US truckload carriers warned shippers that 2018 would be a difficult year to find available trucks, a prediction that has come to fruition as supply, in the form of tractor-trailers and drivers, has become scarce and is not nearly enough to quickly haul all the freight on the market.
Load-to-truck ratios, or the amount of loads for every one available truck, and spot market rates are higher than they were in 2017, according to load board operator DAT. “I’ve been in the trucking industry since 1980 and I’ve never seen the balance being this out of whack,” said Dave Rusch, CEO of truckload carrier CRST International, speaking to JOC.com in March.
Shippers are competing against one another to book an available truck at a reasonable rate. If the load is a just-in-time delivery or on-time, in-full (OTIF) and subject to fines, being on top of a carrier’s preferred customer list is paramount. In 2018 the phrase “shipper of choice” is becoming a popular term, just like “preferred shipper” was in 2014. The two terms essentially mean the same thing, but the former recognizes carriers, and drivers, have a choice today.
“To win in this environment, you have to be a shipper of choice,” said Dave Venberg, senior director of transportation and logistics for Ardent Mills, one of the largest US flour suppliers. But how does one become a “shipper of choice” in what is now a trucker’s market?
Detention is bad, so keep drivers moving:
As of last Dec. 18, truckers must track their hours of service (HOS) through an electronic logging device (ELD), so no more fudging the books to run an extra hour or two. Law enforcement can force drivers to shut down for 10 hours for not possessing an ELD. Every minute counts now for a trucker looking to succeed in business.
“The best way to think about it is terms of minutes. Every minute costs a dollar or several dollars,” said Brian Reed, executive vice president of supply chain and global strategy for FreightWaves and a former vice president of transportation with Niagara Bottling. “All those minutes add up and somehow the carriers need to make up those lost minutes and lost dollars. So every minute you can remove from the process, every minute of savings is ultimately going to come back to you.”
Shippers that regularly detain drivers will find it difficult to get a carrier to quickly haul their freight, or to haul it at all. With ELDs the carrier can easily determine how much time the driver was idle at its dock. Drivers can operate up to 660 minutes behind the wheel, or 11 hours, but trucking companies estimate the average drive time is actually only six to seven hours per day. This is due to highway traffic, roadside inspections, weighing loads, loading and unloading time, searching for parking, refueling, and maintenance work, among other tasks. To keep the driver moving, Reed says shippers should consider capital expenditures on their dock operations.
“Detention may only happen on a fraction of the loads, but once you become known as that type of company, that money gets backed into every rate you receive,” Reed said during a webinar hosted by Arrive Logistics. “So add more forklifts, more forklift operators, add ASRS [automated storage and retrieval systems], add more doors, anything to load and unload trucks faster.”
Although the improvements will cost money, even hundreds of thousands of dollars, they can ultimately net millions of dollars in freight cost savings per year, according to Reed.
Provide drop and hook, then return the equipment:
“Keep the driver moving. Respect them as a person, respect their time,” said Tracy Rosser, senior vice president of transportation and supply chain for Wal-Mart.
One way to accomplish this is a drop-and-hook operation, which are often quicker than live loads. Since the trucking industry depends on productivity, drop-and-hook operations will move a shipper to the head of the pack.
But there are also a couple downsides to the drop-and-hook model.
First, it requires extra space on the shipper’s property and since more distribution centers (DCs) are being built in urban areas, it is not easy to find the land. Second, truckload carriers take exception to shippers holding onto their trailers indefinitely just like the container industry.
“Detaining our equipment too long is as bad as detaining our drivers,” one fleet executive told JOC.com.
Shippers should also offer the driver the ability to weigh the load at the facility rather than wait until a weigh station inspection. Nestlé Purina PetCare, which “loads heavy,” has truck scales at many of its docks. “We don’t want you getting three states away” and finding a load is overweight at a state weigh station, Jeffrey L. Meyer, group manager of transportation for the shipper, said. Nestlé Purina PetCare also lets drivers take breaks at its DCs, where it can.
Offer basic amenities to drivers:
It seems obvious but shippers should provide a bathroom, refreshments, and a break room. Remember these drivers are waiting, sometimes for more than an hour or two.
“As soon as I checked in [at one shipper] they let me know there's a break room with bathrooms and vending machines. They also were willing to come out to my truck and let me know when they're done loading me. I think that's always nice,” said Mark Hedges, a driver on the Rate Per Mile Masters Facebook group.
No access to bathrooms is a major complaint of truckers. “You can keep your freight if as a shipper or receiver you won't offer a professional driver the basic human dignity of access to restrooms while loading or unloading,” truck driver Bob Stanton said via LinkedIn.
“I am well aware that some drivers are not their best selves when they arrive on the dock, but too often we encounter warehouse staff that seem take sadistic pleasure in dehumanizing us more,” said owner-operator Desiree Wood. “‘No Truck Drivers Allowed to use Toilets’ is a sign we see or [something we] are told when we arrive.”
“For a lot of companies managing the bathrooms is more important than managing the docks. That’s a problem folks,” said Mike Regan, chief relationship officer at TranzAct Technologies, on a webinar hosted by the National Shippers Strategic Transportation Council and TranzAct.
“Greet them with a simple ‘good morning’. If the load is not ready, direct the driver to the restroom and break area,” said Jerry Hatchett, a small fleet owner in business since 1982. “I told a large shipper if they wanted to make a good impression on the drivers, then build showers and break rooms and hold an appreciation day for drivers once a month.”
“These are all common decencies. Treat the drivers like you would want to be treated,” Ben Cubitt, a senior vice president at Transplace, told JOC.com. “Then there are the ‘nice to haves’. Boy, if you had a couch, television, showers, even wireless internet, that would be great. But no one is going to push hard for that, so those are unrealistic to expect.”
“[Your facilities] can factor into the rates you receive in your contract. It also goes to whether or not someone will want to pick up your spot freight,” Reed said.
Shippers are used to rating or benchmarking carriers. Now they are being rated by drivers. Stanton recommends drivers use mobile app Dock411, which lets truckers check ahead for information on their next stop’s hours of operation, loading times, yard hazards, backing situations, pallet restrictions, and more.
“Drivers recognize they have leverage in this market,” Cubitt said. “Drivers will say I won’t go here or there. I won’t take evening deliveries, I won’t do weekends. That’s causing challenges to the carriers as they try to meet their commitment.”
Have a plan for dock delays:
Sometimes there are backups at the dock. No one is perfect, even a shipper of choice. But a shipper of choice has an action plan in place for these scenarios. Do not make a driver idle on a line extending into the street.
“If they take a while to load, allow the driver to drop the trailer so they can go get some food or shopping done,” suggested Jen Helbig, a driver on Rate Per Mile Masters.
Drivers minimally want a place to park and exit the truck, rather than sit behind the wheel for an undetermined amount of time. When these delays do happen, communicate with the carrier and the on-site driver. Remember to offer frequent updates and an estimate on how long the delay will be.
“Provide multiple ways of communication whether it’s text, phone, e-mail, or CB radio system. Make sure it’s efficient and you can get a hold of the driver when you’re ready,” Reed said. “If your carrier is on the way, let the dispatcher know the load isn’t ready. Maybe the driver can take a break before getting to your facility.”
It might be embarrassing, but Reed said communication is key to finding a solution to the problem with the carrier.
Ease of access:
Sometimes, backups can be caused by poor design. Drivers arrive at a gate only to find “no directions for a big truck, no accurate phone number to reach someone for directions,” Woods said. “Facilities that are not properly designed for big truck turning radius and docking, poor signage, no truck parking on property or [within a] close vicinity when we have no more hours. That's a big one.”
“Ease of access is huge,” said Bethany Cramer, a spokesperson for Zipline Logistics. That entails “everything from how easy the facility is to find, [does it come up on GPS?], are the roads well paved, is it easy to turn into without worrying about oncoming traffic, poles, parked cars, etc.” She also cited safe traffic patterns, streamlined gate check-in procedures, and dedicated yard jockeys for moving trailers in and out of a facility.
Carriers like forecasts and lead time:
Data are a shipper's best friend. They enable forecasting, and carriers appreciate advance notice and predictable freight.
If shippers can provide a five or seven-day lead time to carriers, then they can position their trucks and dispatch a driver with minimal costs. If shippers tender freight at the last minute, however, they may incur a surcharge and find higher rates in their next contract.
“If you’re giving a rolling 30-day forecast or a weekly forecast, the carrier can plan ahead and reposition trucks,” Reed said. “Not only is it good to give the forecast, it’s also good to give them an idea of how accurate it is. If I forecast 100 loads but you are only 50 percent accurate on your forecast, the carrier will plan differently than if you’re 95 percent accurate.”
Shippers use a metric called absolute percent error to track accuracy and it is a number that Reed believes shippers should share with core carriers, especially those under a non-disclosure agreement.
Offer more hours, be flexible:
Be available on off-peak hours and weekends to ship.
“I know of suppliers that close at 3 p.m. and never ship on the weekends. Think about the capacity you can open up there by operating more hours. Be available 24/7 to ship,” Rosser said.
Traffic is worst when people are heading to work and returning home, so if the driver can travel during the mid-day, evening, or weekends, then shippers are helping to maximize their 660 minutes.
If a driver shows up early to an appointment, do not make the person wait until the assigned window opens, according to fleet executives.
And if shippers shut their gates on the weekends and do not have staff on property, that is when thieves are mostly likely to pay a visit. Trucks left on lots over the weekend for unloading Monday are vulnerable to cargo theft.
Overnight parking is a nice touch:
Since drivers cannot manipulate their log books anymore to find parking, they must make a choice when butting up against their HOS limit: a) drop the load and leave; b) stay with the load and park overnight; or c) call their boss.
Often communication between the carrier and the shipper can solve these problems.
“If they’re tied up at a shipper or receiver, [drivers will] contact their driver manager, who will have customer service contact the shipper. We don’t ever want the driver in the middle of a discussion with the customer. It doesn’t always turn out well,” said Brent Nussbaum, CEO of Nussbaum Transportation.
Providing overnight parking is a solution to curry favor with carriers. Contrast this with a notice (in bold and underline) at one shipper’s dock: "Drivers are NOT permitted to stay on property even if you are out of log hours."
This shipper is unlikely to be a shipper of choice.
“Nothing gets me more upset than when they have a ton of space and say ‘beat it’. I don't expect anyone to pave a new lot, but this shows how they feel about the people helping them to keep their business supplied,” said owner-operator William Snyder on Facebook.
Finding available parking regularly ranks as a top 10 concern of truck drivers in an annual survey from the American Research Transportation Institute. A 2016 research report from the group found that drivers on ELDs were twice as likely to spend more than 30 minutes looking for a parking spot than those using paper logs.
“If I’m in Atlanta and I get to your facility at 6 a.m., it could take me two hours to travel 20 miles to a truckstop. Safe, overnight parking for large shipping facilities is a real bonus. That is a ‘nice to have’ and a real differentiator,” said Cubitt.
Carriers do not like unwelcome surprises at the dock:
Drivers have a lot of tasks to complete each day, so do not add to their responsibilities by refusing service until they pay a fine or fee. Work out lumper payments in advance so that a driver does not have to make an unplanned trip to get cash, money order, or secure check. “One thing we hear from carriers is ‘don’t expect my driver to be the lumper,’” Regan said.
The same adage applies to OTIF fines or other outstanding fees. Take the issue up with the supplier or carrier sales representative through an invoice, not with the driver bumping the dock. “The worst thing is to be a driver, show up at a facility and have a fine of say $500 that you have to pay,” Reed said. “I think they can be useful, but make sure you use them at a higher level in the organization. Charge the customer directly, don’t charge the driver visiting your facility. That’s a real easy way not to be a shipper of choice.”
Pay the carrier quickly and in full:
Trucking companies use shippers' money to pay their immediate needs. Whereas shippers might pay other suppliers in 90 or 120 days, carriers use the dollars to pay their drivers and fuel their trucks. Those costs are due now, not in three or six months.
Blame Europe, where this is a common practice, according to logistics executives. In recent years, multinational companies such as Anheuser-Busch InBev and Procter & Gamble have pushed these payment terms on the trucking community.
“If trucks picked up and delivered freight as speedily as some shippers want to pay their bills, inventory levels would grow monumentally. Warehouses would be everywhere waiting for trucks to pick up freight and stores would have to be much larger to carry more inventory,” Nussbaum said. “We are not a commodity, rather we are an extension of their brand.”
Stubbornly sticking to a 90- or 120-day window can quickly eliminate one as a shipper of choice, even if that shipper offers a supply chain financing agreement to pay the carrier within 30 days for a fee.
“We warned shippers during the economic downturn that if you move to 60, 90, or 120 days, when the market tightens you are going to lose capacity. It was part of our advice to shippers,” Cubitt said.
Form long-lasting relationships, avoid penny pinching:
Of course shippers want to secure a favorable rate from their core carriers. But there is a difference between negotiating a fair deal on a contract and replacing incumbents to save a penny here or there.
“We want to build long-term partnerships with our carriers. We want to make sure we’re considered a strategic partner with our carriers. We also want to make sure the carriers we do business with are strategic partners to us and not transactional,” Venberg said. “We’re comfortable in transactional relationships, but I don’t think that’s how you win in this environment.”
During the procurement process, shippers of choice should work out a good market rate and then balance cost against the quality of the service and the value of incumbency, according to Cubitt. “What we advise shippers, in any market, [is] there are other ways to save money than rates. So compressing rates is not the only way to get cost savings,” he said.
“There may be lanes where your carrier has done a good job even though it may be a little bit more expensive. Keep them in there because good service works for everybody.” Trucking companies remember which shippers were fair or unfair during the bid process and may act on these impressions when they are in a position to carefully choose their freight.
Be a shipper of choice through thick and thin:
Whether it is a CEO or a driver, people have long memories. It is one thing to talk about being a shipper of choice when the market favors the carrier, but what about when trucks are readily available?
It may be natural to pay more attention when there is motivation to do so, like in 2014. But did shippers devote as much in 2015, 2016, and 2017?
“Those who treat us fairly with respect to rates, payment terms, and consistently interact with our drivers in a professional manner — whether capacity is tight or not — are the ones who we are going to work the hardest for in covering their shipments,” said Scott Shephard, CEO of Brown Integrated Logistics. “Those that don’t will move to the back of the queue when everyone is screaming for trucks.”
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