. Therefore, before expanding, it is essential to review the coordination between internal supply chains and financial liquidity to avoid creating new problems while addressing old ones.
3. Establish Cooperation with Stable Logistics Partners. The criteria for evaluating logistics service providers should cover the timeliness of transportation, regularity of departures, and stability of prices. Regardless of market fluctuations, stable transportation services are the foundation of business operations. Price stability, in particular, is the cornerstone of sustained cooperation, especially crucial for price-sensitive customers. While market volatility is hard to eliminate, the extent of price fluctuations varies among logistics providers. Those capable of maintaining relatively stable rates not only effectively protect customer interests but also demonstrate strong market competitiveness. Low-cost competitors are more susceptible to fluctuations and tend to raise prices quickly. In contrast, logistics providers charging mid-to-high rates usually possess stronger resilience against volatility, maintaining continuity in their pricing strategies, and ensuring the smooth operation of the client's logistics chain, fostering long-term development. Thus, selecting a reliable Central Asian logistics partner is another key strategy for fundamentally alleviating the impact of freight rate volatility.
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