I recently came across a Fortune 500 company that could have saved millions of dollars in transportation costs by putting its freight out to bid. But after much internal debate, the company decided to honor its current rates with carriers. Why? The company knows that capacity will tighten again down the road, and when that day comes, it expects its carriers to maintain their commitments to them and not abandon them for other shippers offering a cent or two more per mile.   

I know what many of you are thinking: this company is being naïve to think its carriers aren’t going to accept higher rates from other shippers in the future if that’s what the market is offering. Better to take advantage of the savings available today because the carriers will exploit their leverage and increase rates when the pendulum swings in their favor. As the saying goes, “A bird in hand is better than two in the bush.”

I’m sure this was the argument presented by many folks inside the company. The counter argument was to remember and quantify all of the costs and service level challenges the company faced back in 2004-05 when trucking capacity was severely constrained. The company could take the savings now and suffer again later, or it could take a different approach—yes, with some risk—to create more stable relationships with its carriers.

Did the company make the right decision? Time will only tell and it will come down to one thing: if the trust the company placed in its carriers is well founded. If carriers back away from the handshake agreement, the company will have to revisit how it defines a trustworthy partner. And for the carriers who follow the path of short-term money instead of long-term partnership, they won’t know the value of what they’ve given up until the next downturn arrives.

“Have the courage to manage for the long term against the pressures we face today for instant results.”

Richard MacLaren, General Manager North America, Unipart Logistics (an ARC client), began and ended his presentation last week at our performance-based outsourcing/Vested Outsourcing seminar with those words. The pressure for instant results from Wall Street, investors, and shareholders, however, is often too great to overcome. As I wrote about last January in “The ‘War for Cash’ in Supply Chains,” concepts like collaboration seem to apply only during good times; when times get tough, it’s every company for itself, as we saw so many times last year.

Then there’s patience, which we as a society (at least in this country) seem to lose a little of each day.

Trust, Courage, and Patience—you won’t find these things in financial statements or in the metrics used to reward CEOs and board members. But I believe these are the traits that will define leadership this decade. Yes, to trust is to take on risk. The same is true with having the courage to go against the grain and the patience to see it through. But the payoff is arguably greater and more sustainable than following that worn out path that serves as a shortcut today but often leads you back to where you started tomorrow.

What do you think? Do you agree with this shipper’s decision to trust its carriers? Are the pressures for instant results too difficult to overcome? Are trust, courage, and patience undervalued in business today?

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