How Shipping Lead Time Impacts Freight Rates

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What is a lead time in shipping?

The lead time in shipping is the time gap between the initiation of the order to the complete execution. For example, it is time an object travels from the primary supplier to the final receiver. The concept of lead time when booking loads is a commonly overlooked factor when delivering freight efficiently and economically.

Why shipping lead time is important?

Providing more notice days or lead time for a shipment could help lower costs. Extending shipping lead time can be beneficial in many ways, including:

  • Lower rates
  • More capacity
  • Preferred carrier availability
  • Access to ideal delivery appointment times
  • Higher service levels
  • Better on-time performance
  • Fewer surprises
  • More control over expenditures
  • Possible identification of new savings and efficiencies

The role of shipping lead time in your supply chain

lead time

To put it simply, the more in advance a third-party logistics provider (3PL) books a load, the more time and control they have over the following:

  • Negotiating pricing
  • Finding savings or efficiency improvements
  • Securing top providers
  • Scheduling ideal delivery times

Whereas on the other hand, when working to book a truck for next-day delivery, capacity is tighter, prices are usually higher and fewer delivery options are available.

In addition to these basic principles, more time between when an order is scheduled and when it’s picked up allows your logistics provider to play more of a consultative role. Instead of immediately responding to a request, they can analyze the potential for more cost savings and efficiencies. This could include suggestions to switch from truck to rail, try new order consolidation techniques and/or switch up network configuration.

Final thoughts

Advanced scheduling is a step in the right direction towards greater visibility, as well as logistics managers having the ability to regulate time in their operations more precisely, which in turn can generate more capacity. That type of visibility goes well beyond the technology used to track and trace pallets and trucks today.

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