Editor’s note: This is the first part of a series on how shippers and carriers are working together in the modern freight world. Read Part 2, Part 3, Part 4 and Part 5.
Shippers and carriers used to have straightforward, transactional relationships. Shippers entrusted their goods to carriers for delivery in exchange for an agreed-upon payment for the service. There were shipping options — less-than-truckload, truckload, dedicated carriage, expedited service or operating your own private fleet — and shippers did their best to make good choices to control costs and still meet their customers’ delivery expectations. It was, however, by no means always a sure thing.
Now, enormous forces are converging upon this historic business intersection where shippers and carriers meet and transforming it entirely. Instead of a transaction point, a junction, managing freight transportation is becoming a dynamic process spreading the entire length of a supply chain. And shippers and carriers are finding themselves in something very much like an old-fashioned sack race, where the only way to succeed is to work exceptionally well in tandem.
Once again, it looks like technology, even technology that can be viewed as highly disruptive, is what will allow carriers, shippers, and third-party logistics providers (3PLs) to find the way and the will to meet today’s multiple, compounding challenges.
The modern world of ELDs
Electronic logging devices (ELDs) are a good case in point. In the years running up to their mandated usage, potential downsides of electronic logging got at least as much discussion as their potential benefits. Some of those concerns, such as an overall loss of truck freight capacity and higher costs, have proven to be correct, at least in the short term.
In their winter 2019 annual shipper survey report, “Point to Point,” Averitt Express noted that “ultimately, 2018 was a year marked by tight capacity and increasing freight costs. Boosted by a consumer recovery that began in 2017, supply chain operations were at the same time hindered as the trucking industry adjusted to the electronic logging device mandate that went into effect in late 2017.”
According to Averitt, when shippers were asked to name their “biggest challenges with carriers in 2018,” in addition to the problems with diminished freight capacity and higher rates, shippers said that billing issues and problems with customer service increased in 2018 over 2017. On-time service and freight damage still made the list of biggest challenges that shippers reported, but performance in those areas showed some improvement compared to 2015, 2016 and 2017.
Data from the carrier side of the shipper/carrier relationship looks much the same. In October 2018 for instance, Zipline Logistics reported that a survey of more than 150 trucking companies in their network found that the ELD mandate had indeed required fleets to expand to handle the same level of orders, but that expansion effort was being held back by the driver shortage. Seventy-seven percent of carriers surveyed also reported that they were “being more selective in the shippers/receivers that they were willing to go to,” and 54% said they had changed “how long they will wait at a shipper/receiver, since the ELD mandate.”
ELDs, however, are also helping carriers and shippers to find and capitalize on opportunities to collaborate for their mutual benefit that was not visible or actionable before.
“If all you see in ELDs is a tendency to generate extra costs and remove capacity from the market, you’re focusing on the wrong things,” Will Salter, CEO of Paragon Software Systems, recently told Fleet Owner. “There’s a fantastic opportunity to drive significant improvements for everyone by mining rich data from ELDs. Using routing and scheduling software, that information can be leveraged to create unprecedented levels of efficiencies in truck operations.”
One of the first benefits of ELDs for shippers and carriers is the ability to see the same things at the same time all along their increasingly transparent supply chains. There is nothing quite like hard data for replacing differences of opinion with a come-let-us-reason-together approach.
Waiting to load or unload, what the industry calls “detention time,” is a good example. It has become a real sticking point for carriers and for their drivers, especially since the ELD mandate, which provides no approved means for drivers to stop the clock to make up for time lost sitting and waiting.
In a recent article from the Truckload Carriers Association (TCA) (“Detention time math class: Drivers lose over 20,000 miles per year” by David Heller, TCA vice president of government affairs, and Kathryn Sanner, TCA manager of government affairs, Jan. 30, 2019), the authors note that, “Even in one of the most lucrative years on record, it is clear that operations could be made so much more profitable if this simple problem of detention time were addressed.”
Heller and Sanner make a case for flexibility in the hours-of-service regulations (now pending) but also point out that the ELD mandate has not just exacerbated the detention problem, but also offers a means of resolving it. “[The ELD mandate] is providing the data to prove that detention time is a critical issue that needs to be addressed,” they explain. “Carriers can go to their customers with hard evidence of bad business practices and encourage an overall industry change in our favor…”
The ability to accurately and fairly document detention time is a good first step; you can’t fix a problem if you don’t recognize it. However, it remains for supply chain partners to come up with the means to improve efficiency together, not just address load/unload bottlenecks but truly boost overall productivity. And if that improves shipper/carrier working relationships and eliminates points of stress, all the better.
This is the first part of a series on how shippers and carriers are working together in the modern freight world. In Part 2, we look at how carriers and shippers are creating dynamic and efficient supply chains together. In Part 3, we look at how online freight matching is changing the relationship between shippers and carriers. In Part 4, we look at new ways to manage the shipper-carrier relationship. In Part 5 we hear insights from a freight intermediary’s perspective.
