Carrier Friendly Shippers: The Value of Service & Collaboration

Written by Neal Willis
     

Freight carriers are now in an authoritative position and are commanding the marketplace. They want to do June2nd_Medium_Invoicesbusiness with loyal partners and shippers who are thinking of the big picture and are willing to pay a fair rate for the service they provide. Ease of doing business through technology, schedule accommodations, and mutual cooperation, in general, is also very beneficial. Most carriers don’t want business from shippers who think only in terms of rates. They have enough freight to haul without having to compete on price alone.

Freight costs were driven down considerably during the economic downturn/recession, and many carriers were vying for business through unsustainable pricing just to keep equipment and employees working. Now the economy is seemingly on an upswing, and carriers are struggling to find and keep drivers. Carriers are no longer overlooking misclassified freight, giving concessions on accessorial fees, and letting shippers get away without paying for certain services. When the market was in a slump, carriers were competing for business with multiple price cuts and looking the other way with regard to certain situations, however, the carriers are in the driver’s seat now and are essentially able to set their own rates and schedules.

Carriers are now choosing the shippers, when for the longest time it was the other way around. The LTL market is much different now than it was just a few years ago.  Roughly 25 LTL carriers own the vast majority of the market.  Even though they compete for business, carriers also communicate with each other. A shipper who has historically taken the rates of one carrier and presented them to another, in order to leverage a lower price, may have done irreparable damage to their reputation and their ability to negotiate fair rates with quality carriers. Pitting carriers against each other is a surefire way to put yourself at a disadvantage in today’s market.

We are in the midst of a carrier’s market, and the carriers overwhelmingly favor working with shippers who are willing to form strategic, long term partnerships with a commitment to carrier collaboration over shippers who consistently rate shop. For the most part, only less than reputable carriers will play the rate shopping game, and some of those carriers won’t even do that anymore. Without a shipper’s commitment to collaboration, accommodation, and paying a reasonable rate commensurate
with the desired levels of carrier service, capacity and service cannot be  guaranteed by the carrier.

Logistics and traffic managers are usually operationally minded and often aren't able to look beyond rates at the big picture, which is why many executives are increasingly leading the June2nd_Medium_Approved_Bycharge when it comes to choosing 3PL’s and freight service providers.  Intelligent shippers look beyond rates at the big picture, and understand that guaranteed capacity, quality, and consistency of service all play an important role when it comes to their supply chain and the true cost of shipping. Capacity is at or near demand. Carriers have no problem finding shippers who’ll gladly pay a reasonable rate for their services.

 

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