In times of tight capacity, driver shortages, and new governmental regulations, here’s how shippers can position themselves as companies that carriers and logistics providers want to do business with.
There was a time when “shipper performance” wasn’t measured or shared; carriers weren’t overly particular about whose cargo they were transporting; and shippers could make drivers remain out in the yard for hours, waiting for an open dock door.
Those days are long gone. Between the hours of service (HOS) rules that limit the number of hours a driver can spend behind the wheel during any given period, the electronic logging device (ELD) mandate, and the fact that business is robust (and, as such, providers can afford to be pickier about who they work with), shippers are now being graded, scored, and assessed according to their track records.
Add the driver shortage and tight capacity to the equation and the result is a transportation market where shippers either have to prove themselves to be good customers, or do last-minute scrambles to get their loads covered.
All the Right Moves
A shipper that’s known for holding up drivers for hours due to dock door unavailability, or that repeatedly tries to transport ocean shipments that don’t comply with international laws, will quickly be flagged as “difficult to work with” by carriers and logistics providers. And much like social media has helped spread ratings and reviews like wildfire across the web, this type of feedback gets around quickly online.
“The demand for capacity and drivers is at an all-time high, due to a robust economy, new government regulations, and negative perceptions regarding the driver lifestyle,” Todd Johnson writes in Supply Chain Brain. “It’s a glaring issue across the modern-day supply chain, and everyone’s searching for a solution.”
One of those solutions centers on becoming a “preferred shipper,” which means providing convenient, well-lit tractor and trailer parking areas; being more understanding of driver mistakes and tardiness; and minimizing load/unload times. Other good strategies, according to Johnson, include communicating effectively about delays or other changes that impact a driver and offering ample lead time for pickup and delivery.
“The way that shippers treat drivers affects their reputation, influencing carriers to favor a particular freight opportunity over others,” Johnson writes. “A driver shouldn’t have to play phone tag to reach your warehouse staff or be denied access to simple necessities, like the bathroom. “Generally, the duty of the preferred shipper is to make the driver’s job easier and more efficient, in turn creating a better workflow for all parties.”
4 Ways to Stand Out in the Crowd
Right now, a lot of companies are talking about becoming shippers of choice in order to protect their service levels, but what do you really have to do to become a shipper of choice? ARC’s Steve Banker says some of the key areas that companies should include in their strategies are:
- Balance costs and service with your internal transportation metrics. “If you want good service from your carriers, your internal metrics need to reflect corporate strategy,” Banker writes, acknowledging that this isn’t always easy for shippers to achieve. “If you care about service, transportation needs to be more than an expense center. It needs to be a strategic element of business performance.”
- Benchmark your performance. “Companies need to understand how they are performing in comparison to others in their industry,” Banker writes. “Some suppliers of network-based transportation solutions offer this benchmarking as a natural extension of their solution. There are also outside consultants with strong capabilities in this area.”
- Don’t let your rates get stale. Do your route guides have pricing that is more than 12 months old in a market where prices are going up every month? Then it’s very likely that your tenders will not be accepted, Banker points out, noting that one key metric is tender acceptance rate. “If this is trending up, your rates may be stale.”
- Conduct performance management reviews. This will help ensure that shipper and carrier commitments have been kept. “The metrics and performance reviewed should not just be the carriers,” Banker writes. “There should be both carrier and shipper scorecards.”
Companies should also know that becoming a “shipper of choice” is a decision; it doesn’t just happen naturally. “It’s also easier said than done,” Chad Prevost writes in Freightwaves. “While the economic pendulum swings back and forth in terms of who benefits, right now the freight market favors carriers. There’s a lot at stake for shippers, but whether it’s for the long or short-term, becoming a shipper of choice benefits the entire supply chain, not the least of which are drivers’ experiences.