Competing against other 3PL transportation broker for the same truck

My last blog article discussed the market price fluctuations of niche transportation such as refrigerated transportation and specialized equipments (such as flatbed, stepdeck, low boy, RGN, quad axles, oversized shipment).

I will elaborate on the consequences of two different brokers competing for the same truck on a tough lane. Simply put, the law of supply and demand make the price go up when there is more demand than supply. In this case 2 demands for 1 supply. It is a situation which witnessed in particular lanes where there is an unbalance for certain equipment.

At RM Logistic, a 3PL transportation broker company in Montreal, we are always looking out for our client’s best interest , trying to get the best rates possible from our suppliers. However, when we must find specialized equipment such as reefer trucks in high demand lanes of transportation we end up competing against other brokers over the same truck. The effect is usually an superficial increase in the freight rate.

What really happens is that each broker gives their price to the shipper and they chose which one they would like to use. That’s when a strong relationship, a good communication between both your client and your supplier and a dedicated service is a key factor in the decision made by your client.

When clients purchasing model is shopping around and always try to squeeze down the price in an area where their are no trucks, the demand increases and therefore a rise in the cost as well.

Of course carriers like to work with certain brokers over some other for certain reason, such as:

  • Established relationship
  • Partnership on some other lanes
  • The broker’s capacity to pay faster than other