The tables have turned. Driver shortages and increased HOS regulations have made shipping a seller’s market. More and more, shippers are the ones competing for carrier services. This role-reversal means carriers can be choosier about their freight, and shippers with reputations for being difficult, do so at the costly and inconvenient risk of delays and unshipped cargo. As the trend evolves, there is growing talk of the Shipper of Choice designation, which involves investment in carrier-friendly processes and a conscious commitment to good carrier relations. Here’s what you need to know.
What is a Shipper of Choice?
A Shipper of Choice is a shipper chosen and prioritized by a carrier. They are viewed more as a strategic partner than as a client and have goals that are aligned and compatible with those of their carrier. Through their priority status, Shippers of Choice face less uncertainty and risk in a market where more and more firms are scrambling to move freight.
Prioritizing Value Over Price
Tightening capacity and difficulty booking carriers can have far-reaching implications for scalability, customer service, and rates. As carriers become harder to secure, long-term partnerships become more valuable than low spot market prices.
This goes against traditional wisdom, which views transport as a prime center for profitability gains via cost reductions. Investing in carrier-friendly freight may create additional costs, but building the right relationship with the right shipper can create major long-term gains and minimize unnecessary inefficiencies. For example, Shippers of Choice are better shielded from capacity shortages, are poised for faster speed to market, and have fewer late deliveries and missed opportunities. Though the total cost of transport is important when considering carriers, other factors, such as level of service, reputation and offered solutions, should be considered in equal measure. It’s more than procurement; it’s a commitment.
Being Fair, Flexible, and Partnership-Oriented
It’s a partnership and a two-way street. The carrier chooses you as much as you choose them. The goal should be to build and grow a symbiotic relationship where both businesses help one another. That means communication and goal alignment. Always be vigilant for ways to help the carrier be more efficient and minimize empty miles. Open lines of communication are essential components of building trust.
Shippers of Choice design and enforce their contracts with carrier-friendliness in mind. This means payment terms not exceeding 30 days, generous and flexible shipping/receiving times, honored timeframes and bid commitments, and fair fuel surcharges. Flexibility is king, restrictive appointment times that leave drivers idling at the gates are a surefire way to move down a carrier’s list of preferred clientele. Furthermore, delays in payment or complicated billing/payment procedures will cause carriers to either increase their rates or move on to greener pastures.
Planning Ahead & Communicating
The biggest red flags for carriers are frequent changes/cancellations and short lead times. These can be minimized through planning and load volume/frequency forecasting. On top of providing consistent and steady volumes, savvy shippers flag expected demand and inventory surges ahead of time. Proper forecasting and clear communication with carriers give drivers more predictable and cost-effective schedules, which make carrier driver recruitment and retention easier. Obviously, exceptions are unavoidable and will happen on occasion. When they do, solid and clear notification is what makes or breaks the central tenet of the Shipper of Choice relationship: trust. Ultimately, predictability and communication enhance efficiencies for both parties.
Putting Yourself in the driver’s seat
The driver shortage is the driving force behind the role-reversal and enhanced carrier power. Making your freight attractive to drivers is the golden ticket to Shipper of Choice status. This means making wait times as short as possible and minimizing loading and unloading times. Hospitality via friendly staff, comfortable break rooms or rest areas, and even snacks can also go a long way.
In conclusion, carriers and shippers are currently facing the same set of challenges. As regulation grows and more and more drivers retire (and are not replaced), lasting partnerships and common ground will only grow in importance.