Updated:
7/28/2010 8:45:00 AM
Opinion: Shippers Face a Carriers’ Market
This Opinion piece appears in the July 26 print edition of Transport Topics. Click here to subscribe today.
By Ed Hildebrandt
Senior Vice President, Operations
ChemLogix LLC
The exodus of drivers during the economic downturn is creating a driver shortage as the economy begins to recover. Add to this escalating costs for carriers complying with new federal regulations for tractors, trailers and communications and you have a recipe for reduced capacity and higher prices.
We are seeing the return of the “suppliers’ ” market experienced in 2004 when the “new” hours-of-service regulations combined with rail and intermodal capacity reductions by the railroads created skyrocketing demand for trucks and increased freight costs.
Shippers who haven’t yet experienced any problems can expect them soon. So, how can they prepare for this new reduction in trucking capacity and minimize the effect of freight rate increases? They need to be proactive and to look at their relationships with carriers in a new light.
Shippers’ first step is to realize that they are in a competition for carrier resources with other companies operating in their markets. The way to win in this game is to make their freight more attractive to carriers. It’s time to identify and make changes in those areas that make freight less desirable to carriers.
If all that sounds more like a romance than a business deal, it’s not a bad attitude for shippers to develop, given present market realities. If you’re a shipper or a broker, the following to-do list is for you. If you’re a carrier, make sure your shippers know that this is the new reality:
• Pay on time. The fastest way to lose carrier support and interest is to be a slow payer. Shippers with internal freight-payment issues must work to resolve them or outsource freight pay.
• Establish an effective freight bill exception resolution process with carriers so issues can be addressed quickly and not end up as multiple balance dues. Multiple handling of freight bills drives up shipper costs and those of the carrier.
• Provide a minimum of two days lead time for pickups, giving carriers ample time to plan freight into their schedules.
• Be consistent and predictable. Last-minute change orders and short lead time orders are the most difficult for a carrier to respond to and least likely to be accepted.
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