Meeting of the transportation minds

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You know what surprised me? The willingness of shippers to consider helping us better balance weekly demand for capacity.” –Ron Hall, director of business strategy, TL carrier C.R. England

It’s not every day you put shippers and carriers in the same room to ostensibly try to jointly improve transportation practices. Frankly, one might expect such a meeting to turn into a grudge match more than anything else – with plenty of sawdust on hand to soak up any spilled blood.

Yet the transportation roundtable I attended the other day at Manhattan Associates’ Momentum 2010 user group meeting in Ft. Lauderdale produced far different results. For starters, the leaders of the discussion group told me they learned some unexpected things.

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“What I took away from this is how concerned the trucking industry is about CSA 2010,” Adrian Gonzalez, director of logistics viewpoints for ARC Advisory Group, which predominantly works with shippers.

CSA 2010 – short for “Comprehensive Safety Analysis” – is a new program designed by the Federal Motor Carrier Safety Administration to make it easier for them to identify the riskiest operators in the trucking industry through the use of more “real-time” safety data. They’ll collect in two separate databases – one for fleets and one for drivers – roadside inspection reports, violations, accident records and other safety-related information that currently gets stored in a variety of different individual systems.

Ron Hall, director of business strategy for TL carrier C.R. England, said he thinks this will finally level the playing field in trucking and create some positive “barriers to entry” for the first time in a long while.

“The big difference is that today larger carriers might get put through safety audits three or four times a year, whereas a smaller carrier might be lucky ot go through one every few years,” he said. “CSA 2010, however, with automate data collection for everyone, large and small carriers alike, including drivers as well. That’s really going to change things.”

One major change from CSA 2010, though, may be the further loss of capacity and higher costs for trucking services – something ARC’s Gonzalez said he plans to communicate with his shipper clients. “That’s what I will focus on when I talk with shippers,” he noted.

But it’s important to note that CSA 2010 wasn’t viewed entirely in a negative light – oh no. Mike DeNislio, supply chain director for national grocery chain H-E-B opined that the heightened requirements for safe drivers might lead to significant pay increases in order to attract more qualified candidates – a higher cost, for sure, but one that would likely only boost the caliber of professionals behind the big rig’s wheel.

Another interesting perspective shared concerned the change in bid strategies by shippers. Instead of bidding out freight once a year, noted C.R. England’s Hall, shippers are now doing so every six months down to even three months in search of lower rates – creating an enormous administrative expense for truckers.

“We’ve really focused on making ourselves more efficient in recent years in order to cope with the recession and drop off in freight volumes, through telematics, better fuel expense management, even investing in different types of equipment,” he explained. “But a lot of those savings can get lost if we’re forced to respond to more frequent bid cycles from customers.”

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Yet Hall also found a sympathetic ear among shippers for another less-talked about trucking issue – unbalanced weekly freight demand trends. “Freight is always thin at that the beginning of the week, then it ramps up by week’s end, leading to a lot of overbooking on Thursdays and Fridays,” he noted. “This is a crying issue we need help with.”

Shippers responded that they’d actually be more than willing to help where they can with that – and Hall learned something else in the bargain, too.

“In talking with H-E-B, they explained that much of their peaks and valleys in demand are really ultimately driven by the consumer,” he said. “Unless they are really willing to leave a lot of money on the table through promotions, you won’t be able to change grocery shopping habits – frankly, people shop on Saturday and Sundays because that is when they have days off. I really didn’t consider that, and how it impacts our weekly freight trends, until we started discussing it.”

ARC’s Gonzalez said that it’s actually all part of shippers and carriers expanding the “conversation” around transportation from just cost and shipment times in order to examine the larger supply chain picture together.

“Everyone needs to move beyond just looking at ‘one-to-one’ freight transactions and look at how the entire chain functions from end-to-end, from order to fulfillment, and the processes that are involved,” he explained. “Everyone can learn from that examination and most likely has solutions to offer to help make that entire chain function more smoothly for everyone involved.”

Those are the kinds of positives outcomes I just wish we’d hear more about these days.

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