The recent trucking capacity crunch has struck fear into the hearts of shippers across the country — and with good reason.
Not having access to enough capacity to move one’s freight in a timely and efficient manner puts business-customer relationships at risk.
What’s more, prospects for improvements to the current capacity situation are dire. The electronic logbook mandate is in full effect, and as a result, compliance with federal hours of service regulations is increasing. A healthy economy will continue to increase demand for trucking, and with fleet expansions unable to keep pace, carriers will be in a position to select which loads they haul and at what price.
Shippers navigating the capacity crunch need to understand its causes, how new technology solutions can help, and perhaps most importantly, how to gain “shipper of choice” status with their carriers.
A Perfect Storm. Last year was filled with uncertainty. The 2017 Atlantic hurricane season disrupted supply chains and brought shippers, as well as carriers, to their knees. In some areas, the effects of Hurricanes Harvey, Maria and Irma continue to disrupt supply chain processes. Unfortunately, forecasters at the National Weather Service expect the 2018 hurricane season to be much worse, predicting seven hurricanes and three major storms out of 14 storms in total.
And other factors continue to conspire to limit capacity.
Drivers are aging out of the industry, increasing the talent gap and taking rigs off the road.
Hard enforcement of the electronic logging mandate started on April 1, and the Commercial Vehicle Safety Alliance conducted the annual ELD road check in early June. The road check is an opportunity to review violations, but following hard enforcement, it will result in out-of-service (OOS) designation for many trucks and drivers.
In 2017, approximately 19 percent of inspections led to OOS designation, according to a report from FreightWaves editor John Kingston.
Moreover, demand for capacity is increasing in tandem with a robust economy and is further fueled by surging e-commerce volumes, causing pricing power to shift from shippers to carriers. Even increasing wages for truck drivers won’t be enough to overcome this capacity crunch on its own, but shippers have a few tricks up their sleeves.
Preferred Shipments. Process improvement is essential to the success of any business. In the face of tightening capacity, shippers must enhance the efficiency of their trucking operations, including having freight ready for pickup and completing all documentation.
Process improvement increases efficiency, making freight more attractive to carriers and drivers. In an era of tight capacity, drivers can refuse freight due to the slightest issue and having “preferred shipments” could make all the difference in getting a load picked up.
Preferred shipments also go by another name: shipper of choice. A shipper of choice understands and considers how carriers and truckers view the ease and profitability of hauling freight. This includes overall wages for freight, loading and unloading efficiency, dwell time, timely completion of paperwork and subsequent impact on hours of service (HOS). The more time a driver has to spend picking up a load, the fewer trips they can make in a day, meaning more efficient operations always are more likely to receive preferred status.
In other words, in order to become shippers of choice, cargo owners must be engaged in process-improvement strategies to make freight more attractive and ease driver and carrier woes.
Using a transportation management system, for example, can make operations flow more seamlessly and with fewer disruptions, making freight more attractive to carriers and drivers. Less paperwork and labor also results in savings for carriers, regardless of size, and a modern TMS generally will be designed with an open-source architecture, meaning it can integrate with existing systems, including ELD platforms. Thus, savings increase and shippers can move more product.
The best way to gain shipper of choice status lies in understanding what carriers and truckers need and want.
But with more than 500,000 potential trucking companies in the U.S., it would be illogical to try to contact each and every company to determine their specific preferences. Shippers, therefore, must focus on ways to make freight attractive to all carriers and drivers, not just those frequently used or in local regions.
To gain shipper of choice status, shippers should follow these tips:
1) Reduce dwell time by streamlining yard management, warehouse processes and having freight ready on the dock. Eliminate double booking of loads and make it easy for drivers to see your dock and navigate the yard.
2) Expand fleet size to increase flexibility, even using outside agencies to access more carriers and drivers. For small and midsized businesses, private fleets are likely insufficient to navigate the capacity crunch.
3) Outsource freight management and brokering to third parties, which can go to bat with carriers for why your freight should be given shipper of choice status.
4) Consolidate freight into full truckload and less-than-truckload shipments. The idea is to increase freight volume to match the carrier availability. Consolidated freight means fewer stops, less drain on resources and a higher payoff for drivers, making it a win-win.
5) Upgrade your TMS. A TMS is a vital link in the execution of successful freight management, and since carriers and truckers have access to information immediately, freight becomes more attractive.
6) Implement best-practice solutions by capturing and identifying new processes, ideas and technologies. A TMS is only one of the many possible solutions. Increasing automation, integrating systems and augmented reality on the dock also can help streamline loading and unloading, letting drivers do what they do best, drive!
7) Centralize document storage. Upgrading to a TMS is not an overnight process and shippers that are not yet ready need to centralize document storage and retrieval processes. This is best accomplished through automated systems and moving supply chain management into the digital world.
8) Tender freight properly. Incorrect freight information will breed hostility upon pickup — not to mention rerates — and diminish the attractiveness of freight. Shippers of choice must work to ensure carriers and drivers have accurate, timely information about their freight.
The current capacity crunch is likely going to get worse before it gets better, and it is not isolated to over-the-road transportation. Ocean carriers are seeing increased wait times, and delays in any part of the supply chain could have a compounding effect on the industry. Shipping costs are increasing faster than expected with spot rates up 19 percent since 2017.
The only way to survive and, frankly, afford freight spend is thinking outside of the box, using third parties and freight brokers, increasing efficiency and data accuracy, and gaining shipper of choice status. It will take hard work, but overcoming the capacity crunch is possible.
Adam Robinson is a marketing manager at transportation management system and third-party logistics provider Cerasis. He can be reached by email at arobinson@cerasis.com.