How Shippers Can Manage Risk During the Great Trucking Recession
As inflation slows consumer spending, trucking companies are living through the Great Trucking Recession that’s driving large and small carriers to exit the industry.
The upside is lower rates, at least for a while. The downside risk is carriers going out of business with your loads on their trucks or freight sitting on a dock waiting for a trailer that’s not coming.
Q. How can shippers manage the risk of disruptions from carrier financial instability?
A. Shippers must have processes to ensure they work with fiscally sound transportation providers. Most carriers willingly share this information to prove they are a reliable partner. Properly vetting carriers or using a 3PL that has a thorough vetting process also mitigates risk during a period of volatility.
It’s critical to build relationships with reliable carriers and brokers regardless of the financial environment so a shipper isn’t in a situation where they may need to use a provider that isn’t well-known by their organization.
Q. What red flags should shippers watch out for when assessing a transportation provider?
A. Beware of carriers that have had their authority less than 90 days or have an unexplained lapse in their authority. Make sure their safety rating is not conditional or unsatisfactory with the FMCSA. This status may indicate a carrier operating with unsafe equipment or fraudulently reporting their drivers’ information. Services like TIA Watchdog can also help identify brokers or carriers that have operated unethically or fraudulently with another company. Onboarding and compliance providers, such as Carrier411, Highway, and RMIS, can help weed out unsavory providers.
WSI uses these safeguards to select ethical and compliant carriers. We vet them by reviewing safety records, confirming insurance coverage and authority, checking for any TIA Watchdog reports, and researching any issues in Highway before we invite them to go through our onboarding process to become approved carriers. Our system sends alerts if any carrier falls out of compliance, and they are immediately prohibited from being sent any load tenders.
Q. Can shippers find efficiencies amid the current market conditions?
A. Whether it’s a shippers’ or carriers’ market, having a great rapport with carriers will help ensure a shipper gets the best rates. Shippers can also implement regular RFPs to maintain adequate capacity and accurate rates from carriers as the market adjusts.
Q. How can shippers build partnerships with stable transportation providers?
A. Be truthful and thorough with carriers. Letting a provider know exactly what your expectations are and the complete details of a shipment goes a long way with both carriers and brokers. When you’re negotiating, be realistic with pricing based on market conditions. Asking a carrier to meet a rate well below the market is one way to make them avoid working with you in the future.
Once a great carrier is onboarded, keep using them. The more business you direct toward a carrier, the better overall pricing and service you will receive.
Kelley Stiles is the director of transportation at WSI Freight Solutions, LLC—WSI’s transportation brokerage division. Stiles and her team work closely with WSI’s carrier base to deliver reliable logistics and fulfillment services nationwide.