What power would a single boulder have at stopping the powerful waves of a storm surge approaching a vulnerable marina? But piles of boulders together can form a breakwater to shelter boats and shorelines from intense wave energy. There’s power in numbers.
Likewise, what power does a single shipper have at stopping the powerful market forces that drive transportation rates up? But the collective bargaining power of many shippers together can shield vulnerable budgets from the whiplash of market volatility.
While experienced supply chain practitioners can recognize many of the winds of change driving typical market cycles and stay a step ahead in the delicate rate negotiation dance between shippers and carriers, the COVID moment taught many that another curveball could always be around the next corner.
Let’s take a closer look at the “new normal” that today’s shippers need to navigate, and how the power in numbers can pay off for shippers wanting a better outcome in their next budget.
Today’s Shippers are Tasked with Operating in a Volatile Logistics Landscape
In a previous article on navigating rate fluctuations, we walked through half a dozen factors that contributed to rate volatility in the first half of 2024, from the Red Sea Crisis and geopolitical shifts to weather events and added carrier surcharges. Each included links to articles detailing the impacts on freight rates, so we won’t rehash those in-depth here. One example will suffice: when Houthi rebels attacked cargo ships in the Red Sea, prices on some lanes from Asia to Europe that typically go through the Suez Canal surged nearly five-fold. And that link isn’t from a niche transportation publication. It was J.P. Morgan assessing the global economic impacts of the shipping crisis.
While obviously not the first time piracy has taken place on the open seas, even the best prognosticator probably didn’t have Houthi hijacking on their transportation budget bingo cards. Because nobody could have. Like COVID. Like the Baltimore bridge collapse. Like the Ukraine war.
Manufacturing indices, unemployment reports, inflationary pressures, consumer spending, and countless other global trade trends to watch can be leading and trailing indicators of what will happen to rates overall, but the bottom line is there will always be unpredictable rate volatility driven by real-time, impossible-to-predict events.
A Strong Foundation on Unsteady Ground: Rate Stability for Improved Business Resilience
Market analysis and forecasting are important, but just as a meteorologist can give an indication of what weather may be coming, there’s a difference between knowing a storm is on the way and making tangible preparations for the storm.
Some of the more well-known ways to achieve rate stability include:
- Carrier Diversification – Just as a diversified investment portfolio reduces risk for future retirees, spreading freight across a variety of capacity providers can minimize risk for shippers.
- Shipment Consolidation – This is another example of power in numbers, but with cargo itself. Smaller shipments are combined to negotiate bulk discounts.
- Contract vs. Spot Balance – Shippers often try to secure a mix of contracted capacity over long durations vs. spot market capacity that fluctuates day to day, and shift the amount of each depending on the rate environment at the time, but overplaying a hand in one market condition can come back to bite in another.
But there are some lesser-known ways, like the collective bargaining power of a shippers association, which lets even small shippers band together to bring greater combined volumes to the table, that can then work to secure more fixed rates for longer terms and with more reliable space allocation. But not all shippers associations are created equal.
Gemini Shippers: Stability in Uncertain Times
The Gemini Shippers Association procurement experts secure fixed rate contracts for each member based on individual rate and service requirements. We also go beyond a typical shippers association to streamline the entire process from quote request to shipment arrival with rate search, tracking and tracing, rate auditing, and data analytics tools.
Gemini rate lock solutions provide a shield from today’s increasingly volatile logistics environment, using a simple process that starts with a consultation and continues with ongoing membership resources and customer service.
Shield Yourself From Market Volatility with Gemini Shippers
When the next storm comes and the waves of rate hikes rise, will you weather the storm alone, or will you gain rate security and stability by joining forces with other member shippers via the Gemini Shippers Association?
Join Gemini today to get all the benefits of membership in our not-for-profit collective that’s been serving members for nearly 100 years. We’re eager to serve you in a mutually confidential environment.
