When Shakespeare used the phrase, “The worm has turned,” he knew his audience would understand that he meant a reversal of fortune. “Worm” was a term for ‘dragon.’ In fairy tales, the flying dragon spewing fire would ravage fields and villages. To be in the dragon’s path resulted in destruction.
In shipper/carrier relationships, too many shippers have been the fire spewing dragon, engaging in scorched earth business practices. But the power has shifted to the carriers. One executive from a very large shipping organization was implementing a new software platform to transform the supply chain capabilities at her company. A failed project would almost certainly lead to the loss of her job. This, not surprisingly, concerned her. But she told me that what keeps her up at night is whether her team can secure all the capacity they need.
I talked to a vice president at a large carrier recently. This carrier, like many, has made it a strategic priority to retain drivers. With the driver shortage and hours of service constraints, this priority is only becoming more important. Their driver turnover is 90 to 110 percent, about average for the industry. But they do a fair bit of long haul, where turnover is higher. So comparatively, despite these dismal numbers, they are actually doing pretty well.
One thing they have done, that drivers appreciate, is made an effort to update their fleet by shortening the replacement cycle for tractors from four years to three years. This has reduced maintenance costs, but it also improves safety and comfort for the drivers. They have also invested in a clever network routing solution, which improves utilization and profitability for this carrier, but it also provides drivers with shorter dead hauls and fewer unproductive hours.
But let’s face it, one significant set of frustrations relates to shipper behaviors. This VP commiserated with the drivers. “Imagine a long haul driver passing a rest stop because they want to arrive on time. They get to the shipper’s site and are told they can’t use the restrooms. Then they have to wait two hours for the shipper to unload the truck. The next time they are going to that site, do you think they are going to hustle to make it on time?”
This carrier has not given their drivers the right of customer refusal, the right to decline driving assignments to obnoxious shipper sites. Other carriers do allow this.
But what this carrier has done, and what many of their peers are doing, is creating a customer scorecard. Half the factors on the customer scorecard, not unexpectedly, relate to the favorability of doing business with that customer (profitability, fuel surcharges, whether they use EDI, etc.). But the other half of the factors that comprise the scorecard relate to the shipment window offered by the shipper: is the facility open 24 hours; does the shipper offer first come, first serve; do they offer drop and hook capabilities, etc.
Further, this is a real time system. Every time a shipper tenders a load, that shipper’s score pops up. Poor scores mean that usually that shipper’s load will be turned down.
So will the carriers now turn into dragons? That is unlikely. It is a competitive industry. If anything the trend is for carriers to provide their strategic customers with guaranteed capacity through brokerage on lanes they can’t cover. But even if carriers don’t turn into dragons, more and more of them now have fireproof suits of armor.
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