Collaborative or Combative?: Re-evaluating shipper-carrier relations during supply chain challenges
Shippers and carriers are being forced to collaborate more than ever, with supply chain challenges and labor shortages constraining fleets’ abilities to meet current freight demand.
A panel at the Truckload Carriers Association’s annual convention revisited the shipper-carrier relationship and offered insights into how those relationships can be enhanced to help navigate the current tight capacity environment.
But, noted Robin Baggs, director of logistics for Home Depot, at the end of the day carriers are still being graded using traditional KPIs.
“It doesn’t mean the pressures aren’t different,” he said. “But how you measure that, grade it, looks very similar. Is product being picked up and delivered on time? We are really measuring the same things and we grade things the same way. It creates a sense of calm in a sea of change and craziness.”
Steve Hueser, North American transportation director for Cummins, said his company continues to see to the little things – are drivers’ needs being met at facilities? Are they being turned around quickly? In return, the main things he wants to see from carriers are performance history, safety, reputation, and reliability. He prefers to deal directly with asset-based carriers.
“Sometimes with that non-asset-based company you’re not really sure who’s moving the freight,” he said. “Personally, and with my team, that does concern us.”
But Joey Hogan, president of Covenant Transportation, noted running a brokerage is a great business decision in this market. As long as the carriers’ freight is being sourced out to provide the same service levels as the core carrier.
“We can offer capacity through trusted carriers and it’s transparent to them, we know who it is, and we hold them to the same standard to which we hold ourselves,” Hogan said.
Shippers on the panel agreed more needs to be done to improve working conditions for drivers. And to highlight that point, Hogan pointed out the fleet’s drivers only drive about 6.5 hours a day. Much of the rest is spent being tied up waiting at shipping and receiving facilities.
“Think about how much capacity is available. The capacity sitting out there without us having to add one truck or one driver if we can just figure out how to address inefficiencies in the network,” he said. “We can pick up capacity but it’s going to take time and bold moves to get there.”
Hueser said at Cummins, there’s a push to double stack freight so more cargo can go in a trailer.
“The double stacking of freight to use one truckload instead of two truckloads is a simple, straightforward thing to do.”Steve Hueser, North American transportation director for Cummins
“The double stacking of freight to use one truckload instead of two truckloads is a simple, straightforward thing to do,” he reasoned. “Our role is to find these opportunities where waste is occurring and to work with our business units, our facilities and within our logistics functions to improve and solve those.”
Home Depot is working more closely with carriers to help them find strategic ways to get in and out of markets with loaded trailers.
“Filling up the truck is so important,” said Baggs. “We are digging into helping carriers think about how they can get into a market and out of a market – get into a facility of ours and out of a facility of ours – with another load. If you’re going to move a product for us inbound from one market to a distribution center, is there an opportunity to match up an outbound load from the same distribution center to one of our stores?”
In return, shippers like Home Depot are grading their carriers on things like customer service, and living up to contractual obligations. “If you committed to 10 loads and we have an 11th load, we sure do hope you’ll try to haul that for us,” said Baggs.
Hueser also said freight will be rewarded to carriers that are easy to do business with. “Someone is always resisting, doesn’t want to join the normal bid, doesn’t want to have a discussion. That’s hard. That’s a tough partner to do business with,” he said.
However, carriers in the room expressed frustration at having to bid on freight annually even when their performance is exceptional.
“It’s an opportunity to reset the rate, but an opportunity to reset the rate in a market that is competitive,” admitted Baggs. “The reality is, with a really large network, it’s dynamic. What was a good fit for them 12 months ago may not be a good fit now. Maybe there’s another lane that’s a better fit for them.”
But Baggs also said Home Depot has in place policies that favor incumbency. “If the service is good and we can come to an agreement on a rate that makes sense around current market conditions, we’ll pull that [lane] out of our bids.”
Cummins’ Hueser also said Cummins doesn’t put every lane up for bid annually, and acknowledged staying with an incumbent carrier is less complicated than switching.
While shippers want to see strong communication from their carriers, communication is equally important within fleet operations to keep drivers happy, noted Hogan.
“We are actually in transition ourselves,” Hogan said of how Covenant communicates with drivers. “We have to make information available where they know where to go get it, versus always pushing it because that can be overwhelming.”
Both shippers on the panel agreed sustainability and environmental initiatives are important in the carrier selection processes.
“We have targets specific to transportation operations to reduce our CO2 footprint,” noted Hueser. “Understanding what different types of powered vehicles you have in your portfolio to help us reach our targets for 2030 is important. I think it can be a competitive advantage.”
But Hogan voiced frustration that carriers aren’t getting credit for vastly improving their fuel economy with diesel powertrains in recent years. Questions about electric trucks, or hydrogen fuel cell trucks, don’t allow fleets to highlight the gains they’ve made using traditional powertrains, he contended.
“I remember when it was a dream to get 6 mpg,” he said. “Now many fleets are 8, 9, 10 mpg. We’ve had some huge movements and we need to be proud of that and manufacturers need to be proud of helping us get there.”
Another factor in carrier selection processes is the general appearance of the fleet. Believe it or not, a lot of big shippers love big trucks. “Clean, newer, bright equipment that shows the brand,” said Hueser, adding “trailers are an opportunity for messaging.” “I love a big shiny beautiful toy as well, that I know is going to move a bunch of product for us,” agreed Baggs.
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