The Logistical Lowdown

While the truckload spot market is still showing record high spikes, things seem to be winding down a little, at least for right now. This brief calm could not have come at a better time for those trying to recover from the last few months' volatile price hikes. Given that this trend could lead to huge increases in next year’s contract truckload rates, shippers should start preparing their budgets now. 

While it’s been established how aiming to be a Shipper of Choice has its fair share of benefits, it’s quickly become a relevant topic for many in the industry again. With such tight trucking market conditions and capacity issues continuing to surface, obtaining this sought-after shipping status has reappeared as the solution to securing carrier interest.

 

 

As logistics professionals, we all know that a low rate is nothing without good service to match. A late delivery on an important shipment, or any other type of supply chain service failure, can cost far more than what the carrier or a fulfillment center’s being paid. And when problems do occur, the provider who made the mistake is still usually getting their money with no penalty for the extra cost or wasted time that their performance failure caused.

 

As industry giants like Walmart and Amazon respond to rising consumer demand for instant shipments with free one-day shipping and same-day delivery options, the delivery window for suppliers and logistics providers is growing smaller and smaller. With less time to meet these shorter windows and generally tighter regulatory guidelines for carriers, manufacturers are facing some serious pressure to perform.

Our country is living in strange times, and it’s impacting how most industries operate. For some companies, the demand for their products and services have disappeared very quickly, such as travel-related businesses like airlines. In others, companies and employees are working harder than ever, such as in the healthcare space. And for certain manufacturers, it’s temporarily changing what they do, which will eventually impact shippers. 

Our country is living in strange times, and it’s impacting how most industries operate. For some companies, the demand for their products and services have disappeared very quickly, such as travel-related businesses like airlines. In others, companies and employees are working harder than ever, such as in the healthcare space. 

President Trump recently invoked the Defense Production Act in response to the COVID-19 pandemic. This law, which was first engaged during the Korean War, essentially allows the federal government to regulate the private-sector to keep the production we need for battling COVID-19 (like ventilators, protective gear, or testing kits) moving. For certain manufacturers, it's temporarily changing what they do.

 

As a logistics professional for over 20 years, I've seen many changes take place on the transportation side of things.

Think back to the late 1990s; email was just starting to become mainstream in the business world, the internet was gaining popularity, and the smart phones we now rely on to get through our entire day was a pay phone; unless of course you were Zack Morris.

Business relationships were built on face-to-face interactions with open dialog about each party's pain points and strategies. The goal was working together to both become more efficient, and to be better suppliers to customers. 

Email, the internet, and of course our smart phones have easily made us all more productive. However, the face-to-face business interactions that now take place on our electronic devices make the idea of a partnership seem more like a one-way street.

As the Vice President of Sales at Keller Trucking, and the person who approves the rates for all of our truckload freight, I find it interesting how the use of dropped trailers at customers' facilities has increased over the years; and that shippers expect carriers to view the use of dropped trailers as just a cost of doing business.

The truth is that carriers prefer not to drop trailers, but we have to due to restricted shipping and receiving hours or the customers' lack of resources to unload and load efficiently. 

In today's market, a typical 53' van trailer can average as much as $28,000. Keeping your total costs at a minimum by utilizing that trailer as much as possible during its 5-year life span is of great importance.

 

The world of hauling short haul freight, defined as lanes of 250 miles one way, is certainly one that can be lucrative and command a high revenue per mile if executed properly. At the end of the day, it is the goal of leadership, operations, and professional truck drivers to run as many miles per day as quickly, efficiently, and safely as possible; after all, the money is made when trucks are on the road.

Pricing of short haul lanes all comes down to utilization. The dynamics involved with hauling short haul freight can be challenging and costly in labor and equipment if it isn’t utilized properly.