Shippers and carriers have reached an impasse in typical relations. Unfortunately, dramatic increases in the number of shipments being processed due to global trade and the rise of e-commerce are forcing shippers and carriers to re-evaluate their relationships which produced a positive effect throughout the industry. As explained by Peter Moore of Logistics Management, companies need to refocus their efforts on sustainability and create a mutual incentive for both shipper and carrier to excel in the future. In other words, shippers need to consider seriously why the shipper-carrier relationship must change, how it will change and actively work to encourage change.
Why Does the Shipper-Carrier Relationship Need to Grow?
Current shipper-carrier relationships are stressed. Shippers are turning to carriers to send out more packages than ever, and carriers are being forced to reweigh continually and reassess packages for acceptability and take steps to prevent damage in both truckload and less-than-truckload shipments. Ironically, these measures should have been completed correctly by the shipper in the first place.
For example, some shippers have berated carriers into providing the lowest prices possible. However, the first six traits of these relationships eventually wear away at the fundamentals of the relationship, which results in a bad performance of the carrier and shipper alike. But, more shippers need to understand the value their carriers bring to the table and how the shipper can work to improve the relationship through the bidirectional flow of information.
The Shipper-Carrier Relationship Needs to Become Bidirectional.
A bidirectional shipper-carrier relationship benefits the whole industry and both parties. When shippers work with carriers, the carrier is more likely to go the extra step to provide service above and beyond the original terms of the contract. Unfortunately, shippers often view carriers as the sole provider of services in the relationship. In reality, shippers need to help carriers by providing the most accurate, timely data and information about these respective shipments.
Additionally, shippers must we evaluate the purpose of the original agreement. On the surface, the contract is created to provide benefits to both shippers and carriers. However, shippers should not rely solely on the price of a carrier. Instead, shippers should focus on what type of advantage and savings are achieved through their relationship in the long term.
For example, a shipper who selects the cheapest carrier may feel they are getting a good deal. The only services within this sample agreement are defined by large pickup Windows and minimal coverage. So, shippers are faced with a high degree of uncertainty, and even if this agreement contained an automated transportation management system (TMS), there is no incentive to use the system to make the job of the carrier more efficient and easier. As a result, the entire relationship needs to evolve and focus on improving the capabilities of both the shipper and carrier.
Tips to Re-Imagine the Shipper-Carrier Relationship.
Building strong relationships between shippers and carriers has the potential to help the logistics industry survive the capacity crunch and driver shortage, as well as other problems that have yet to arise. According to Inbound Logistics, shippers can improve the shipper-carrier relationship by taking the following actions:
- Work with carriers to optimize transportation routes from the beginning. This builds rapport and helps encourage all workers to embrace the changes brought by a new carrier relationship.
- Shippers need to provide data to carriers. Before signing a contract and after working with your new carrier or third-party logistics provider (3PL), you must ensure your data collection methods are accurate and thorough. Without the proper data, potential carriers and service providers cannot plan and create a contract that will meet your needs consistently.
- Crete Carrier drivers as your staff members. Just because a carrier’s drivers do not necessarily receive a paycheck from you does not mean you can treat them like a stranger. Every interaction with a carrier’s driver helps to reduce the driver turnover rate for your carrier, which will help drive your business forward.
- Offer your services to your carrier. This can be a complicated aspect of new, improved carrier and shipper relationships. If your company Works weekends or provide last mile delivery in your local area, offer your services to your carrier. As a result, the relationship becomes more bi-directional and beneficial to both companies.
- Do not expect change overnight. Your new relationship needs time to grow, and carriers may need a chance to implement new processes and give you access to advanced processing systems.
- Used technology that is available through new relationships. If your new carrier or 3PL offers a TMS, take advantage of the system’s benefits.
- Do what you say you will do. Shippers have a tendency to hold the carrier to the terms of the agreement at all costs, but the other side of this relationship is often overlooked. As a shipper, you need to follow through on commitments you make to the carrier, and if you are incapable of following through on such promises, you need to notify the carrier as soon as possible. This allows both parties to figure out alternative Solutions before problems result in necessary delays and blowback from customers.
Modern relationships between carriers and shippers are not the same relationships of the past. If the logistics industry hoped to face its problems and excel in the future, the entire relationship must be re-imagined, and you can take the first steps to re-imagining this relationship as a shipper.