Big Truck TV
During the economic slowdown, the balance of power shifted dramatically in the favor of the shipper, with many looking to squeeze every available cent out of their transportation costs. With price as the determining factor, many shippers left established relationships to new carriers willing to cut their rates to the bone. The recent increases in freight volumes have left capacity squeezed, leaving carriers holding the hammer and shippers scrambling to get their goods moved. Lee and Hal Miller of Miller Transporters explain, from a carrier's perspective, the effect this reversal is having on the industry and how they're dealing with it.
Has your company been experiencing a capacity shortage and if so, how have you been dealing with it?
We have found with our company, we are missing opportunities on a daily basis because from a capacity standpoint we just can't take every load that's being offered to us. As far as which shippers to take care of and how to take care of them, carriers are being forced to make some difficult choices. I think the shippers that have been the most loyal through the years and didn't take advantage of the situation will find that loyalty rewarded. The ones who didn't take advantage of their carriers when things got slow will find that their carriers will take care of them as things tighten up. Those that took advantage of their carriers - either directly or indirectly through a 3PL operation - may have a harder time covering their business.
How do you decide which shippers to take on as customers and which to pass on?
With the tight capacity we are dealing with, you do have to makes some difficult choices on who to serve and this is the time when you really need to exercise your "trucking smarts", if you will: analyze the lanes, analyze what has the best return, analyze what fits best for driver satisfaction and analyze which shippers have the same core values as you - whether it be "Safety First" or the willingness to pay for quality. You search those shippers out and you make sure those are the companies you join at the hip with so that you are with them when times are good, as well as when the cycle repeats itself.
Also, it really comes down to smart economics; things are tight, carriers need to make sure they can compensate their drivers the best they can, and because of that they are going to gravitate to the shippers that have been the most loyal and that didn't take advantage of them financially during difficult times.
What is your view on shippers that took advantage of the situation by squeezing carriers for better rates?
You can hardly fault somebody that's looking to lower their costs when their facing difficulties, but at the same time, given the way some things went down, it does tend to leave a bad taste in your mouth. I'm not sitting here saying that just because we've been hauling for somebody for 20 years that that should mean lifelong loyalty. We have an obligation to them to continue to make our business more efficient and to also make their business more efficient.
Having said that, we have customers that worked with us throughout the recession by letting us know what their needs were. As things move forward, and as the economy strengthens, you tend to remember those relationships as being the types of organizations that you want to do business with.
Post new comment