Sleek Technologies, the leader in freight procurement automation, today announced the release of its 2022 State of Freight Procurement Research Report. The study – which polled 300 senior logistics decision-makers across the C-Suite, SVP and VP / Director levels at manufacturers, retailers or distribution centers with an annual freight spend of $100M+ – delved into the most pressing freight procurement issues, concerns and trends brought on by the COVID-19 pandemic that will remain top-of-mind in 2022.
“COVID-19 has fundamentally changed the way the entire logistics industry operates – particularly when it comes to freight procurement,” said Mike Nervick, CEO and Co-Founder of Sleek Technologies. “From sky-high rejection rates and costs, to navigating the increasingly murky spot market, the pandemic and supply chain crisis have been one of the most disruptive periods in the history of freight procurement. This research helps to illuminate the issues and trends that some of today’s biggest shippers are keeping in mind as we try to work through the pandemic in 2022.”
Below is an overview of the study’s key findings:
97% of Shippers Plan to Increase Freight Procurement Budgets in 2022
According to the research, 97% of shippers say they plan to increase their freight procurement budgets in the wake of COVID with hopes of being able to better manage capacity, increase agility, bolster cost management and deliver better overall results. Furthermore, of all respondents, 52% are expected to increase their freight procurement budget by 25% or more year over year.
“These findings illustrate just how competitive the freight procurement space has become over the last 18-24 months,” said Nervick. “From boosting technology to trying to absorb higher costs, freight procurement professionals are having to ramp up their budgets to beat out competitors and meet customer expectations.”
96% Have Invested in Freight Procurement Upgrades Since the Pandemic Began
The study found that 96% of shippers have invested in new technology or strategies to help boost freight procurement performance as a result of COVID-19, with 95% saying their freight procurement operations have either “significantly improved” or “somewhat improved” since the start of the pandemic.
“For decades, freight procurement has flown under the C-suite radar, and has been renowned for sticking with the status quo when it comes to process,” said Jaimie Kowalski, VP Marketing of Sleek Technologies. “And with COVID-19 spurring on massive digital transformation efforts and investment, shippers are finally modernizing antiquated operations and freight procurement teams are reaping the benefits.”
Automation Becomes a High Priority
Per the research, 66% of respondents said that automating freight procurement operations has become a “high priority” for their organization with another 31% saying that it is a “medium priority.”
“It’s amazing to see how many shippers still use static processes to manage their transportation needs and routing guides,” said George Belle, Head of Product Engineering at Sleek Technologies. “As unprecedented challenges become normal, shippers will need to ramp up automation efforts in order to mitigate rising truckload costs, and improve upon OTD to make the most of every dollar in their transportation budget.”
Brokers Primary Barrier to Freight Procurement Success
When asked what the biggest barrier to freight procurement success was during the COVID-19 pandemic, the majority of the study’s respondents said that brokers were their primary hurdle, with outdated technology and processes coming in second and third.
“The relationship between shippers and brokers has been strained for a long-time,” said Mike Edwards, VP Sales at Sleek Technologies. “They become a necessary evil, especially when contracted carriers pass on loads. Many shippers are now seeking new options to source capacity before it hits the costly spot market. That said, the key is to find compliant, asset-based capacity that matches the shipper’s specific load attributes. Only then, can the shipper move product on time, at fair market price.”
Cost Control Most Common Hurdle for Shippers During COVID
Per the study’s findings, cost control issues (66%), on-time delivery (65%) and high primary rejection rates (46%) were cited as the most frequently recurring issues that respondents encountered throughout the pandemic.
“Freight brokers will continue to inflate truckload cost and contract carriers will react by rejecting loads until they level-set their rates, which means increased truckload cost for everyone,” said Oleg Yanchyk, CIO and Co-Founder at Sleek Technologies. “As this happens, shippers will struggle to find a healthy balance between truckload cost and service which is why they need dynamic tools that uncover fair market price and find the most ideal asset-based carrier at that moment in time.“
“Although navigating freight market highs and lows is not a new concept for shippers, the pandemic has left many shippers to juggle multiple fire drills all at once and often for prolonged periods of time,” said Dean Corbolotti, VP Customer Success at Sleek Technologies. AI-powered technology, along with actionable truckload insights, will be instrumental to help freight procurement teams uncover resilience, sustainability and cost reduction opportunities.”