WHAT MAKES A GOOD SHIPPER?
By: Phil Sneed
TANDEM LOGISTICS NEWSFEED 6/18/12: Shippers take note: There’s more to working with a trucker than just offering up some freight. Your business may depend on understanding that.
That may be the most important question facing the trucking industry today. How shippers answer it—and carrier perceptions of that response—could determine if and how freight gets moved, the cost of moving the goods, and how effectively this large and important business is able to function at a critical point in its history.
What is known today has been known for some time: Truck capacity has shrunk by 15 to 20 percent since the onset of the four-year freight recession in 2006, and with the possible exception of specialized equipment like “reefers” or flatbeds, it isn’t returning to pre-recession levels any year soon. About 10 percent of commercial drivers are expected to leave the business over the next several years, pushed out by advancing age, tough new government safety rules, and a general weariness of the road and the short shrift their skills often receive. Diesel fuel prices reached a national average of $4.15 a gallon on April 9 and could go higher. Asset inflation is hitting everything from trucks to tires, to motor oil to labor. And ever-increasing government regulations have added to those operating costs and subtracted efficiencies from the supply chain.
With capacity contracting and costs rising, carriers can no longer afford to accept and move all freight that comes their way. And shippers no longer have the luxury of contributing nothing more to the relationship than the goods they tender.
“Ten to 15 years ago, the definition of a good shipper was ‘one that had a lot of freight,’” said Dan Van Alstine, senior vice president and general manager, dedicated services for truckload and logistics giant Schneider National Inc. “Today’s definition is much different.”
The pressure on both sides is unprecedented. Yet the burden seems to fall more on the shippers. After all, it’s their freight—and their business—at stake. Many shippers have never needed to think about being “sticky” with their carriers. The time to start thinking about it, experts said, is now. Herewith are four steps to being a “good” shipper:
1 Trust, communicate, and participate. These are time-worn maxims. But they are worth repeating.
Carriers don’t want to be treated like vendors. They want you to be fair. They want you to engage in fact-based discussions. And they want to be recognized for doing a good job for you. This recognition should come in the form of consolidating more business with a top-performing carrier, especially if the carrier has invested in building a broad product and service portfolio that reduces a shipper’s costs and improves convenience.
Shippers must have a realistic understanding of their carriers’ capabilities and must negotiate in good faith based on that knowledge.
For shippers, a little knowledge could go a long way. Many shippers have been too focused on the freight charge, while upper management did not realize there was a freight company that could improve their customer experience.
Often times savings doesn’t show up as a cost reduction on the shippers’ freight bill. Rather, it manifests itself in the benefits of fixing internal defects that lead to improved customer satisfaction metrics.
2. Don’t skimp on the data (but make sure it’s both accurate and up-to-date). It’s been said that “there is no bad freight, just bad pricing.” And bad pricing frequently stems from being forced to work with incorrect and insufficient shipper data, according to carrier executives.
Shippers should provide logistics providers as much information as possible about their business and freight to see if where a proper network solution can be built around it.
3. Know your accessorials. The treatment of accessorial charges is a perpetual work in progress. In the past, carriers lacked the visibility into the various scenarios that triggered accessorials to price them correctly. And shippers have pushed back on many of the charges because they were unsure they were actually responsible for the exceptions that triggered them.
High-tech advances, notably the advent of electronic on-board recorders (EOBRs) that monitor a truck’s every move, give neither side room to hide. Gone (or fast going) are the days when drivers prepared paper logbooks—and sometimes fudged the information in them—and their employers would be none the wiser. EOBRs, whose mandatory use is the subject of legal action but which are now being used by many large truckers, do away with paper logs and make it impossible for drivers to exceed their hours-of-service limits.
Using the technology, the trucker knows exactly where its drivers are, what they should be doing, and what keeps them from accomplishing the task within the number of hours in a day they can operate. The good news is that both sides now have increased visibility into the problems and their causes, and that’s a key step toward achieving solutions.
4. Show a little love. It is no secret that drivers have historically been taken for granted. But as demand continues to grow, rig counts shrink, and government programs like CSA 2010 remove unsafe drivers from the highways, qualified drivers are well-positioned to work wherever they want. Shippers must pay heed to the changing environment and end their cavalier treatment of drivers, executives said.
If a driver arrives early or is on time but the load isn’t ready, a shipper should be prepared to give him or her a comfortable rest place with something to eat or drink, rather than have the driver leave the facility and drive around looking for a truck stop.
Programs like CSA are forcing shippers to be far more engaged in our business than before.
BY MARK B. SOLOMON, SENIOR EDITOR
NATIONAL MOTOR FREIGHT
BY MARK B. SOLOMON, SENIOR EDITOR
NATIONAL MOTOR FREIGHT