TIA Photo: Neil Abt/Fleet Owner
Fedex's Smith (left), YRC's Hawkins, Werner's Leathers and NASSTRAC's Rutkowski at the TIA conference.

Avoiding the 'ditch-to-ditch' mentality on freight rates

PALM DESERT, CA. Derek Leathers, president and CEO of truckload carrier Werner Enterprises, has advice for fleets that chase high freight rates on any given day, instead of focusing on the “longer-term view.”
“There is nothing as powerful as building sustainable networks,” said Leathers, who joined with two other carrier executives to speak with brokers on building better relationships at the annual meeting of the Transportation Intermediaries Association

Leathers also said on third-party logistics firms to be more willing to be a “representative” for asset-based carriers. This is about “more than matching capacity with demand,” he added.

Pointing out his company had spent in excess of $2 billion in capital investments in recent years, Leathers called on brokers to “value that investment and take it seriously.”

He expressed frustration when he hears that shippers have strict terms, and a broker appears unwilling to engage in what appears to be a fair negotiation. At the same time, he said brokers and logistics firms have a role to “keep it rational” when fleets may be too aggressive.

Darren Hawkins, president and chief operating officer of YRC Worldwide, addressed the desire to lesson freight rate volatility.

He called for an end of the “ditch-to-ditch” model, where one side demands huge concessions, based on market conditions. Instead, a “middle of the road perspective” can benefit the entire supply chain over the long time, he said.

“There is margin there for you and us,” he told the brokers in attendance.

Much of the panel discussion centered on ways technologies could help – or hamper – the relationship between carriers, brokers, and shippers.

John Smith, senior vice president of operations at FedEx Freight said while technologies can create efficiencies, it has to enhance the overall customer experience in order for it to truly be successful.

Similarly, Hawkins said brokers could assist by educating customers on how carriers operate and what shippers should expect. That includes proper handling of a bill of lading and what to expect in the event of a claim.

Likewise, brokers need to assist in making sure freight is ready when truckers arrive to pick up a shipment.

“It’s a game of minutes now,” said Hawkins.

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