Limited capacity warning! Many shippers are hearing these words from pundits on their side of the industry. As a result of the recession-driven downsizing by a multitude of carriers and closure or failure of many others, capacity by those left on the hauling side has been greatly reduced. Another warning being sounded by these same experts is with the implementation of CSA and looming changes to HOS; there's the fear of a reduction in the number of truckers available to drive freight from origin to destination. Adding to shipper anxiety over reduced capacity is the law of supply and demand, which means increases in shipping rates. Their day in the sun is suddenly becoming very cloudy.
This sounds like a win for carriers: more freight from which to choose; the ability to set higher hauling rates that can help recoup losses incurred during the downturn; and the return of the trucking operation to constant profitability.
But wait, there seems to be another cloud behind this silver lining for carriers. The same experts telling shippers of the doom and gloom of capacity and rates are also providing a solution. “If you can't control something from the outside, bring it in-house where you gain greater control.” In other words, manufacturers and shippers are being advised to build their own private fleets.
Now this can either result in a cog in your hauling wheel or something to which a smaller carrier can take advantage. It all comes down to cost control for the shipper and profitability for the carrier.
To keep your shippers and to encourage new ones to utilize your services, you need a plan of action that says, “Shippers, do what you do best: manufacture, sell and distribute your products. We'll be the experts at getting your product from Point A to Point B in a timely, cost-efficient manner. We'll work together as a well-oiled logistics machine.”
When a shipper and a hauler work as a team to cut costs from their respective operations, carrier profits can easily be increased while customer shipping expenses can be reduced; however, it takes communication and teamwork for this to work. The objective for any carrier is to be the in-house fleet at a lower cost, all while providing superior customer service.
Creating greater efficiencies on both sides is the simplest way to reduce cost. A shipper cutting loading and unloading times will increase available driving time for the trucker; the more driving time, the more loads that can be hauled. From the trucker's perspective, development of efficient, well-thought-out freight lanes with preplanned loads mapped far in advance provide the carrier with greater reaction time when a load cancels.
Trucking is evolving, and you either evolve and adapt with it, or become extinct. CSA and the revised HOS are just a part of the evolution.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
