Five ways to make sure the LTL and FTL capacity crunch doesn’t hit your company where it hurts.
With transportation costs making up anywhere from 10-12% of the average company’s cost of goods sold, the capacity crunch, driver shortage, and booming national economy are making it difficult for shippers to maintain profitability. This issue is hitting full truckload (FTL) and less-than-truckload (LTL) shippers especially hard right now, and it’s not relegated to any specific carrier or region.
“Capacity is at record levels right now for both the FTL and LTL segments,” says Iryna White, Senior Business Development Manager, NAFTA Land Transportation, for DB Schenker. The fact that the trucking industry is short about 49,000 drivers right now is only exacerbating the situation, she says, as is the volume of larger shipments (more than 10,000 pounds) that are spilling over in the LTL segment.
“On average, a single, 12,000-pound shipment consumes the same weight and cube as 12 800-pound shipments, servicing just one shipper versus 12 different companies,” White explains. The situation isn’t expected to ease anytime soon, and LTL volume shipments over 10,000 pounds and with greater than four pallet positions—as well as freight that requires additional services (e.g., lift-gate, hazmat, or oversized)—being most prone to delays.
Here are five ways to make sure these delays don’t derail your company’s supply chain during the second half of 2018:
- Lighten up your freight loads.Carriers can afford to be pretty selective right now. For example, there are currently over 120 loads available for every flatbed on the spot market. And much like Uber drivers rate their passengers, carriers are “rating” shippers and sharing that information with one another. To make sure your company rises to the top of the preferred list, try making your freight more attractive. Where shippers used to load trucks up to their weight capacity, it now pays to reduce those loads by 3,000-5,000 pounds to help reduce vehicle wear-and-tear and help carriers maintain good standing with the state departments of transportation (DOT). “The lighter the freight, the better,” says White. “Take this step and you’ll see an improved level of service and possibly even better trucker availability.”
- Load your trailers as quickly as possible. No carrier or trucker wants to lose money by sitting around the yard, waiting for a truck to be loaded or unloaded. You can offset this problem by developing key performance indicators (KPIs) around fast truck turnaround, and then working to improve that performance. Hold your internal or external teams (i.e., your lumpers) accountable for those KPIs, and offer bonuses to those that meet or exceed the KPIs. “It’s not like it was four years ago, when trucks could sit idle for hours without anyone caring,” says White. “Time is money for truckers, so respect that reality.”
- Strive for good grades. Did you know that your company has probably already been “rated” by one or more carriers or drivers who then share that information with other drivers? And as more providers utilize scorecards to rate the shippers that they work with, it’s becoming more and more important to maintain “shipper of choice” status (or risk falling prey to the LTL/FTL capacity crunch). “Truckers have the first right of refusal and a lot of loads to choose from,” says White. “If they have 100 different loads available to pick up, they’ll pick the fastest one that treats carriers right.”
- Build flexibility into your transportation schedule. We all know what it’s like to leave home on time, get stuck in traffic, and wind up late for work. Truck drivers feel this pain on a daily basis, which makes schedule flexibility a pretty big deal for them. “If you’re using by-appointment scheduling, test out a ‘first come/first served’ approach instead,” White suggests. Weekend loading and unloading is another good option that can pay off even if it costs $15-$20 an hour for the manpower to cover those shifts. “It’s worth the overall savings that comes from not having the freight arrive on time,” White points out, “or not having to pay chargebacks to your own customers for not delivering the freight in a timely manner.”
- Consolidate your stops. If you normally book freight with five or six stops, it’s time to consolidate those points down to two or three. Work to bridge the geographic gaps between those stops, and make sure you’re evening-out your freight in the most logical manner possible. For example, if the bulk of the shipment is going to Chicago, followed by a 3-pallet drop-off that’s 350 miles away, consider using LTL for the second stop. “Consolidate, deconsolidate, play with your supply chain, and work with your transportation providers,” says White, “all with the goal of reducing costs and freeing up capacity for other orders.”
Treat Them with Respect
On a final-but-obvious note, it also pays to treat all drivers like the valued providers that they are. This can be as simple as providing restrooms and showers for them, knowing that over-the-road (OTR) truckers spend a lot of time behind the wheel and very little time enjoying the basic luxuries that some of us take for granted. A courteous gate security guard who offers a cold bottle of water or directs the driver to the nearest restroom facility can go a long way for a driver who needs some comfort.
“Your security guards are your business card in this transportation environment, so talk to them about common courtesies and how to be polite to truck drivers,” says White. “This very simple strategy will speak volumes about your company and elevate its status as a ‘shipper of choice’ for drivers.”