Executive Briefings

What Shippers Don't Know About Their Carriers

Carriers are widely viewed as having an easy task: pick up and deliver on time. Piece of cake, right? Wrong. During the next few minutes of reading you will learn not only the challenges carriers face behind the scenes, but also what they aren't telling you that can reduce your transportation and distribution costs!

What Shippers Don’t Know About Their Carriers

Technology

Let's begin with technology. Most of us have seen the complex ERPs manufacturers use, but most haven't seen the basic and mundane systems carriers use. Their systems have a few basic functions: order entry, load planning, fleet management and accounting. There are numerous reports than can be run on miles per truck, revenue per truck, number of loads per customer, detention, etc., but overall, it's a "select the truck and plan them on a load" type of system. The rest is up to the driver to pick up and deliver on time. The challenge lies within the unknowns that planners face: will this driver actually come out of the house, how many trucks will break down, will we get all six guys out of orientation, and so on. Just because you start the morning with 50 trucks and 50 loads doesn’t mean things are going to go smoothly. No matter what your morning truck/load balance is, things never go as planned. Primarily, it’s a “shoot from the hip” environment using tribal knowledge and experience to get through the day.

Shippers, if you know your carrier customer service rep, then you know the most tenured people typically do the best job. They do a better job of predicting the unknowns than newer employees. Second, carriers don’t have a system than can understand all the factors they face that were previously mentioned above. Quick story: a director of operations was once tasked with explaining to the president and COO why the new “optimization” planning tool wasn’t working. It was supposed to match trucks to loads and reduce the time spent planning. Needless to say, it didn’t factor in 34-hour resets, trucks breaking down, shipments customer service was waiting on that sales had just accepted, that the best driver in the company was going to get the worst load and the worst driver was going to get the best load. This story is parallel to the challenges manufacturers face with their planning systems. They typically do a good job, but there’s a lot of tribal knowledge and experience that really gets the job done. Without a truck load builder that links the planning and execution of shipments, the load planners build towards a conservative target weight/cube and the truck loaders struggle anytime the bar is pushed to increase those limits.

Equipment Capabilities

Most carriers say they can haul 45,000 pounds or 45,500 pounds with a 53-foot dry van trailer. More often than not, they can haul more than that. So why don’t they? What load planners and drivers hate the most is over-axle and over-weight loads. It causes hours-of-service (HOS) issues and impacts driver retention. Second, they don’t really know what their equipment can handle. What they know is from tribal knowledge and experience. Third, what do they gain from telling a customer they can handle more weight? In their mind it’s going to cause more issues with re-works and talking drivers off the ledge.

Desires

So what do carriers like? What do they constantly search for? Three major things carriers desire:

Drop trailers: With EOBRs and the HOS regulations, carriers are always looking for ways to get more work (miles) in every day. As long as the trailers get “turned” within 48 hours it’s a win-win.

Power-only freight: Wal-Mart is notorious for doing this during holidays and when there’s a FEMA emergency. They will pay a daily flat rate to use your truck and driver – no trailer needed! It’s a fixed daily income and a trailer isn’t necessary. Plus you won’t have to book a load for your driver every day.

Disclaimer: The tricky part is figuring out how to adequately compensate the drivers. Also, it’s always a fun one for billing and driver payroll to calculate!

Dedicated freight: There are differences in the meaning of “dedicated freight” for manufacturers and carriers. For carriers, it means you have a specific lane that will be run at consistent intervals and there will always be return trips. For example, trucker Bob will always have a load from Nashville to Atlanta on Monday, Wednesday and Friday. On Tuesday and Thursday, he will always have a return load from Atlanta to Nashville. Note: carriers will go below their normal rate to obtain dedicated freight. It provides consistent revenue and has the lowest driver turnover. From my experience, when manufacturers say dedicated freight it means they’re always shipping to a specific destination, but they are usually empty (deadheading) the return trip. To manufacturers dedicated freight is a problem they’re always trying to solve. Quite the opposite, don’t you think?

Brokers

Most people cringe when they hear the word “broker”. Some even refer to them as a necessary evil. Shippers, if you use brokers, watch out! Carriers will almost always put their worst drivers and heaviest trucks on broker loads. Not to mention it will be the first load not covered when a carrier is over-booked. While brokers aren’t everyone’s favorite, they do help out shippers and carriers. Especially when a driver ends up in the middle of nowhere or they need a load to a specific place ASAP (i.e., family emergency). The only time a broker load is considered as “customer freight” is when they meet a company’s rate requirement and it’s consistent freight.

Conclusion

We are all armchair quarterbacks when it comes to understanding how other parts of the supply chain operate. If we looked inward we would see that we are all contributing to the problem. For example, carriers shy away from pushing the limits on how heavy they can load their equipment. Manufacturers say they push the limits but cut back just a little to ensure they don’t have issues getting the trailer loaded and legal. And when issues do occur they lower the “target weight/cube” even more. One suggestion – look at solutions that not only do a better job at order creation but also guide the loading of those orders. Then we could achieve an end-to-end win-win in the supply chain. All companies are looking for ways to reduce costs and be more environmental … sometimes we look in the wrong areas, and other times we don’t realize a solution to our problem exists.

Source: Transportation Optimization

Technology

Let's begin with technology. Most of us have seen the complex ERPs manufacturers use, but most haven't seen the basic and mundane systems carriers use. Their systems have a few basic functions: order entry, load planning, fleet management and accounting. There are numerous reports than can be run on miles per truck, revenue per truck, number of loads per customer, detention, etc., but overall, it's a "select the truck and plan them on a load" type of system. The rest is up to the driver to pick up and deliver on time. The challenge lies within the unknowns that planners face: will this driver actually come out of the house, how many trucks will break down, will we get all six guys out of orientation, and so on. Just because you start the morning with 50 trucks and 50 loads doesn’t mean things are going to go smoothly. No matter what your morning truck/load balance is, things never go as planned. Primarily, it’s a “shoot from the hip” environment using tribal knowledge and experience to get through the day.

Shippers, if you know your carrier customer service rep, then you know the most tenured people typically do the best job. They do a better job of predicting the unknowns than newer employees. Second, carriers don’t have a system than can understand all the factors they face that were previously mentioned above. Quick story: a director of operations was once tasked with explaining to the president and COO why the new “optimization” planning tool wasn’t working. It was supposed to match trucks to loads and reduce the time spent planning. Needless to say, it didn’t factor in 34-hour resets, trucks breaking down, shipments customer service was waiting on that sales had just accepted, that the best driver in the company was going to get the worst load and the worst driver was going to get the best load. This story is parallel to the challenges manufacturers face with their planning systems. They typically do a good job, but there’s a lot of tribal knowledge and experience that really gets the job done. Without a truck load builder that links the planning and execution of shipments, the load planners build towards a conservative target weight/cube and the truck loaders struggle anytime the bar is pushed to increase those limits.

Equipment Capabilities

Most carriers say they can haul 45,000 pounds or 45,500 pounds with a 53-foot dry van trailer. More often than not, they can haul more than that. So why don’t they? What load planners and drivers hate the most is over-axle and over-weight loads. It causes hours-of-service (HOS) issues and impacts driver retention. Second, they don’t really know what their equipment can handle. What they know is from tribal knowledge and experience. Third, what do they gain from telling a customer they can handle more weight? In their mind it’s going to cause more issues with re-works and talking drivers off the ledge.

Desires

So what do carriers like? What do they constantly search for? Three major things carriers desire:

Drop trailers: With EOBRs and the HOS regulations, carriers are always looking for ways to get more work (miles) in every day. As long as the trailers get “turned” within 48 hours it’s a win-win.

Power-only freight: Wal-Mart is notorious for doing this during holidays and when there’s a FEMA emergency. They will pay a daily flat rate to use your truck and driver – no trailer needed! It’s a fixed daily income and a trailer isn’t necessary. Plus you won’t have to book a load for your driver every day.

Disclaimer: The tricky part is figuring out how to adequately compensate the drivers. Also, it’s always a fun one for billing and driver payroll to calculate!

Dedicated freight: There are differences in the meaning of “dedicated freight” for manufacturers and carriers. For carriers, it means you have a specific lane that will be run at consistent intervals and there will always be return trips. For example, trucker Bob will always have a load from Nashville to Atlanta on Monday, Wednesday and Friday. On Tuesday and Thursday, he will always have a return load from Atlanta to Nashville. Note: carriers will go below their normal rate to obtain dedicated freight. It provides consistent revenue and has the lowest driver turnover. From my experience, when manufacturers say dedicated freight it means they’re always shipping to a specific destination, but they are usually empty (deadheading) the return trip. To manufacturers dedicated freight is a problem they’re always trying to solve. Quite the opposite, don’t you think?

Brokers

Most people cringe when they hear the word “broker”. Some even refer to them as a necessary evil. Shippers, if you use brokers, watch out! Carriers will almost always put their worst drivers and heaviest trucks on broker loads. Not to mention it will be the first load not covered when a carrier is over-booked. While brokers aren’t everyone’s favorite, they do help out shippers and carriers. Especially when a driver ends up in the middle of nowhere or they need a load to a specific place ASAP (i.e., family emergency). The only time a broker load is considered as “customer freight” is when they meet a company’s rate requirement and it’s consistent freight.

Conclusion

We are all armchair quarterbacks when it comes to understanding how other parts of the supply chain operate. If we looked inward we would see that we are all contributing to the problem. For example, carriers shy away from pushing the limits on how heavy they can load their equipment. Manufacturers say they push the limits but cut back just a little to ensure they don’t have issues getting the trailer loaded and legal. And when issues do occur they lower the “target weight/cube” even more. One suggestion – look at solutions that not only do a better job at order creation but also guide the loading of those orders. Then we could achieve an end-to-end win-win in the supply chain. All companies are looking for ways to reduce costs and be more environmental … sometimes we look in the wrong areas, and other times we don’t realize a solution to our problem exists.

Source: Transportation Optimization

What Shippers Don’t Know About Their Carriers