Force of Nature
Say what you want about the trucking industry, but it has never been more exciting for carriers. Opportunities for growth are great, but "little" errors or lack of vision can have fatal results. What fun, as customers pull carriers in seemingly opposite directions.
Demands for inventory reduction and the resultant "efficiency" mindset drives this trend, says Don Schneider, president of Schneider National. "The logistics managers we deal with reflect market demands," he says. "If we look at trend lines, increased competitiveness and low inflation is what our customers want. They cut costs by eliminating inventory and supporting infrastructure. That desire creates challenges and opportunities for those providing trucking services."
Speed, reliability, and low cost are givens. It is tough enough for carriers to clear that bar. But today's logistics managers emphasize operating ratios and technology. "Value add is important, but O/R is more important," says David Baum, national distribution manager, FishKing Unisea Foods, Los Angeles. "We all learned that from the undercharge crisis. It's hard to imagine that any company with substantial volumes would not regularly monitor its carriers' O/R."
Michael Bryant, director distribution, Goodys Family Clothing, Knoxville, Tenn., agrees. "The atmosphere that failing carriers have created makes O/R monitoring a business necessity."
To boost O/R and become more efficient, carriers are reengineering their processes and investing in, learning, and sharing technology as well as becoming creative in their quest to keep customers. And while you need these new services, which impact on the carriers' bottom lines, you also want to use carriers that are profitable.
With these Darwinian forces at work, carriers respond in different ways. The best of the best proactively use this tension as the driving force to improve, welcoming your challenge. Others have opted out of providing the extra value many customers demand and have concentrated on cutting costs to keep prices low and O/R high. Typically these types serve the wholesale market, dealing only with 3PLs and other intermediaries that manage your logistics business, or with customers who need plain vanilla A to B transport only.
You'll find both types of carriers on our annual Top 75 Motor Carriers list. Compared to last year, many carriers have dropped off the list; others are no longer in business. But that number is eclipsed by new carriers and by smart carriers that have answered your call, improving in all areas - and delivering to you more solutions than ever before.
Face it, you're a force of nature.