READER PERSPECTIVES
to take the next order at a cheaper price. Carriers are on a much tighter leash and shippers are cognizant of this leverage. Nearly half of surveyed motor freight buyers (44 percent) acknowledge switch- ing carriers recently, following last year’s trend. Their reasons are mixed, but largely reflect failed expectations: “late pickup and delivery, and no commu- nication,” “better carrier fit for service needed,” “damaged shipments,” and “my contact left for a different company.” Confronted by their own pricing pres- sures, shippers are more willing and able to reevaluate rates in certain lanes and re-bid accordingly to extract as much value as the current market allows. Even valued shipping customers are feeling the compulsion and seizing the oppor- tunity to negotiate pricing. “The market is such that our long-term collabora- tive partnerships are under pressure to reduce costs, so we see pricing pressure across the board,” reports one carrier. …Until Capacity Gets Tight Freight buyers that have established, long-term arrangements with core car- rier partners recognize the intangible value of partnership. As one shipper notes, “sorting out the hype to make accurate and real comparisons is impor- tant. I’d rather have a carrier I trust who delivers my freight on time and damage free than save a few dollars per move.” Still, the nature of supply and demand, and buyer impulse to wrangle with transportation suppliers over spot- market pricing, is creating a dangerous precedent that will trigger a harsh real- ity when capacity hardens. The numbers speak for themselves. Over the past three years, the average fleet size of companies responding to IL ’s Trucking Perspectives survey has dropped from 2,946 trucks per carrier in 2007 to 2,574 trucks per carrier this year. With little to fall back on, many trucking companies have jettisoned older trucks and winnowed their asset pools to reduce overhead. Larger motor freight companies have the latitude to simply idle assets until
IL editors never miss a chance to check in with readers. We followed up with a few survey participants to get their thoughts on transportation best practices and trends. Here’s what they told us. ON CAPACITY… “When the economy rebounds, we could find ourselves facing a capacity crunch. We are concerned this could cause delays in outbound carrier pick-ups. To avoid problems, we’ll schedule pick-ups earlier and increase the number of carriers we use.” — BILL CARDOZA, facilities administrator, Schurter ON SOURCING LTL… “When buying LTL transportation, get quotes from five or six carriers the first few times you make a move. After that, find a few to build a more personal relationship with. This establishes loyalty on both sides, which leads to better discounts and service than using different carriers every other move.” — BRIAN ROSS, shipping manager, Ronile ON CHALLENGES… “The biggest challenge we face is ensuring that the carrier is on equal footing with the competition. Cost is a vital factor. We ask potential carriers to quote on an equal basis by using the same year base rate, available FAKs [rates based on shipment weight and distance only], and minimums so we can accurately compare discounts.” — JACK DELEON, vice president, materials management, Piedmont National
ON SWITCHING CARRIERS… “When it’s time to switch carriers, don’t hesitate. I was getting
attractive rates from a well-known carrier, but it simply could not get freight through one lane without damaging it. Our ignition coils are not particularly delicate, and it takes quite a bit to damage one to the point of non-use. After receiving three shipments in a row that had significant damage, the last straw was receiving a shipment with a skid that should have been on the bottom, stretch-wrapped in pieces on the top of what was left of the shipment.” — TERRI SHEELY, purchasing/traffic manager, Altronic
54 Inbound Logistics • September 2009
FACING LOGISTICS CHALLENGES? USE IL’S 3PL EXPERTS AND
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