Successful businesses can turn the smallest edge into the biggest advantage. In a volatile freight market, such as the industry faces to start 2023, shippers and brokers who communicate better and are more accommodating to the carriers hauling their freight can find that edge.
“A key opportunity for shippers is to be more transparent in communicating their cargo-capacity needs to carriers,” Chris Oliver, chief marketing officer at Trucker Path, said. “Shippers tend to conceal information from carriers, only providing what they need to get individual loads transported from point A to point B. By being more open and forthcoming, carriers can plan equipment placement more strategically, enabling them to provide better service and pricing.
“Furthermore, shippers that are more ‘truck friendly,’ meaning their dock times are short and they are more accommodating when pickup and delivery times are missed, will have the best chance of securing the capacity they need,” he added. “Carriers tend to want to work with shippers who will work with them.”
See also: How to analyze unpredictable freight-hauling trends
Transparent lines of communication between shippers, brokers, and carriers help ensure capacity, said Brent Hutto, chief relationship officer at Truckstop. Transparency is a benefit for things like route planning and rate negotiation because communicating freight volumes and delivery expectations clearly in advance allows the carrier to offer the most competitive rate to haul the load.
“Another large challenge for carriers is the amount of detention time at the dock,” Hutto continued. “Shippers should understand that the longer the wait time, the higher the price and the less likely a carrier will be willing to haul a second or third load. Minimizing and compensating for this major inefficiency is one key to securing capacity.”
DAT Freight & Analytics' principal industry analyst Dean Croke agreed that when shippers do a better job of identifying imbalances and choke points in their networks, the effort results in keeping trucks moving. Instead of throwing lanes where volume is sporadic or low into a routing guide with rates that rarely materialize, shippers can hand them to a broker, perhaps through an application program interface (API) connection from a TMS, and have the rate set dynamically using indices or with negotiated guardrails.
Shippers and cargo owners are critical players in the capacity-planning process during container drayage operations at Pacific Drayage Services (PDS), Jim Gillis, president of PDS, a marine drayage operation of IMC Cos. More detailed projections are needed to enable continuity of service and to protect from heady rate increases driven by market price fluctuations. “Consistent communication between carriers and shippers detailing forecast data is not just a plus in today’s world, it’s a necessity,” he emphasized.
At McLeod Software, Barry Brookins, director of data science, said that improving lead times is important when tendering shipments. “Early research suggests that there is a tender lead-time window that optimizes productivity, and that translates into lower costs,” he stated. “Lower costs for carriers translate into lower rates for shippers. Companies that tender a shipment to be picked up today end up paying a premium.”
“Lead time matters as much as rates do when it comes to sourcing truck capacity in a market that experiences high demand,” Brookins continued. “Shippers should start thinking about how they would act if the rates charged were based on time of possession and not distance traveled.”
Their focus should also include expanded dock hours of operation, Brookins noted. “Shippers who choose the status quo with respect to their dock operations will pay more, putting them at a competitive disadvantage in the marketplace,” he said.
Brookins added as well that there will come a point, within the next decade, where trucking is less about cost per mile and more about cost per hour. His advice to shippers is to get their operations ready now, especially with how they treat carriers when their trucks and drivers are at their dock or at the consignee.
Without collaboration, success is harder
“The one path to mutual improvement for shippers and carriers is to cultivate respect for each other’s time,” Brookins said. “Carriers must understand the implications for showing up late, especially if their customer is a just-in-time operation. Shippers must understand that detaining a power unit and its driver, a trailer, or both comes with economic consequences for the carrier. If both carriers and shippers don’t advance respect for each other’s time, our industry will continue to pay for the waste.”
“There’s an opportunity for carriers to take more of a consultative, open-book approach,” DAT’s Croke said. “Here’s what it costs us to run the truck, and if you give us this utilization per week, here’s how we can help you get your costs down. If you combine that with accurate rate benchmarking, you can facilitate a level of transparency among the shippers and brokers you do business with.”
Hutto at Truckstop said he believes collaboration is the key to meeting the needs of all stakeholders in freight transportation. “In this post-pandemic period, the marketplace is driving shippers, brokers, and carriers to work more closely in relationship to future planning,” he observed. “The days of whoever has the market advantage leveraging the other are beginning to soften as all three parties realize the need for each other to create success in their businesses.”
Gillis said collaboration between carriers and cargo owners is a necessity. To plan out and project capacity needs, volume forecasting is most important. By being transparent and flexible, both parties can even out the peaks and valleys of capacity crunches. The more flexible the customer and the carrier, the better the result, he said.
“Shippers who are merely focused on finding carriers to move freight on a case-by-case basis are converting long-term business opportunities into short-term Band-Aids to address pressing needs,” said Trucker Path’s Oliver. “Conversely, carriers who only seek freight with the highest revenue for the trip regardless of the shipper are going to miss significant opportunities in the future.
“Shippers benefit from building relationships because that can facilitate shifting their focus away from finding a carrier for a load to identifying a set of carriers that can cover their freight in a more consistent manner,” Oliver continued. “If they spend the time to learn carrier preferences, they can build mutually beneficial partnerships that can be relied on whenever capacity needs arise. The more relationships the shipper develops, the easier it is to move freight.”
He added: “As for carriers, they can make the most of every load opportunity by reaching out to shippers. Over time, that lets them build a network of shippers who can be reliable, predictable sources of revenue, especially during tough and unpredictable times in the freight market.”
This is the second part of a two-part article about how to analyze unpredictable freight markets in a post-COVID-19 world. Read part one.
