If the global pandemic made a hero of the logistics industry in 2020, the great restock of 2021 has caused it to stagger under the weight of revitalized demand. Manufacturers and shippers are ramping up production as consumers ease back into their pre-pandemic lifestyles, but freight carriers are struggling to keep up with the pace due to a shortage of available drivers.
The situation became a little more dire when FedEx Freight abruptly announced it would “begin implementing certain volume control actions to help balance capacity with demand.” Freightwaves reported that the popular LTL had more freight than it could handle and was suspending outbound shipping to 1,400 customers operating thousands of facilities in total. FedEx Freight reversed course a few days later, under pressure from key stakeholders for its sudden suspension notice. Service has resumed for now but the signal has been sent: market forces are driving carriers to become more selective about the cargo they’ll carry and the shippers they’ll work with.
Shippers of Choice
In 2018, constrained carrier capacity brought forth a new concept: the “Shipper of Choice.” Shipper of choice is an aspirational status for shippers seeking to strengthen relationships with carriers by improving the quality of their business practices as well as their driver amenities. For freight carriers, shippers of choice have become preferred customers.
Today, carriers have turned up the pressure, not only evaluating shippers by how easy they are to do business with and how well they treat drivers, but how they impact a carrier’s freight volume and throughput. Shippers who rise to the occasion may establish themselves not only as shippers of choice but valued business partners. These organizations will have the leverage to negotiate the best possible rates and, perhaps more importantly under current circumstances, ensure they are able to secure a spot on their preferred carrier’s route.
Supply and Demand
Vice President of Managed Services for Robinson Fresh, Todd Bernitt, said in a recent United Fresh Produce Association webinar that the driver pool problem may take a decade or longer to play out. In the meantime, the carrier capacity shortfall is having a measurable impact on the industry. One metric commonly used as a real-time indicator of the balance between spot market demand and capacity is load-to-truck ratio, which represents the number of loads posted for every truck posted on DAT Load Boards. Bernitt said a normal load-to-truck ratio should be 2.5 or 3 loads per truck. Currently, it is 8:1.
In a tight trucking market, the supply-demand dynamic gives carriers the upper hand. As the trucking industry struggles to attract and retain long haul drivers, shippers are bracing for carrier rate increases of up to 7% this year. Surprisingly, how much shippers pay for freight may be more directly determined by their reputation as a shipper.
Becoming Today’s Shipper of Choice
Beyond paying bills on time and providing drivers with clear signage, clean restrooms, and access to water, today’s shippers of choice are those who adopt technology to modernize their processes and create the efficiencies needed to move drivers through their facilities as quickly as possible. Dwell time is costly not only to shippers paying detention fees but to carriers as well. One study found that a whopping 78% of carriers lost the opportunity of at least one load a month due to detention while 49% lost more than one load a month. Furthermore, since dwell time is included in HOS (Hours of Service) maximums, delays reduce the number of hours drivers are legally permitted to drive before resting. Every hour of dwell is roughly equivalent to 50 miles of distance traveled.
Shippers of choice are using technology to automate on-site processes and reduce dwell time associated with gate access, check-in/check-out, driver orchestration, and handling paperwork. They are planning schedules to balance loads and unloads to further shorten wait times. They are offering flexible appointment windows and maintain extended business hours to accommodate drivers who are trying to manage HOS limits. Finally, shippers of choice are actively monitoring on-site processes to ensure they meet their dwell time objectives.
Create Value with Efficient Workflows
Carriers value shippers who minimize driver dwell time and avoid detention. Shippers who adopt new technologies to create efficiency and simplify workflows are attracting carriers looking to optimize their freight volume and throughput. Selecting a workflow automation solution that includes contactless check-in and digital document management can provide shippers with the valuable tools they need to become today’s Shipper of Choice.
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