Trucking Tips of the Trade

Though our readers come from diverse industries and companies of varying sizes, they have one thing in common: daily in-the-trenches experience buying transportation services and managing the flow of inbound and outbound goods.

We asked them three questions, and received numerous suggestions demonstrating how to effectively maneuver for extra capacity, examine your transport network for hidden opportunities, and find and maintain great carrier relationships.

Meet our expert reader panel:

• Bill Tiedeken, logistics manager, Unique Industries Inc.
• Brian Yamaguchi, manager, transportation and logistics, EMJ Metals
• Clement LaFond, shipping manager, Hovensa Marine Agency
• Andrew Gale, director of operations, Alvin & Company Inc.
• Craig Enders, distribution manager, Banta Corporation
• Buddy N. Spurgeon, transportation supervisor, Sanden International
• Bruce Lewin, manager, procurement, inventory and logistics, Beverly Tire Group

1. If you could offer transport buyers one tip for buying truckload transportation, what would it be?

Tiedeken: “Leverage your volume and beware the lowest bid.”

Yamaguchi: “Don’t be so quick to put a 3PL between you and the carrier. If you haven’t yet outsourced your transportation staff, carefully consider the intangibles—service and communication are the most critical components of sourcing decisions. Auctions also do not breed loyalty and don’t engender cooperation when resolving problems. Do you know the true cost of retraining carriers?”

Spurgeon: “Contract, contract, contract.”

LaFond: “When things go wrong, customer service is key to recovering your losses. Regardless of how cheap, organized, or well-known a carrier is, if customer service isn’t there when you need it, you’re lost in wonderland.”

Gale: “It takes a considerable amount of time to monitor truckload carriers for compliance, insurance, and operating authority. If you can’t spare the time to do it right, hire a reputable broker with an excellent record for ‘suggesting’ that carriers settle legitimate claims promptly, among other things.”

Enders: “Shippers can create loyalty by committing a large portion of their volume to a small list of carriers. Carriers, in turn, must agree to accept all freight and not cherry-pick only the premium loads. This strategy reduces costs and improves service for both shippers and carriers.”

Lewin: “Make sure you are comparing apples to apples. With door-to-door costs, for example, do the prices you are comparing include any fuel or other surcharges? How many days for door-to-door service? Will the carrier call to schedule delivery? If delivering cross-border, is the carrier familiar with the necessary paperwork and customs clearance? Is the carrier GPS-equipped so it can track the trailer if something happens?”

2. If you could offer transport buyers one tip for buying less-than-truckload transportation, what would it be?

Tiedeken: “Anticipate your needs and any external economic factors, then negotiate a pricing program that is a win-win for both you and the carrier.”

Yamaguchi: “Standardize your rates on one base price. Percentage discounts mean nothing when carriers are all using different base rates. Pick one and make carriers all quote to that—it’s the only way to compare apples to apples.”

Gale: “Unless you have your LTL carriers under a contract or transportation agreement, you will not have 100-percent control over your freight costs. Shipping managers today that subject their companies to the pitfalls of carriers’ rule tariffs—usually a 100-series tariff—are doing a disservice to their employers. To be completely protected, it takes a well-designed, bilateral contract with an effective date, expiration date, and an evergreen clause.”

Enders: “Consider the overall transportation value: net price combined with transit days. Is it worth a 5-percent price premium to gain one or two transit days?”

3. Have the challenges facing the industry—capacity, fuel costs, driver shortage—affected your service in any way?

Yamaguchi: “Costs have gone up, and if you require better-than-average service, it’s not realistic to get that from the lowest bidder. It’s all about qualifying the carrier. Are its costs higher because it pays drivers more, because it absorbs detention time or deadhead to cover your loads?”

Gale: “As with everything else in our industry, fuel surcharges are negotiable. The carriers, for the most part, are healthy and making handy profits. If we take away fuel surcharges, that would change. The trick is to find a balance with your carriers and put a cap on whatever scale you use. That cap is dependent on things such as discount level and claims ratio, which will determine the carriers’ operating ratio regarding your business.”

Enders: “Capacity has not negatively affected Banta Corporation; in fact we predict an over-capacity by Q1 2006. We compensate the carriers fairly for fuel increases by negotiating surcharges to neutralize costs for LTL and TL carriers. We also believe the driver shortage is overstated.”

Service Providers Speak Up

Are carriers and 3PLs in sync with shippers when it comes to buying transport services? We turned to several service providers to get their perspective on truckload and less-than-truckload services, and how to weather current industry challenges.

Here’s our service provider panel:

• Andrew Ussery, manager, supply chain analysis, Averitt Express Supply Chain Solutions
• Bob Lilja, vice president, transportation, Weber Distribution
• Byrd Gossett, president, Executive Courier Inc.
• Chuck Lounsbury, senior vice president, strategy, marketing, and acquisitions, Ryder System Inc.
• Dave Buss, director, business development, AIT Worldwide Logistics
• Paul Newbourne, vice president, carrier and capacity management, Exel
• Barry Frain, customs and transportation consultant, GHY International

1. If you could offer transport buyers one tip for buying truckload transportation, what would it be?

Ussery: “Avoid the impersonal net auction bid process. Carriers can create a more cost-effective solution if they are able to dialogue with customers about their needs.”

Lilja: “Find the right dedicated partner—preferably a blended asset-/non-asset-based provider—with a commitment to meeting your needs every time. Avoid trucking companies that either provide the lowest price but aren’t there for you in peak periods, or sell you the service they want to sell instead of the best blend of timeliness and price.”

Gossett: “Due diligence, due diligence, due diligence.”

Lounsbury: “Make your freight as user-friendly as possible: correct packaging and loading, scheduled appointments, and reasonable expectations such as dropoffs or milk runs. When carriers have choices they take the best freight.”

Buss: “Focus your efforts on relationships with a few asset-based carriers. If you can push 80 percent of your business to your primary partners and utilize the technology available in today’s marketplace, the capacity, service, and efficiency will make your company more competitive.”

Newbourne: “Take a collaborative approach with your key truckload transportation service providers. This strategy drives mutually beneficial productivity gains into your transportation network, which helps solve the challenges of securing high-quality, cost-effective truckload transportation capacity. By shifting select key relationships from transactional to collaborative, organizations can often improve performance and profitability for all parties.”

2. If you could offer transport buyers one tip for buying less-than-truckload transportation, what would it be?

Ussery: “Find providers that have the capability to provide more than simple point-to-point shipping services and give them the opportunity to create a solution catered to your company’s specific needs.”

Frain: “Shippers should know when it is cheaper to move their LTL shipment as a truckload shipment. The break-even weight point varies by lane, but generally shippers should consider using truckload options for shipments weighing 10,000 pounds or more.”

Lilja: “If you need gold-standard service, don’t pick a low-cost provider and try to force it to be something it is not. Similarly, if you have a low-cost, non-JIT product, you can maximize your transportation dollar by picking solid providers with the cost structure appropriate to save you money.”

Gossett: “Don’t fib about the freight.”

Lounsbury: “Be willing to commit to predictable volumes and consistent schedules whenever possible. Also, look for total value versus cost.”

Newbourne: “Evaluate your network to fully leverage the LTL value proposition. Be sure you have the right freight classification; consider changes in minimum order quantities; and determine if pool distribution alternatives are a more cost-effective option.”

3. Have the challenges facing the industry—capacity, fuel costs, driver shortage—affected your service in any way?

Ussery: “The greatest concern is finding truck drivers of the quality that Averitt expects, without becoming non-competitive due to wage escalation.”

Gossett: “Because Executive Courier an expedited carrier, we’ve maintained capacity by being selective on the freight we haul. If I could recruit more drivers, however, I’d select more freight.”

Buss: “These challenges have made it necessary to focus more than ever on vendor relationships and partnerships. If you can direct your volumes to fewer carriers and aggressively integrate with these carriers, you can actually increase your capacity to service your day-to-day needs.”

Newbourne: “Tight capacity has provided carriers the ability to be more selective in the customers they choose to serve. This reality, however, offers shippers an opportunity to become better customers. They can eliminate or reduce floor loads/driver assist/multi-stop TL shipments; reduce driver load and unload time; improve driver waiting time at production/distribution facilities; and make other changes to increase the attractiveness of their business.