Winning a contract with one of your customers is always a great feeling. You have a reoccurring order to fulfill daily, weekly, bi-weekly, or monthly. This creates a great position for you and your company to establish a long term and sustainable future. The only problem is coordinating the logistics every single time. It could be a wise decision to shop it out and have people bid on the work, but that can lead to unreliable service, extra work, and unwanted headaches.
Contracts work great for all parties involved. You and your customer deal with the same drivers every time, you benefit from a steady price that you can budget for, and you let your logistics partners take care of all the work. It is a stress-free solution that has many benefits.
There are two main contracts that we offer here at Fide. Depending on your situation, one might be better than the other. One is a volume contract and the other is a reoccurring contract. They both have their advantages, so let’s get into the specifics.
Volume contracts are very common in the logistics world. Essentially, a company agrees to spend so much on transportation every year with one logistics company. This allows the logistics company to offer fixed rates per mile, lower upfront costs, or other advantages. This helps both parties win.
Volume contracts are more essential when you do not have a set schedule. Let’s say you have 20 million pounds of biomass that you need to move to a processing facility, but they can only hold 500,000 lbs at a time. You could contract Fide Freight to move it for a fixed rate. Then if you move it all, then you get a discounted rate. If you only move half, then you would end up paying full price. The benefits are the flexibility of the deal. It allows you have it moved any time with little warning for the same price.
Reoccurring contracts are best for deals that need to be delivered weekly or on a re-occurring basis. The benefits are discounted rates, hands-off service, and familiarity/relationship. It can not only benefit your company, but it will impress your customers with service, help build a better relationship between all parties, help create a sustainable future, and in the end save everyone money.
Let’s say you have 10 million pounds of biomass to ship, but the customer only wants to take in 100,000 lbs a week. That would be 4-5 tuck loads a week. We could coordinate pick up’s daily and have it delivered to your customer on a routine route. This helps the supply chain continue to move with no bottlenecking.
Drop trailers are twists that you can throw into any contract. They are great to avoid loading delays, add extra storage, and the option to load with a 3rd shift. With this, you can also coordinate daily, weekly, or monthly pick up’s. For this to work, you must have a dedicated lane that you want to ship to.
A good example would be having 500,000 lbs of biomass in super sacks. In order to free up more floor space, you can grab 10-20 drop trailers and store 20,000 – 25,000 lbs per trailer. Then when you are ready to ship to a processor or customer, you can call us to pick them up and run them to your customer for a contracted rate. This will help eliminate the stress of sorting, loading, and bracing. You would have it all done and ready to go. Not to mention all the open floor space you will have for more material.
Why is it a Good time to Start a Contract?
Due to the recent global pandemic, COVID-19, our markets have come to a screeching halt. Everyone who is non-essential must stay home and those who are deemed essential have the luxury of working and the burden of getting sick. With that said, shipping has dropped dramatically, which has created an imbalance of trucks and available freight to haul. The government is estimating that we have 3-5 more weeks of quarantine left, so we can only imagine that freight will sky-rocket once again. During these low few months, many carriers will be hungry to jump on contracts that will give them guaranteed work. Since there is a larger number of carriers and a limited amount of contracts, we can negotiate very good rates that will help benefit everyone involved for the remainder of the year. The fear of not having something to haul will result in exceptional service to both you and your customer.
Please contact Fide Freight today and talk to one of our experienced consultants about contracting. We are more than happy to help answer any questions you might have and tailor our services to you. Have a safe week and we look forward to working with you all in the near future.
Fide Freight Team