Freight management solutions are always a topic of discussion for shippers across North America. However, over time, even with improved fuel efficiency and a steadily improving economy, a current and looming increased capacity crunch is making the “solutions” side of things much more difficult for shippers these days, as the importance of staying focused on shippers’ core businesses is vital in such a competitive and volatile economic marketplace.
One of the major trends highlighted in FTR Associates’ annual Transportation Conference earlier in September of this year was how shipper/carrier collaboration will only increase in creating strategic freight management solutions as collaboration remains one of the few ways left in which both shippers and carriers can control both the capacity crunch, costs, and remain profitable in the years ahead.
As a myriad of issues continue to apply pressure on the domestic freight market, such as a growing shortage of drivers, an ever increasing capacity crunch, and the new hours of service, transportation experts report that more “sincere” collaboration between shippers and carriers is now occurring compared to the past as both parties seek greater stability for their operations.
In our conversations with our select carrier partners, most have said they have largely exhausted the ways they can cut costs and save money. Equipment is not getting cheaper, they must pay drivers more, and unprecedented regulatory growth is increasing their cost of operations. The only thing left to them is what’s beyond their direct control: increase collaboration. Carriers are excited to work with both shippers and third party logistics companies, like Cerasis, to work towards creative, strategic, and sustainable freight management solutions to allow both shippers and carriers to continue to remain profitable and ship freight cost effectively.
Naturally, the shipper with access to capacity at a reasonable cost and sustainable freight management solutions, even as the shipper grows and ships more freight, is going to have a competitive edge in business, as failures to get goods to market on time will lead to lost customers and inability to get supplies to fill orders.
Of course, there are several ways to make your freight more attractive as well, but most of those tactics requires collaboration and even further strategic freight management solutions. Furthermore, if you work with a transportation management system or logistics service provider, you can leverage those tools and resources (i.e. experience) to work with carriers on your behalf so you may focus on your core business, and not having to go through the growing pains of working effectively to collaborate with carriers and achieve your desired outcome as a shipper: not having to spend money you don’t have to due to a lack of experience.
When considering all shippers and all carriers, if we have more collaborating together, we then begin to create a mindset in all of the land of freight between shippers and carriers to create a new status quo of partnership, and not one of shipper vs. carrier (READ: From the shipper: “How much is my price increase this year?” OR from the carrier: “How much freight do you have?”). The less we treat the process of creating sustainable freight management solutions as a commodity, and more of a long term relationship, the more shippers and carriers will come out on the positive side of the effects collaboration can bring. This change brings a huge opportunity to change the way trucks are operated in the U.S.
For example, FTR estimates that changes to hours of service (HOS) rules made back on July 1 alone resulted in a 3% loss of trucking productivity nationwide, how carriers and shippers collaborate going forward will determine how much an impact future regulations have on the industry’s capability.
Capacity has been tight but predictable due to the pace of growth in this moderate economic recovery. Capacity tightness means shippers need to lower some expectations, same-day pickups and service, for example, are tough to handle now and so carriers may need more lead times.
Time is really the key advantage of better shipper/carrier collaboration. The more lead times carriers have, the more chances shippers have to optimize inbound and outbound freight moves via shared information, the more tremendous efficiency become available. Better syncing shipper and carrier schedules together is what enables this.
This key point stated above is why better management of capacity is the key to success to create viable freight management solutions. So while truck capacity has been tight the last two years, it’s been stable, thus allowing shippers and carriers to work successfully with what’s available. Unless new modes of transportation are created (and it looks like flying drones will take a while, as well as autonomous trucks), we foresee the capacity crunch staying for a while, and therefore it makes sense to start collaborating now, or finding a third party logistics company to do this on your behalf. The sooner you can start working towards meeting your own goals as a shipper by working with carriers now, the better off both you and the freight world at large will be.
In the past, many shippers simply focused on ways to squeeze out day-to-day transportation costs, but now many (including our customers own paradigms over the years in engaging with our third party logistics services) realize they need to take a much broader, and collaborative, approach in order to move the needle. It all comes back to what we call ‘profitability at the product level’: how can I lower my total cost of service for moving goods through the supply chain from start to finish.
We’ve gotten away from talking to people face-to-face in this business somewhat. Freight management solutions, although greatly powered by technology, also still requires people. So, you can either employ these people yourself, or get an expert to work with you and the carrier on your behalf. Either way, you can’t just live in your ‘silo’ anymore, separated from the larger issues of how to jump-start freight and transportation management.
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