For Carriers, Time is of the Essence
A subtle but dramatic shift is taking place in motor freight carriage. Distance still matters, but carriers are focusing on time.
Motor carriers have 660 minutes per driver per day of capacity to sell. That current hours-of-service (HOS) limit on a driver’s time will govern carrier thinking and pricing. Shippers who understand cost per hour or cost per day will have an advantage when dealing with carriers.
“Hammering carriers for price cuts during a downturn is counter-productive,” says Christine Greer, logistics manager for Guardian Glass, one of the world’s largest manufacturers of float glass and fabricated glass products.
After reviewing the market cycles of the past 10 years, Greer developed a strategy to keep carriers and key suppliers as whole as possible during the down market and build a stronger relationship that will help ensure Guardian has access to capacity when the cycle turns. “My job is more about relationship management than it has ever been,” she notes.
The cycle that led to overcapacity could turn dramatically, leaving some shippers in a tight spot. Among the market drivers are, frankly, drivers.
A tight economy has meant many drivers who were able to keep working have not seen pay increases. Pay levels and work lifestyle are combining to make the profession less attractive to new workers. One good bump in construction, and some drivers will move to that industry. Carriers that have been able to maintain or improve driver pay and conditions, rather than make deep cuts, may have the advantage of more driver loyalty when jobs start to open up.
Safety compliance issues could further exacerbate the situation. Shippers were in for some unpleasant surprises when carrier data was made available under the CSA 2010 safety reporting standards. Even carriers who have been proactive about driver performance and safety could need up to 24 months to work off bad scores. The bad drivers may be gone, but the carrier is left with the effects of those safety scores. Add HOS rule proposals that could shave even more time from driver duty cycles, and the challenges continue to mount for drivers, carriers, and shippers.
Arne Gonzales, who sets supply chain strategy for the H-E-B chain of regional grocery stores, modeled the proposed HOS changes and determined they could add one day to transit time for goods coming out of southern California. For perishable produce, that just doesn’t work. He and other shippers are looking for alternatives, including more use of rail intermodal.
Shippers and carriers need true cooperation to optimize and balance network lanes. To achieve this, shippers need to share more information with carriers and, potentially, other shippers who might be able to provide balancing loads. According to carriers, shippers are good at specifying annual volumes in bids, but they need a closer view to help them plan capacity week to week and day to day.
The message for shippers is: regardless of where fuel costs are headed, carriers face major time constraints. They need your help to plan together and improve scheduling and dock performance to get drivers moving. The hours they gain could come back as better service and less volatile pricing.
By working with carriers, and understanding their issues, shippers could find it easier to get capacity when supply is tight.