A couple of weeks ago I wrote about the trucking capacity crunch and what were the 4 major contributing factors such as less trucking companies, a lack of drivers replacing retiring workers, a decrease in equipment investment, and the adverse government regulations such as the new hours of service rules, creating unintended consequences. In today’s post, I will cover how collaboration between shippers, logistics providers, carriers, and consignees alike can thrive and save on transportation costs even during an ever increasing trucking capacity issue, which the ATA head chief economist, Bob Costello says will trouble the industry for years to come.
Today’s trucking capacity crisis is a perfect storm of volume limitations. Driver pay and work/life balance are key issues affecting capacity in the trucking industry. The industry is losing drivers to careers with higher pay and more attractive lifestyles. Carriers today are also more disciplined about adding capacity, hiring drivers only when they can ensure a good financial return. The trucking capacity crisis is forcing key players in the industry to work together to create unique solutions. With proper planning, better strategies, and constant attention to capacity’s impact, shippers and carriers can successfully maintain superior service, find ways to meet capacity commitments, and continue to grow their businesses and the economy.
Resources are limited, so shippers must become more resourceful. Now is the time to step outside of operations and reap the benefits of multi-shipper freight collaboration.
Multi-shipper freight collaboration is not a new concept, but it is one that warrants serious consideration. A successful multi-shipper initiative entails several vital components, which can be challenging to implement. But none of these challenges trump the win-win situation that collaborative programs create for shippers, carriers, drivers, and consignees.
Through multi-shipper collaboration or even a logistics provider who can work with multiple shippers, various shippers—even competitors—leverage their collective freight activities to maximize asset utilization, save money, and meet delivery deadlines. This can be accomplished in two ways: co-loading and continuous move routing.
Co-loading entails multiple shippers combining less-than-truckload (LTL) freight to create full truckloads. As a result, participating shippers realize the financial benefits of mode shifting, while maximizing asset utilization.
Continuous move routing calls for multiple shippers to use their collective truckload (TL) shipments to create ongoing tours that reduce one-way movements, empty miles, and high-cost minimum charges. It transforms separate shipments into multi-stop trips to reduce costs and, once again, maximize assets for shippers.
Asset utilization is the timeliest benefit of multi-shipper collaboration. Of course, this tactic does not create additional trucking capacity in the marketplace, but it does enable shippers to increase capacity within their core carrier bases. Most importantly, these tactics maximize motor asset utilization for the collective benefit of all shippers.
Shippers, however, are not the only beneficiaries. Carriers, drivers, and consignees are also impacted by the positive effects of collaboration initiatives.
For example, continuous move routing is particularly attractive to carriers. If carriers can get their equipment in and out of markets with little or no empty miles, their freight becomes more attractive to those carriers that can afford to cherry-pick routes.
This scenario also works well for drivers. Inherently, a continuous move route returns drivers to their origin. It also becomes a desirable route for owner-operators, especially as fuel prices continue to surge.
Consignees benefit from reduced transportation costs and improved, consistent service….and everyone wins!
Now, you may be saying there going, “Great…..idea….but, what if I don’t have the ability to work with a competitor or can’t be collaborative? I need real tips to help fight the trucking capacity crunch!” Well you are in luck! Stay tuned in tomorrow for some tips YOU can do on your own, without or in addition to collaboration.
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