Some Takeaways from the 2014 Surface Transportation Summit Part 2 – Shipper-Carrier Collaboration

At the 2013 Summit, Jacquie Meyers, President of Meyers Transportation Services, made shipper-carrier collaboration a “hot topic” with an impassioned plea to both sides to take a more enlightened approach to working together. Her argument was that this is the best way to reduce freight costs. Since this plea resonated so well with the attendees, Jackie was invited to come back and participate in a panel discussion on this topic with another carrier and two prominent shippers.

This year Jacquie was joined by Elias Demangos, President & CEO, Fortigo Transportation Management Group, Anna Petrova, Associate Director, Supply Chain, Ferrero Canada Ltd., and Susan Promane, Director, Supply Chain, Whirlpool Canada. To lead off the track, Jacquie was asked to provide a definition of a successful shipper-carrier partnership. She expressed the view that true shipper-carrier collaboration is the opposite of a poorly-run freight RFQ that goes to 105 transport companies with the lowest price carriers being awarded the freight. Jacquie stated that a true shipper-carrier partnership is based on honest communication, trust, commitment and investment. A 2, 3 or 5 year commitment allows her company to invest in equipment and develop special customer service solutions. While there is room for “good” RFQ’s, working together will achieve greater efficiencies and cost savings.

The two shippers on the panel presented their views on what it takes to make this happen. Anna Petrova suggested that they key is “alignment on strategy. The carriers we hire are an extension of our brand.” Since retail customers can “fire us” or “punish us” for poor performance (e.g. poor case fill rate, poor on-time service), the shipper and carrier must perform in these areas. On-time service is a carrier KPI and it is up to her carriers to provide the service.

Susan Promane reinforced this point by highlighting the importance of “execution.” She stated that very few carriers operate as true partners. Susan mentioned that she shares her annual goals with her carriers and monitors their performance on a monthly and annual basis. While she agrees with the concept of a multi-year commitment, to her that means 2 years since the world changes too much in that time frame to lock in for a longer period.

Anna suggested that there is value in “formalizing SLAs” (service level agreements) so as to clarify expectations with respect to trailer drops, dedicated CSRs, service reports etc. Providing a carrier partner, particularly a new partner, with this information helps build trust and creates accountability. When a carrier meets their service expectations, they aren’t just talking the talk; they are “walking the talk.” Susan also emphasized the importance of tracking safety, EDI compliance and billing accuracy.

The other carrier representative, Elias Demangos, stressed the importance of “hard work” and “continuous improvement.” He highlighted that it is essential to fix mistakes that will happen, on a timely basis and to avoid becoming complacent. He stressed the importance of “granularity” or attention to detail.

Jacquie Meyers picked up on these points by stating that her company takes an “open book” approach. Customers can come to Meyer’s office to scrutinize their costs of operation. She stressed the importance of demonstrating continuous improvement by identifying opportunities to consolidate LTL shipments, to run LTL every two days rather than every day and/or to consolidate a customer’s freight with the freight received from other customers.

How do shipper-carrier partnerships “go south”? One of Susan’s pet peeves is when carriers knock on her door seeking rate increases but don’t put forth ideas on how to improve efficiencies and reduce costs. Anna made the point that she sees “too much continuous complaining.” She urged carriers to display “Positive Leadership.” She would like to see more carriers come to their customers with ideas for improvement rather than complaints. Positive leadership can transform a partnership. “It would be “21st century thinking to see a carrier lead us.”

Both Ferrero Canada and Whirlpool Canada are major Canadian shippers. During the question and answer session, one member of the audience asked the question about smaller shippers. Specifically the question was what can a small shipper, with low volumes and less leverage, do to form alliances with quality carriers. Jacquie made the point that every shipper starts small. Her company is committed to working with small shippers and playing a part in their growth. Anna suggested that the shipper should seek out a small number of core carriers and build with them. This was a great discussion by a panel of youthful, thoughtful and energetic logistics professionals.

To stay up to date on Best Practices in Freight Management, please join our group (https://www.linkedin.com/groups?gid=4357309&mostPopular=&trk=tyah&trkInfo=tarId%3A1409587506329%2Ctas%3Afreight%20management%20best%2Cidx%3A1-1-1 ) on LinkedIn or subscribe to Dan’s Transportation Newspaper (paper.li/DanGoodwill/1342211466). To follow me on Twitter, go to @DanGoodwill.