Carriers rule (at least in today’s capacity environment). The driver shortage, increased demand, and the new Electronic Logging Device (ELD) mandate have shifted the balance of power to the carrier.
“Since mid to late 2017, the landscape has changed, and carriers are now ‘in the driver’s seat,’” says Wes Jayne, associate manager of Hall’s Fast Motor Freight. “Carriers for the first time, for as long as I can remember, are getting to be selective on the customers we choose to work (sic).”
That scenario is likely to continue as transportation experts predict that a coming wave of retiring drivers will create an even bigger shortage. If shippers want to succeed, they’ll have to not only recognize the shift in power but learn how to create long-term relationships with carriers by becoming a “shipper of choice” (or “preferred shipper”).
Obvious Benefits and an Unexpected Opportunity
Since competition for carriers will only get fiercer, the benefits of becoming a shipper of choice are evident. Preferred shippers will be able to stay ahead of the competition by offering:
- Consistency – Shippers of choice won’t have to worry about finding drivers when capacity is limited, so business can proceed as usual.
- Flexibility – Carriers are more likely to accommodate shippers of choice, which means those shippers can also accommodate their customers.
- High-quality carriers – Preferred shippers become just that, preferred, which means they’ll attract better carriers.
- Competitive rates – Because shippers of choice are “regulars,” they’ll often be able to secure better rates, at least in the long-term. They’ll also see cost-savings as a result of the efforts put toward becoming a shipper of choice, e.g. reducing load times will not only give a shipper preferred status, but reduce costs as well. Some experts, though, caution that there may be an initial cost. “Build at least a 10% phrase increase into your business model and prepared to pass it through,” says CEO of Jetco Delivery Brian L. Fielkow. “Trucking companies are increasing truck driver pay, which is long overdue for the United States professional drivers. Higher wages are translating into higher rates. Low wages have subsidized low rates long enough, and that time has passed.” Fielkow does see a definite long-term benefit for shippers. “Consistent relationships allow for more competitive pricing, a greater capacity commitment and a better level of service.”
Given those obvious benefits (and that growing driver shortage), you think that everyone would be jumping on the shipper of choice bandwagon, but a recent study by Peerless Research Group reported that just one third of respondents claimed to have attained “preferred shipper” status, and fewer than one in five shippers provided the benefits typically offered by shippers of choice, namely, forecast error data, information on order changes, a web-based billing system, or amenities for drivers. Fortunately, those surprisingly low numbers mean that shippers have a timely opportunity to get ahead of the competition by becoming a shipper of choice now.
6 Ways to Become a Shipper of Choice
1. Help to maximize driver time.
Now that ELDs are tracking Hours of Service (HOS), it’s more important than ever that drivers use their on-duty time efficiently. Though it may seem like shippers have little to do with truckers’ HOS, they can help to streamline several tasks that fall under the definition of a driver’s on-duty hours, like:
- Loading or unloading a truck
- Supervising or assisting in the loading or unloading of a truck
- Waiting to operate a truck at a shipper’s facilities
- Waiting to provide or receive receipts for shipments loaded or unloaded
By assisting drivers in these areas, shippers save them precious time, and that savings (and courtesy) goes a long way when carriers are deciding what loads to haul.
2. Pay on time.
Even better, pay quickly. Carriers aren’t like other vendors who can wait 60 or 90 days for payment. The money they receive from shippers pays their drivers and fuel bills, and they need it right away. Freightwaves.com advises using a Transportation Management System (TMS) that integrates clean data between carriers and shippers in order to ID and speedily resolve any payment issues.
You’ve heard it time and time again, communication is central to any good relationship, and that’s especially true when it comes to the partnership between you and your carriers.
- When you know lead times, tell your carrier as soon as possible. It will help them plan and save money for both of you since the cost of shipping greatly increases for tenders received with less than two days notice.
- Provide them with your weekly volume forecasts, and give your regular carriers (especially those under non-disclosure agreements) an idea of the forecast’s accuracy by providing them with the “absolute percent error (APE)”.
- When negotiating with a new carrier, be upfront about any issues you’ve had with certain lanes or past carriers. Being transparent not only builds trust but can help the carrier plan ahead to avoid those same issues.
- Use technology to aid communication. Automate what you can, so you can avoid the time suck of back-and-forth emails or calls.
- Remember that communication is a two-way street. Listen to carriers’ and drivers’ feedback. Ask them to identify any time-wasters. Make adjustments accordingly.
4. Provide amenities (and courtesy) to drivers.
A small step like access to restrooms can be a big plus—and the lack of them a big minus. “You can keep your freight if as a shipper or receiver you won’t offer a professional driver the basic human dignity of access to restrooms while loading or unloading,” truck driver Bob Stanton wrote on LinkedIn. Other welcoming amenities include break rooms, refreshments (or access to snack machines), and overnight parking. “Nothing gets me more upset than when they have a ton of space and say beat it,” owner/operator William Snyder posted on Facebook. “I don’t expect anyone to pave a new lot, but this shows how they feel about the people helping them to keep their business supplied.”
5. Invest in infrastructure, long-term.
Improving your dock operations can save you a bundle. Consider buying new equipment, hiring more employees, maybe even paving a new lot. Anything that helps drivers save time will save you money in the long-term.
6. Be flexible.
If possible, expand your hours of dock operations. Instead of the typical Monday delivery and Friday pick-up, allow for midweek delivery. Be as adaptable as you can in order to give drivers the flexibility they need when planning their schedules.
If you’re a small shipper, flexibility is even more important. “In order to benefit from LTL consolidation, smaller shippers need to understand they have to be flexible to consignee receiving schedules and carrier delivery schedules, so they don’t feel the pressure of high costs to move their products,” says Hall’s Jayne. “The days of sending a truck out to make a two-stop LTL delivery are long gone unless the shipper is willing to pay a significant charge for the service.”
We Can Help
We work with only the best shippers and carriers, and we work with any size shipper, from a small outfit with an LTL to a big one (like the U.S. government ) with an oversized load ( like a helicopter). At Next Exit Logistics, we earn the trust of our clients with efficiency, transparency, and security. In addition, we understand how to handle freight services for unusual, oversize, or overweight shipments and are certified to arrange the shipment of hazardous materials. To learn more about our services, call Next Exit Logistics at 866-624-2661 or contact us via email.