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	<title>Shipper-Carrier Collaboration Archives - DG&amp;A Freight Consultants</title>
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	<title>Shipper-Carrier Collaboration Archives - DG&amp;A Freight Consultants</title>
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		<title>Analyzing the Results of a Freight Bid – Part 2 – The Carrier Meeting</title>
		<link>https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-2-the-carrier-meeting/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Fri, 19 Jul 2024 17:16:21 +0000</pubDate>
				<category><![CDATA[Best Practices in Freight Management]]></category>
		<category><![CDATA[Freight Bids]]></category>
		<category><![CDATA[Freight Cost Savings]]></category>
		<category><![CDATA[Freight Rate Pricing]]></category>
		<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[financial management]]></category>
		<category><![CDATA[Freight]]></category>
		<category><![CDATA[freight bid]]></category>
		<category><![CDATA[freight cost savings]]></category>
		<category><![CDATA[freight costs]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[freight rates,]]></category>
		<category><![CDATA[freight RFP]]></category>
		<category><![CDATA[freight transportation]]></category>
		<category><![CDATA[RFP]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<category><![CDATA[supply chain management]]></category>
		<category><![CDATA[Transportation]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/?p=2149</guid>

					<description><![CDATA[<p>After analyzing the completed carrier questionnaires, and the bid rates, it is time to eliminate those carriers that don’t meet expectations in terms of service, coverage, rates, and other key variables.  It is also the time to identify a short list of potential bid award winners to discuss their proposals in more detail.  This blog [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-2-the-carrier-meeting/">Analyzing the Results of a Freight Bid – Part 2 – The Carrier Meeting</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>After analyzing the completed carrier questionnaires, and the bid rates, it is time to eliminate those carriers that don’t meet expectations in terms of service, coverage, rates, and other key variables.  It is also the time to identify a short list of potential bid award winners to discuss their proposals in more detail.  This blog focuses on how to get the most out of the Carrier Interviews.</p>
<p>Since these truckers, IMCs and/or freight brokers will interact directly with your customers, it is very important to meet with your potential business partners in person.  Zoom or TEAMS meetings may be necessary in some instances (e.g. small bid award, distance from shipper), but in-person meetings are preferable.</p>
<p>For carriers that will be given a select group of lanes or limited customers, a 30-minute interview may suffice.  Carriers that may receive a larger bid award, a 60-minute meeting, or longer, may be required.  Some carriers may ask for a pre-meeting lunch or dinner.  My advice would be no lunches or dinners during this process so you can be fair and objective.  I also recommend meeting in a comfortable conference room that has good ventilation, and a screen that can be connected to a computer.  Keep in mind that some carriers will bring a small “army” to these meetings.</p>
<p>I also recommend that you are clear on the date, location and timeline of the interview.  Manage the time carefully so other carriers don’t have to wait extended periods of time for their interviews and/or miss their return flights.</p>
<p>The interview should consist of 6 components.</p>
<p><strong>     1. Introductions</strong></p>
<p><strong>     2. Shipper Overview</strong> – 5 minutes</p>
<p>The senior project manager should utilize a maximum of 3-4 PowerPoint slides.  That person should focus on those elements that are most important to their transportation network.  The slides should be easy to understand and highlight service, coverage, drop trailer or live load, appointment times, customer pickup and delivery requirements, reports &#8211; &#8211; &#8211;  whatever is most important to the shipper and their customers.</p>
<p><strong>     3. Carrier Overview</strong> – 10 minutes</p>
<p>Similarly, carriers should prepare 3 or 4 PPT slides.  Some carrier salespeople can be quite long-winded. The carrier spokesperson needs to be aware of their time allocation.  The trucker or broker should be asked to outline how they would service the account in terms of assets, customer service, reports etc.</p>
<p>Shippers need to listen carefully, and probe as required.  Is the carrier a good fit from a service and culture perspective?  How prepared are they for the meeting?</p>
<p>Recently we conducted a bid for a mid-size shipper that moved truckloads of freight throughout the United States.  On a weekly basis, they move one or two full loads direct to most of their customers and loads of LTL freight to multiple distribution centers.  When one senior representative of a large carrier spoke, he mentioned that his company works on the 80/20 principle.  Large shippers, twenty percent, receive eight percent of their assets.  Smaller shippers, with 1 or 2 loads a week to specific locations, receive the balance of their capacity.  If the carrier representative had studied the data, they would have realized that they were communicating the wrong message to this shipper.  They did not receive any business.</p>
<p>As a shipper, it is important to focus on whether the carrier is professional and how well they understand your requirements.  Do they customize their presentation to address your specific requirements or deliver a “cookie cutter” message?</p>
<p><strong>   4. Review Questions/Concerns from Carrier’s Bid</strong> – 20 minutes</p>
<p>This is the time to obtain answers to questions that are not fully answered in the questionnaire.  What is the carrier’s OR and how long has company been profitable?  If the carrier has 10 to 20 trucks and has bid on multiple lanes, which blocks of business are they best equipped to handle (e.g. where they have reliable backhaul traffic)?  If you are looking at LTL carriers, do they serve specific areas on a direct basis or through (handoffs to) interline carriers?</p>
<p>How will your account be serviced?  Where is the carrier’s equipment yard that is closest to your facilities?  Do they have the assets and resources to manage the account?  What added value to they bring to the business?  What reports are they able to supply?</p>
<p><strong>    5. Rates</strong> – 20 minutes</p>
<p>We prepare rate analysis sheets for each carrier and present this information on the screen so each carrier can see their rate, the best rate, and where they rank, on every lane, for which they submitted a quote.  Some incumbents hold back in their round 1 bid.  This exercise helps them see that they need to be more competitive to retain the business.  Where they are not competitive, we ask the carrier if they want this business, if they can do better on price, and how many loads a week they can handle.  During this exercise, it becomes clear which blocks of business are the best fit for each transport company.</p>
<p><strong>    6. Next Steps</strong> – 5 minutes</p>
<p>At the end of the meeting, we advise the carriers that we will send them their rate analysis, via email, for the lanes they bid on.  We ask them to resubmit their final bid by a specific deadline.  We discuss whether the client will be seeking a contractual agreement or whether a rate sheet will be satisfactory.  We also advise them of the length of the bid award and the rate increase formula in future years.  The carrier interview, and the carrier’s responses during, and after the meeting, are key elements in the shipper’s decision-making process.</p>
<p>&nbsp;</p>
<p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. If you are looking for ways to improve the effectiveness of your freight management processes, to save money on freight, or to conduct a freight bid, contact me at dan@dantranscon.com.</p>
<p>The post <a href="https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-2-the-carrier-meeting/">Analyzing the Results of a Freight Bid – Part 2 – The Carrier Meeting</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>What are Some Lessons that Shippers Can Learn from the Past Two Years?</title>
		<link>https://www.dantranscon.com/what-are-some-lessons-that-shippers-can-learn-from-the-past-two-years/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Sat, 28 Sep 2019 00:35:01 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[capacity shortage]]></category>
		<category><![CDATA[Driver Shortage]]></category>
		<category><![CDATA[freight costs]]></category>
		<category><![CDATA[freight transportation]]></category>
		<category><![CDATA[Transportation]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/what-are-some-lessons-that-shippers-can-learn-from-the-past-two-years/</guid>

					<description><![CDATA[<p>From a Freight Transportation perspective, the past two years have been among the most tumultuous in decades. Throughout 2018, an economic surge, a shortage of qualified drivers, and the implementation of the ELD mandate in the United States, created a shortage of freight capacity, particularly in the truckload sector. Shippers struggled to find trucks to [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/what-are-some-lessons-that-shippers-can-learn-from-the-past-two-years/">What are Some Lessons that Shippers Can Learn from the Past Two Years?</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p><img decoding="async" style="display: block; margin-left: auto; margin-right: auto;" title="b2ap3_thumbnail_dreamstime_l_54762115.jpg" src="https://www.dantranscon.com/wp-content/uploads/2019/09/b2ap3_thumbnail_dreamstime_l_54762115.jpg" alt="b2ap3_thumbnail_dreamstime_l_54762115.jpg"></p>
<p>From a Freight Transportation perspective, the past two years have been among the most tumultuous in decades. Throughout 2018, an economic surge, a shortage of qualified drivers, and the implementation of the ELD mandate in the United States, created a shortage of freight capacity, particularly in the truckload sector. Shippers struggled to find trucks to move their loads.</p>
<p>To address these shortfalls, many shippers were forced to pay significantly higher rates, establish dedicated fleets and/or change their freight operations to become a “Shipper of Choice.” Rather than simply tender their loads, shippers were advised to become more “carrier friendly.” This encompassed a range of activities.</p>
<p><strong>Becoming a “Shipper of Choice” </strong></p>
<p>Shippers learned that they could improve their chances of securing needed truck space by giving carriers advance notice of a pending surge in business volumes. Another way to improve carrier relations was to help fleets keep their trucks on the road, rather than sitting in warehouse yards or at loading docks. To avoid carrier detention fees for long waits, shippers and receivers were encouraged to improve appointment scheduling and freight loading / unloading processes.</p>
<p>Manufacturers and distributors were also advised to invite carriers to participate in joint business reviews on topics such as improving freight flow or boosting profitability. Since driver recruitment and retention is such a huge issue, shippers were requested to improve their treatment of these key carrier employees by allowing them to use the restrooms at their facilities.</p>
<p><strong>Business Conditions Softened in 2019 </strong></p>
<p>In 2019, demand for motor freight services softened. As an example, last year daily demand found six truckload shipments searching for one truck; this year there are three. Dry-van truckload spot-market rates in July were down nearly 19 percent versus last year, and declining freight rates have become the norm. This year carriers are carefully trimming their fleets and scaling back truck purchases as new capacity to handle last year&#8217;s surging volumes is now competing for fewer shipments.</p>
<p><strong>Shippers are taking Two Approaches to the Changing Market Conditions </strong></p>
<p>One group of shippers has abandoned the lessons learned from 2018 and gone back to a tactical or transaction-oriented approach that focuses on the old standbys – price and service. They have reverted to securing capacity on the spot market. Since capacity is more plentiful this year, they are forgetting two facts of life.</p>
<p>First, business is cyclical. The economy ebbs and flows. Capacity is already contracting. Carriers cannot afford to purchase, maintain and insure excess equipment. The driver shortage is not likely to go away any time soon, even with the advent of autonomous vehicles that is still some years away. As capacity exits the market, shippers will be facing shortages again, possibly sooner than they think.</p>
<p>Second, carriers can play the same game as shippers. They can take a tactical approach and award their capacity to shippers in a manner that best serves their companies. They can give priority to their Shippers of Choice, those companies that make long term commitments and pay contracted rates; they can make their limited excess capacity available, at higher spot rates, to those shippers that did not learn the lessons of 2018.</p>
<p>Another group of “enlightened” shippers learned and internalized some powerful lessons during the latter half of 2018. They realized that they needed to expand their processes and key metrics beyond price (freight costs) and service so that they included a range of “Shipper of Choice” capacity related attributes.</p>
<p>One indicator of the quality of those relationships is first-tender acceptance rates, a measure of how often carriers accept (or reject) potential loads from shippers. If a shipper has been difficult to work with, carriers may be inclined to reject their tenders. By changing procedures, by giving carriers more lead time, they can raise tender-acceptance rates.</p>
<p>Another key process (and metric) is dwell time at origin and destination. Dwell time and detention fees can be measured and monitored.</p>
<p>Shippers of choice build strategic partnerships with their carriers. The strength of these partnerships can be measured in two ways. Shippers can track monthly, quarterly, semi-annual and annual meetings. They can measure the number and results of the Action Items that come out of the partnership meetings. Driver satisfaction is also measurable. Shippers have a vested interest in ensuring the drivers of their core carriers are happy and well treated.</p>
<p><strong>Summary </strong></p>
<p>During 2018, many shippers that did not have a Core Carrier Program, and were not Shippers of Choice, experienced capacity shortages and rising freight rates. Those manufacturers and distributors that booked loads on the spot market, frequently paid freight rates that were higher than contracted rates. In 2019, carrier capacity conditions improved, and spot rates came down. The question for shippers is whether they should abandon the principles of becoming a “Shipper of Choice” in view of current realities.</p>
<p>It is our view that the driver shortage will not be solved soon. As carriers adjust the size of their fleets to meet market conditions, capacity shortages will return. To avoid the pain of 2018, shippers are encouraged to establish a Core Carrier Program with a set of high-quality suppliers, and to negotiate contract rates, service requirements and capacity allocations with each of them. By implementing the set of Best Practices and metrics outlined above, this is a sound long-term approach to establishing a robust and competitive freight transportation services procurement program.</p>
<p>&nbsp;</p>
<p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>Twitter</strong> <strong>@DanGoodwill</strong>, join the <strong>Freight Management Best Practices</strong> group on<strong> LinkedIn</strong> and subscribe to <strong>Dan’s Transportation Newspaper</strong> (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/what-are-some-lessons-that-shippers-can-learn-from-the-past-two-years/">What are Some Lessons that Shippers Can Learn from the Past Two Years?</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Time to Become a “Shipper of Choice”</title>
		<link>https://www.dantranscon.com/time-to-become-a-shipper-of-choice-2/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Mon, 16 Apr 2018 03:19:54 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[capacity shortage]]></category>
		<category><![CDATA[Driver Shortage]]></category>
		<category><![CDATA[freight costs]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/time-to-become-a-shipper-of-choice-2/</guid>

					<description><![CDATA[<p>&#160; In last week’s blog, I highlighted the tight freight capacity being experienced across North America (https://dantranscon.com/index.php/blog?view=entry&#38;id=310 ), and that it is likely to continue for another year or two. For shippers that are experiencing shortages of trucking or rail equipment, there is a series of steps that need to be taken to prevent service [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/time-to-become-a-shipper-of-choice-2/">Time to Become a “Shipper of Choice”</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>&nbsp;</p>
<p style="text-align: center;"><img decoding="async" title="b2ap3_thumbnail_dreamstime_l_83448528.jpg" src="https://www.dantranscon.com/wp-content/uploads/2018/04/b2ap3_thumbnail_dreamstime_l_83448528.jpg" alt="b2ap3_thumbnail_dreamstime_l_83448528.jpg"></p>
<p style="text-align: justify;">In last week’s blog, I highlighted the tight freight capacity being experienced across North America (https://dantranscon.com/index.php/blog?view=entry&amp;id=310 ), and that it is likely to continue for another year or two. For shippers that are experiencing shortages of trucking or rail equipment, there is a series of steps that need to be taken to prevent service failures and loss of market share. Here is a link to some blogs I wrote on this topic last summer (https://www.dantranscon.com/index.php/blog/entry/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases and https://www.dantranscon.com/index.php/blog/entry/two-keys-to-maintaining-truck-capacity-this-winter ).</p>
<p style="text-align: justify;">The following are some additional steps to take to become a Preferred Shipper.</p>
<p style="text-align: justify;"><strong>1. Integrate a Freight Transportation Strategy into the company’s Business Plan </strong></p>
<p style="text-align: justify;">For companies that have relied on rate quotes and sport market pricing, transition from a transactional to a strategic approach to freight transportation. Select a core group of carriers, negotiate and sign multi year agreements that include SLAs for price, service, and capacity. Keep an open mind on modal options. Meet with the leaders of these transportation organizations to ensure they can meet the stated requirements in all three areas. Before awarding freight to these companies, test them over time to verify that they can meet their commitments.</p>
<p style="text-align: justify;"><strong>2. Provide Carriers with Shipping Forecasts </strong></p>
<p style="text-align: justify;">Share information with carriers on shipping characteristics, freight flows, and seasonal fluctuations. Notify carriers of peaks and valleys and variances in equipment requirements.</p>
<p style="text-align: justify;"><strong>3. Work with Core Carriers to Remove Inefficiencies and Costs </strong></p>
<p style="text-align: justify;">Meet with these core carriers and openly discuss all elements of the company’s freight operations. Can the company be flexible with pickup and delivery times? Can drivers work with the dock schedule? Is there anything that can be done to have the freight and paperwork available more quickly? Are there lines of trucks in front of the company’s facilities on a regular basis causing delays and lost driver time? Does it take more than 45 minutes to load a truck from gate in to gate out? Is a drop trailer program required? Are drivers penalized by requiring them to pay a fine on the spot for a service failure they did not cause?</p>
<p style="text-align: justify;"><strong>4. Speak with Partners to Remove Roadblocks at the Receiving Dock </strong></p>
<p style="text-align: justify;">Speak with the transportation companies serving the business and obtain frank and complete information on the process of delivering freight to customers. Speak with and if necessary, visit with customers, stores, merchants, replenishment teams and other partners to remove roadblocks. Follow up with the core carriers to verify that that the requested changes have been made.</p>
<p style="text-align: justify;"><strong>5. Document SOPs for these Cost Saving Processes and Maintain a Dialogue with Core Carriers</strong></p>
<p style="text-align: justify;">Don’t view this exercise as a “one shot” project. View this as an ongoing effort at establishing Best Practices. Remember that there is a shortage of drivers and equipment. Carriers have choices and are selecting “Shippers of Choice” that operate at the lowest cost and pay the highest price. Rate increases can be mitigated through cost efficiencies and by ensuring the fluid movement of drivers and equipment.</p>
<p style="text-align: justify;"><strong>6. Create and Sustain a “Shipper of Choice” Culture </strong></p>
<p style="text-align: justify;">Treat dispatchers, sales reps, drivers, and customer service personnel with respect. Be fair and reasonable in the demands placed on these partners. Ask for feedback from transport companies and take corrective action to address unprofessional behavior.</p>
<p style="text-align: justify;">These are unique times. Shippers that make the necessary strategic, tactical, and cultural changes are likely to secure the capacity they need.</p>
<p style="text-align: justify;">&nbsp;</p>
<p style="text-align: justify;">To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>Twitter @DanGoodwill</strong>, join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong> and subscribe to <strong>Dan’s Transportation Newspaper</strong> (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/time-to-become-a-shipper-of-choice-2/">Time to Become a “Shipper of Choice”</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Shipper-Carrier Collaboration is a Challenge in this Era of Tight Capacity</title>
		<link>https://www.dantranscon.com/shipper-carrier-collaboration-is-a-challenge-in-this-era-of-tight-capacity/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Mon, 16 Oct 2017 01:08:11 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[Dedicated Trucking]]></category>
		<category><![CDATA[freight broker]]></category>
		<category><![CDATA[Freight Capacity]]></category>
		<category><![CDATA[freight rates,]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/shipper-carrier-collaboration-is-a-challenge-in-this-era-of-tight-capacity/</guid>

					<description><![CDATA[<p>&#160; On October 11, my company co-hosted the 2017 Surface Transportation Summit with my partners at Newcom Business Media. I am very pleased to report that we had another packed house for what has become the premier educational and networking event in Freight Transportation in Canada. The day was again kicked off by one of [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/shipper-carrier-collaboration-is-a-challenge-in-this-era-of-tight-capacity/">Shipper-Carrier Collaboration is a Challenge in this Era of Tight Capacity</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>&nbsp;</p>
<p style="text-align: center;"><img decoding="async" title="b2ap3_thumbnail_Stifel-2018-rate-increase-projections.jpg" src="https://www.dantranscon.com/wp-content/uploads/2017/10/b2ap3_thumbnail_Stifel-2018-rate-increase-projections.jpg" alt="b2ap3_thumbnail_Stifel-2018-rate-increase-projections.jpg"></p>
<p>On October 11, my company co-hosted the 2017 Surface Transportation Summit with my partners at Newcom Business Media. I am very pleased to report that we had another packed house for what has become the premier educational and networking event in Freight Transportation in Canada.</p>
<p>The day was again kicked off by one of Canada’s leading economists, Carlos Gomes of Scotiabank and by two investment analysts, Walter Spracklin, CFA, Equity Research Analyst &#8211; Transportation Sector, RBC Capital Markets and John Larkin, CFA, Managing Director and Head, Transportation Capital Markets Research, Stifel Financial Corp., who provided an American perspective. These gentlemen highlighted that 2018 will be a year of economic growth. This economic growth, coupled with the ELD mandate and the limited supply of quality drivers in the United States, will translate into tight capacity and higher freight rates.</p>
<p>One of the slides that caught my eye was the one inserted above from the John Larkin presentation. John’s views are consistent with what one of the largest US trucking operators, J.B. Hunt Transport Services, is telling its shipper customers. They are advising them to budget for transportation cost increases as high as “10 percent or more” as the peak fall distribution season and electronic logging mandate intensify a driver shortage. “This is one of the highest periods of turbulence and volatility in supply we have ever experienced, and we don’t think it will abate any time soon,” John Roberts, president and CEO, and Shelley Simpson, chief commercial officer, said in a letter to J.B. Hunt customers.</p>
<p>Capacity is limited, even with contracted core carriers. The subject of shipper-carrier collaboration was the focus of one of the afternoon breakout sessions. One of the issues that was highlighted is that even carriers with contracted rates, that have committed to supply capacity to their core customers, are not able to provide the required number of drivers, tractors and trailers this fall. In Canada, this has become a problem on cross-border truckload traffic out of Quebec and Ontario.</p>
<p><strong>The Basic Options for Securing Capacity </strong></p>
<p>This led into a discussion of the available options to obtain capacity. The option of adding more backup carriers was seen as of limited value. Backup carriers may be able to supply capacity on specific days, on specific lanes, when their volumes are soft. However, at the end of the month, they need to make their capacity available to their primary customers; shippers may not be able to rely on extra equipment from these carriers during their peak periods. Backup carriers will become more dependable if they receive consistent volumes, not a couple of extra loads at the end of the month or quarter.</p>
<p>Using load brokers is an option, but not necessarily an entirely reliable one. Load brokers work with their group of core carriers. These carriers have their own base of customers, of which brokers rank somewhere on the pecking order. They can be an option at times but they may not always be able to meet the specific needs of the shipper (i.e. performing trailer drops rather than live loading). Using the so-called “spot market” may work in times of excess capacity but when capacity tightens, rates can spike as they are now in some areas.</p>
<p>Another option is to establish a private fleet to move freight for certain customers and/or specific geographic areas. Running a private fleet is a significant undertaking, even if a company only runs a small fleet. Driver recruitment is an industrywide problem. Setting up a private fleet will require the shipper to address issues such as finding back haul traffic to ensure the economic viability of the fleet, buying or leasing equipment, fleet maintenance, insurance, fleet management and other concerns. Creating a private fleet is not for everyone.</p>
<p>Some shippers are trying to “throw money at the problem.” Certainly, carriers like shippers that pay premium rates and that pay their invoices quickly (i.e. within 15 days). But shippers must watch their bottom lines. Paying top dollar for freight and/or going on the “spot market” are costly solutions. With freight rates already on the rise, there is a limit to how much shippers can afford to pay for the assurance of capacity.</p>
<p><strong>Other Options to Consider </strong></p>
<p>During our discussion at the Summit, certain options came up for discussion. They included the following:</p>
<p><em>Dedicated Transportation </em></p>
<p>Shippers that are having trouble managing this problem can explore the possibility of outsourcing their freight operations to a dedicated contract carrier. While this may address the capacity issue, in some markets, the shipper must carefully compare the financial implications of this option against the status quo.</p>
<p><em>Freight Management Companies </em></p>
<p>Another choice is an extension of the freight broker option. Using a large freight management company provides the shipper access to a much broader range of carriers. This option can be particularly attractive on some of the harder to cover lanes. The top freight management companies may be aware of the small, less well-known carriers that may be just what a shipper needs in some situations. Since freight management companies add a markup to the costs of their carriers, this can be an expensive option for some shippers.</p>
<p><em>The Best Option </em></p>
<p>As our discussion ended, the attendees seem to agree on one of the most desirable paths forward. This is the idea that in this era of tight capacity, there is a great need for shippers and carriers to be frank on how they can best work together. As one of the attendees stated, it is better for a carrier to be forthright and tell the shipper on certain days that they simply don’t have the capacity rather than over-committing or lying to customers, and then failing to meet their needs.</p>
<p style="text-align: justify;">As “partners,” it is essential to be open and honest with each other so each side can plan accordingly. Shippers can help themselves by giving their carriers as much lead time as possible on upcoming promotions and special offers that may create equipment challenges down the road. Clearly there is no easy solution to the truck capacity issue and rising freight rates but reverting to good communication with key partners is probably the best starting point.</p>
<p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>Twitter @DanGoodwill</strong>, join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong> and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/shipper-carrier-collaboration-is-a-challenge-in-this-era-of-tight-capacity/">Shipper-Carrier Collaboration is a Challenge in this Era of Tight Capacity</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Shippers need to become more “Carrier Friendly” to Minimize Freight Rate Increases</title>
		<link>https://www.dantranscon.com/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Tue, 29 Aug 2017 17:46:19 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[Freight Capacity]]></category>
		<category><![CDATA[freight costs]]></category>
		<category><![CDATA[freight rates,]]></category>
		<category><![CDATA[Packaging]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases/</guid>

					<description><![CDATA[<p>As the long, slow recovery from the Great Recession continues, shippers and carriers have become used to modest economic growth. Demand for freight services has been steady but not robust. The muted demand for freight services has not put undo pressure on truck capacity; rate increases have been limited in recent years. This may be [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases/">Shippers need to become more “Carrier Friendly” to Minimize Freight Rate Increases</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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										<content:encoded><![CDATA[<p style="text-align: center;"><img decoding="async" title="b2ap3_thumbnail_dreamstime_xl_49902079_20170829-134855_1.jpg" src="https://www.dantranscon.com/wp-content/uploads/2017/08/b2ap3_thumbnail_dreamstime_xl_49902079_20170829-134855_1.jpg" alt="b2ap3_thumbnail_dreamstime_xl_49902079_20170829-134855_1.jpg"></p>
<p>As the long, slow recovery from the Great Recession continues, shippers and carriers have become used to modest economic growth. Demand for freight services has been steady but not robust. The muted demand for freight services has not put undo pressure on truck capacity; rate increases have been limited in recent years. This may be about to change.</p>
<p>Regulations have placed constraints on the management of trucking companies, particularly full load carriers. The Hours of Service regulations coupled with the ELD (electronic logging device) mandate are placing limits on the number of hours that a driver can legally operate a truck. These directives limit truck capacity. The difficulties in finding quality drivers and the high turnover ratio among current drivers provides additional challenges for many truck fleets. To address the potential erosion in capacity, truckers are applying a variety of technologies.</p>
<p>Good quality transportation management systems are allowing truckers to better manage their routes and balance their lanes. Dimensional scanners are helping LTL carriers manage the space available on their trailers by matching freight rates to cube utilization. ELD technology provides carriers with information on how long their drivers and equipment are held up at customers’ facilities. The net result of all this is that small parcel, LTL and truckload carriers can be much more accurate in tailoring their freight rates to the “carrier friendliness” of their clients.</p>
<p>How can shippers become more &#8220;carrier friendly”? &nbsp;Here are a few items to consider.</p>
<p><strong>Packaging </strong></p>
<p>This is an often overlooked or undermanaged item. There is a defined amount of cubic space on a trailer or straight truck. Since each company’s product mix changes over time and since many products are condensed in size over time, packaging should be revisited periodically. Part of the process should include a study of pallet and product dimensions, product packaging and loading processes. Since poorly designed pallets create empty space on a trailer, improvements can reduce freight costs.</p>
<p><strong>Production and Administrative Processes </strong></p>
<p>It is maddening to come to a shipper’s dock and find that the bills of lading and/or the freight itself is not available at the time of appointment. This is a reflection of sloppy manufacturing and/or customer order processing and fulfillment processes.</p>
<p><strong>Dock and Yard Management </strong></p>
<p>Trailer detention is a “killer” in the era of ELDs. A lack of dock doors, inefficient yard management processes and some of the issues outlined above can create congestion. This can result in higher rates for those shippers that are consistent offenders in this area.</p>
<p><strong>Loading Processes </strong></p>
<p>This is another critical item. Are trailers dropped in your yard? &nbsp;Is your freight “live loaded”? Are you using a process that is the most efficient and cost effective for your business? If trailers are dropped, how long do they sit in your yard and why is this happening? These processes should be audited from time to time to make sure that are as productive as possible.</p>
<p><strong>Carrier Communication </strong></p>
<p>Good communication is fundamental to every strong relationship. In this year of technology, it is easy for machines to take the place of human contact. Some people have the habit of hiding behind their communication devices. Voice mail, e-mail and text messaging are all great forms of communication. However, it takes people to set up working communication systems with proactive alerts and emergency response processes. An overdependence on technology can undermine the success of a shipper-carrier relationship.</p>
<p>Moreover, the evolution of eCommerce, particularly the Amazon model, and Walmart’s OTIF (&#8220;On-Time, In-Full&#8221;) program, are placing considerable pressure on carriers to provide speed to market and to meet tight delivery windows. Shippers that impede the smooth operations of carriers will face higher than normal rate increases and in some cases, will find their business de-marketed.</p>
<p>As a first step, shippers should set up face-to-face meetings with their core carriers. They should inquire as to what are the “pain points” in their freight operations. They should then embark on fixing these pain points to become “Carrier Friendly” shippers.</p>
<p>&nbsp;</p>
<p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>Twitter @DanGoodwill</strong>, join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong> and subscribe to <strong>Dan’s Transportation Newspaper</strong> (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases/">Shippers need to become more “Carrier Friendly” to Minimize Freight Rate Increases</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Shipper-Carrier Collaboration – Establishing Trust</title>
		<link>https://www.dantranscon.com/shipper-carrier-collaboration-establishing-trust/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Sun, 06 Mar 2016 22:27:40 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[Freight]]></category>
		<category><![CDATA[freight agreements]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<category><![CDATA[shipper-carrier contracts]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/shipper-carrier-collaboration-establishing-trust/</guid>

					<description><![CDATA[<p>The essence of successful freight rate negotiations is an honest exchange of information. Carriers count on shippers to supply them with complete and accurate information on shipment weights, dimensions, volumes by lane, seasonal spikes and any special service (i.e. job site deliveries, weekend pickups etc.) requirements. Shippers expect carriers to be able to supply them [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/shipper-carrier-collaboration-establishing-trust/">Shipper-Carrier Collaboration – Establishing Trust</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
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<p>The essence of successful freight rate negotiations is an honest exchange of information. Carriers count on shippers to supply them with complete and accurate information on shipment weights, dimensions, volumes by lane, seasonal spikes and any special service (i.e. job site deliveries, weekend pickups etc.) requirements. Shippers expect carriers to be able to supply them with the correct types of equipment to pick up their freight at the designated time, to provide adequate amounts of equipment at the right time to move their loads, to meet their designated transit times over 95% of the time and to provide good customer service and quality information as they outlined in their submission and interview.</p>
<p>While this all seems so straight-forward and reasonable, there are a host of challenges that get in the way of committed shipper-carrier relationships. Here are a few to consider.</p>
<p><strong>Changes in Shipment Volumes </strong></p>
<p>Business conditions are constantly changing. There are ebbs and flows in the general economy that can impact on many industries, including both shippers and carriers. There is ongoing competition in the market where shippers win or lose customers every day. Then there are mergers and acquisitions and new product launches (or old product cancellations) that can lead to rationalization of locations for factories or distribution facilities. The net impact of these changes is that the shipment volumes discussed in an RFP may not come to pass or the actual volumes by lane may vary over time.</p>
<p><strong>Changes in Equipment Availability </strong></p>
<p>Similarly, carriers face a variety of challenges and opportunities. The rates supplied to a shipper may be based on certain volumes of head haul or back haul freight. But these dynamics are constantly in flux. &nbsp;New business is being won and lost on a daily basis as a result of service changes, modal options (i.e. switching from over the road to intermodal service) or competitive pricing initiatives. Carriers are continuously seeking head haul or back haul freight on their core lanes of business so they afford to supply shippers with the equipment they committed to provide to move their loads.</p>
<p><strong>New Business Opportunities </strong></p>
<p>In addition to the market forces above, shippers and carriers face other challenges. &nbsp;After an RFP has been completed, a new or previous incumbent carrier may come back with lower rates. The shipper faces the dilemma of should they maintain the commitment that was made during the process or switch to another carrier so as to save more money on freight.</p>
<p>Carriers may commit to serve shippers but come across other business on the same lanes that produces higher profits. They face a dilemma. Do they honor their commitment, shift or buy equipment to move this higher paying business or supply a lesser amount of equipment to their committed client and provide them with a rationale as to why they cannot live up to their prior commitment.</p>
<p>These types of challenges test the honesty, integrity and level of trust of both parties. There is no simple solution. While it is fair to say that honesty is always the best policy, there is a risk in how the other party may receive the news. As a shipper, how would you respond to a carrier saying that they have just secured a new account that pays higher freight rates and they now have less equipment to supply to your company?</p>
<p><strong>Establishing Trust</strong></p>
<p>&nbsp;This is how I see it. Both shippers and carriers should be trying to create as many long term partnerships as possible. As the culmination of any rate/service agreement, both parties should be seeking a multi-year (i.e. minimum 3 year) commitment. This gives the shipper rate, equipment and service certainty over an extended period of time. Multi-year commitments give the carrier revenue certainty.</p>
<p>The two parties should meet at a senior level and attempt to establish a level of commitment to one another, a commitment that can survive the various tests and challenges along the way. This commitment shouldn’t take the form of a minimum annual contracted volume. Rather, it should take the form of ongoing communication and meetings between the parties to address challenges along the way. This is the best way to build trust. The end result is that the shipper resists the temptation to switch carriers to save a few bucks. The carrier resists the temptation to divert the promised equipment to other clients or make up stories to deceive the original client. In return they both enjoy the benefits of a committed relationship.</p>
<p>&nbsp;</p>
<p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>Twitter @DanGoodwill</strong>, join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong> and subscribe to <strong>Dan’s Daily Transportation Newspaper</strong> (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/shipper-carrier-collaboration-establishing-trust/">Shipper-Carrier Collaboration – Establishing Trust</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Creating an Effective Shipper-Motor Carrier Freight Agreement – Part 2</title>
		<link>https://www.dantranscon.com/creating-an-effective-shipper-motor-carrier-freight-agreement-part-2/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Wed, 10 Feb 2016 01:40:50 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[Freight]]></category>
		<category><![CDATA[freight agreements]]></category>
		<category><![CDATA[Freight contracts]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[freight transportation]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/creating-an-effective-shipper-motor-carrier-freight-agreement-part-2/</guid>

					<description><![CDATA[<p>&#160; &#160; The first part of this blog focused on the operational, service and equipment issues that constitute a strong shipper-carrier freight agreement. This blog will address the financial and business issues that need to carefully captured in detail. 6. Rates and Service Charges The rates, fuel surcharges and other accessorial charges need to inserted [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/creating-an-effective-shipper-motor-carrier-freight-agreement-part-2/">Creating an Effective Shipper-Motor Carrier Freight Agreement – Part 2</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>&nbsp;</p>
<p>&nbsp;</p>
<p><img decoding="async" style="display: block; margin-left: auto; margin-right: auto;" title="b2ap3_thumbnail_dreamstime_l_46467035.jpg" src="https://www.dantranscon.com/wp-content/uploads/2016/02/b2ap3_thumbnail_dreamstime_l_46467035.jpg" alt="b2ap3_thumbnail_dreamstime_l_46467035.jpg" width="436" height="290"></p>
<p>The first part of this blog focused on the operational, service and equipment issues that constitute a strong shipper-carrier freight agreement. This blog will address the financial and business issues that need to carefully captured in detail.</p>
<p><strong>6. Rates and Service Charges </strong></p>
<p>The rates, fuel surcharges and other accessorial charges need to inserted as appendices and discussed in the contract. There must be a clear understanding of the length of time the rates will be in effect (i.e. one year) along with a formula to highlight if, when and how much rates will increase in future years. There is value in inserting a formula, tied to increases in the Consumer Price Index (CPI) that specifically addresses the level of rate increases in each year of the agreement.</p>
<p>The quarterly or annual rebate program, if one has been created, should be stated in the agreement with the thresholds required to generate each level of incentive payment. There also needs to be an Annual Review Process so the two parties can discuss the status of agreement and if there is a need for corrective action. Also the annual agreement formula above should be tied to specific performance criteria set forth in the agreement and captured in the appendices. A failure to meet specific performance criteria can sometimes provide a mechanism to terminate the agreement prior to its target expiry date.</p>
<p><strong>7. Term of Agreement </strong></p>
<p>The term of agreement (i.e. one year plus two more years at the increases agreed to above) should be clearly stated. There should also be an exit clause for both parties if the one of the parties is unhappy with any aspect of the contract. Typically a 30 day exit clause is satisfactory but this should be carefully considered since it can take a shipper more than a month to find and negotiate with a qualified replacement carrier or carriers. There needs to be a process where either party can serve notice to the other party, by a specified date, if it wishes to exercise its right to exit the agreement.</p>
<p><strong>8. Payment Terms </strong></p>
<p>This section should state the required payment interval (i.e. 30 days), the documents required to justify payment (i.e. signed proof of delivery) and state that the rates in the invoice must match the rates detailed in the appendices.</p>
<p><strong>9. Indemnity </strong></p>
<p>There is a requirement to include words in the agreement that ensure the carrier indemnifies the shipper from all liabilities and claims made against the shipper as a result of the carrier’s actions while the property, goods, materials or commodities are in their possession.</p>
<p><strong>10. Insurance </strong></p>
<p>The shipper must ensure that the carrier maintains an adequate amount of bodily injury and property damage public liability insurance so that any injuries sustained or cargo damage/loss while in the possession of the carrier is their responsibility. There should be a declared value on all cargo and a mechanism for reimbursement for all losses or damages incurred. Carriers will also try to insert language in these agreements to mitigate the impacts of these losses. The claims policy and timing of claims reimbursements should also be detailed in the agreement and/or appendices.</p>
<p>After reading these two blogs, a shipper or carrier might be tempted to create an agreement without the assistance of legal personnel. There is an old saying that whoever has himself as a lawyer has a fool for a lawyer. Get legal help. While capturing the business components of an agreement is not too difficult, there is great benefit in making sure all of the terms and phrases are legally correct in every respect. There is value to creating a first draft of the agreement but engaging an expert in contract/transportation law to augment, edit and/or deliver the final product.</p>
<p>&nbsp;</p>
<p>To stay up to date on Be<strong>st Practices in Freight Management</strong>, follow me on <strong>Twitter @DanGoodwill</strong>, join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong> and subscribe to <strong>Dan’s Transportation Newspaper</strong> (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/creating-an-effective-shipper-motor-carrier-freight-agreement-part-2/">Creating an Effective Shipper-Motor Carrier Freight Agreement – Part 2</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Does your Company Need a Motor Carrier Agreement to Manage its Freight Transportation?</title>
		<link>https://www.dantranscon.com/does-your-company-need-a-motor-carrier-agreement-to-manage-its-freight-transportation/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Wed, 20 Jan 2016 20:34:00 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[financial management]]></category>
		<category><![CDATA[Freight]]></category>
		<category><![CDATA[freight agreements]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/does-your-company-need-a-motor-carrier-agreement-to-manage-its-freight-transportation/</guid>

					<description><![CDATA[<p>&#160; Motor carrier agreements or contracts are documents signed between shippers and carriers that set out the parameters and processes under which two or more companies work together to provide freight transportation services. These documents, often prepared by lawyers (with input from freight management professionals), set out a range of service expectations and freight rates [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/does-your-company-need-a-motor-carrier-agreement-to-manage-its-freight-transportation/">Does your Company Need a Motor Carrier Agreement to Manage its Freight Transportation?</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>&nbsp;</p>
<p><img decoding="async" style="display: block; margin-left: auto; margin-right: auto;" title="b2ap3_thumbnail_dreamstime_xl_64569399.jpg" src="https://www.dantranscon.com/wp-content/uploads/2016/01/b2ap3_thumbnail_dreamstime_xl_64569399.jpg" alt="b2ap3_thumbnail_dreamstime_xl_64569399.jpg"></p>
<p>Motor carrier agreements or contracts are documents signed between shippers and carriers that set out the parameters and processes under which two or more companies work together to provide freight transportation services. These documents, often prepared by lawyers (with input from freight management professionals), set out a range of service expectations and freight rates that define the relationship between the parties. While freight agreements have come into widespread use, the question is if and when these documents are necessary?</p>
<p>One could argue that if two or more parties are operating in good faith, do they&nbsp;need a legal document to circumscribe the nature of their relationship? If shippers and carriers are supposed to work together as partners in an open and trusting manner, does a formal, written agreement get in the way of a business partnership arrangement? Does it inhibit open and honest communication?</p>
<p>Do motor carrier agreements create a rigid framework that reduces flexibility? Are they detrimental to the sometime unpredictable and fluid nature of freight transportation? Does a formal agreement make it more difficult for a shipper to obtain additional equipment or after hour’s service? Do they place carriers with a limited set of equipment into a straight-jacket? Does the fear of punishment or service failure force a carrier to provide equipment and service to one client (that has a contract) at the expense of another client (that doesn’t have one)?</p>
<p>Some of these issues are valid concerns. The freight business is fast-moving. Shippers and carriers need to work together in a trusting relationship and adapt quickly and effectively to changing situations.</p>
<p>Freight agreements are not universally necessary for every shipper-carrier relationship. For companies with a small freight spend (less than $2 million on an annual basis), contracts are probably unnecessary unless all of the freight moves with one mode (i.e. small parcel) and with one carrier. For shippers who work in markets where there are limited choices, contracts are likely of limited value. Similarly, for shippers with multi-million dollar freight expenditures, there are likely niche carriers that service certain remote or hard to reach markets. On an annual basis, these costs may be less than $500,000 per year. There is likely no need for freight agreements to manage these carriers. In these instances, a rate agreement and transit schedule will likely suffice.</p>
<p>However, for shippers who spend 5, 10 or 50 million dollars (or more) on freight transportation, carrier contracts can be very beneficial. Here is the rationale.</p>
<p>A good motor carrier agreement addresses a range of important items. A well written contract will specify the types of licenses and permits that the motor carrier must have to perform work for the shipper. It lays out the quality of equipment and drivers that the carrier must employ to transport the shipper’s freight. It also details the services to be performed and how performance will be measured. It goes on to describe the “progressive discipline” process that will be in place, including timelines for corrective action, to ensure acceptable levels of performance are maintained over time. The agreement outlines the level of insurance required to protect the goods of the shipper and describes the process for damage or loss claims. It includes the rates and surcharges to be&nbsp;applied and the formula for rate increases in subsequent years. The transit schedule is usually attached as an addendum.</p>
<p>In other words, a good motor carrier agreement takes away a level of risk and uncertainty that can exist for both parties. It provides a detailed blueprint of all of the key elements of a successful shipper- carrier relationship over a multi-year period. Rather than restricting the nature of the relationship, a good agreement promotes a long term partnership. Check out the next blog where the components of a comprehensive, quality agreement are outlined in detail.</p>
<p>&nbsp;</p>
<p>To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the <strong>Freight Management Best Practices</strong> group on&nbsp;and subscribe to <strong>Dan’s Transportation Newspaper</strong> (http://paper.li/DanGoodwill/1342211466).</p>
<p>The post <a href="https://www.dantranscon.com/does-your-company-need-a-motor-carrier-agreement-to-manage-its-freight-transportation/">Does your Company Need a Motor Carrier Agreement to Manage its Freight Transportation?</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Developing a Core Carrier Program</title>
		<link>https://www.dantranscon.com/developing-a-core-carrier-program-2/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Thu, 09 Apr 2015 00:18:52 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[capacity shortage]]></category>
		<category><![CDATA[Driver Shortage]]></category>
		<category><![CDATA[Freight Capacity]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/developing-a-core-carrier-program-2/</guid>

					<description><![CDATA[<p>In a recent Stifel report, it was noted that the “mother” of all capacity shortages is expected to hit the United States in 2017 as a series of government regulations reduce the supply of fleet equipment by five to fifteen percent. Despite the efforts of carriers to raise pay, upgrade facilities and improve the lifestyle [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/developing-a-core-carrier-program-2/">Developing a Core Carrier Program</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>In a recent Stifel report, it was noted that the “mother” of all capacity shortages is expected to hit the United States in 2017 as a series of government regulations reduce the supply of fleet equipment by five to fifteen percent. Despite the efforts of carriers to raise pay, upgrade facilities and improve the lifestyle of drivers, annual turnover stubbornly remains at close to one hundred percent in many fleets. On the rail side, a huge upswing in the movement of energy products by this mode has had a deleterious effect on intermodal capacity and service. Wise shippers realize that trying to secure carriers on the spot market is a risky endeavor since this leaves them open to capacity shortages and rate volatility.</p>
<p>What can your company do to protect itself if there are capacity shortfalls?</p>
<p>Is your company ready for even tighter freight capacity? Will the integrity of your company’s supply chain be maintained in this ever-changing environment? What can your company do to protect itself if there are capacity shortfalls?</p>
<p><strong>1. Bring your top performing carriers under contract </strong></p>
<p>An important first step is to view your major carriers as business partners. As such, it makes good sense to negotiate formal multi-year contracts with capacity commitments and service guarantees. As you engage in these types of discussions, find out how your business fits within the parameters of their operation. Does your freight move on their primary traffic lanes? Do they have head haul or back haul in the reverse direction? Are you a valued customer?</p>
<p><strong>2. Do your Due Diligence </strong></p>
<p>An equally important step is to evaluate the extent to which your top carriers can meet your range of inbound, transfers and outbound movements of freight. Some traffic lanes are easier to cover than others. One often finds that there are certain particular (remote) lanes or requirements that require specialized carriers or equipment. These lanes and services may best be served by a local carrier or freight broker. Searching out regional or local carriers may take some time and due diligence. To be safe, it may be helpful to test and interview these less known players to ensure they can perform at a high level.</p>
<p><strong>3. Secure Back-up Carriers on every lane </strong></p>
<p>Where are the weak spots in your supply chain? What would happen if one or more of your core carriers went out of business or stopped hauling your company’s freight? With limited capacity, carriers are allocating their scarce equipment and drivers to the highest yielding customers. Many shippers have been surprised to see their carriers come to them with substantial rate increases to improve margins or as a mechanism to de-market their accounts. Do you have backup carriers on all of your lanes? Do you give them a percent of your freight to keep them engaged with your company?</p>
<p><strong>4. Look out for Quantity and Quality </strong></p>
<p>One should never forget that some carriers are better than others. The better carriers have higher quality management, have more motivated staff, employ more highly trained personnel and utilize newer model equipment and better monitoring systems. Higher quality can translate into better safety ratings, superior productivity, fewer damages and theft and happier customers. It is wise to interview all prospective carriers for your company to see if they are Smartway certified, to review their CSA or CVOR (in Canada) scores and to inspect the quality of their customer service personnel, their equipment and their information systems. If you are considering using a freight management company, it is fair to ask them about their systems and those of their core carriers.</p>
<p><strong>5. Focus on Performance </strong></p>
<p>Missed pick-ups, late deliveries and damaged product all cost companies customers. Review your on-time service and billing accuracy reports. Make sure that they are at a very high level. In this extremely competitive world, superior performance allows a company to stay ahead of the competition.</p>
<p><strong>6. What can your company do better? </strong></p>
<p>Where does your company fit on your carriers’ scorecards? Is your company a profitable account for all of your core carriers? Are there any lanes that don’t work for a particular company and would be better handled by another carrier? What is the one thing that your company could do that would make your account more profitable for some of its carriers? Are you willing to work with those carriers to make it happen? What can your company do to rank higher on their scorecards? Do you have regular (quarterly) meetings with your core carriers to address and fix problems?</p>
<p>Proactive companies should go through this due diligence exercise now so they protect the integrity of their companies’ operations.</p>
<p>&nbsp;</p>
<p><strong>Dan Goodwill &amp; Associates</strong> (<strong>www.dantranscon.com</strong>) provides freight transportation consulting services to shippers and carriers throughout North America. Follow Dan on <strong>Twitter @DanGoodwill</strong>. To stay up to date on the latest developments in energy and transportation, obtain a free subscription to <strong>Dan’s Transportation Newspaper</strong> (<strong>http://paper.li/DanGoodwill/1342211466</strong> ).</p>
<p>The post <a href="https://www.dantranscon.com/developing-a-core-carrier-program-2/">Developing a Core Carrier Program</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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		<title>Some Takeaways from the 2014 Surface Transportation Summit   Part 2 – Shipper-Carrier Collaboration</title>
		<link>https://www.dantranscon.com/some-takeaways-from-the-2014-surface-transportation-summit-part-2-shipper-carrier-collaboration/</link>
		
		<dc:creator><![CDATA[Dan Goodwill]]></dc:creator>
		<pubDate>Wed, 05 Nov 2014 03:06:55 +0000</pubDate>
				<category><![CDATA[Shipper-Carrier Collaboration]]></category>
		<category><![CDATA[Business Strategy]]></category>
		<category><![CDATA[Freight Management]]></category>
		<category><![CDATA[shipper-carrier collaboration]]></category>
		<category><![CDATA[solutions provider]]></category>
		<category><![CDATA[Trucking]]></category>
		<guid isPermaLink="false">https://www.dantranscon.com/some-takeaways-from-the-2014-surface-transportation-summit-part-2-shipper-carrier-collaboration/</guid>

					<description><![CDATA[<p>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, [&#8230;]</p>
<p>The post <a href="https://www.dantranscon.com/some-takeaways-from-the-2014-surface-transportation-summit-part-2-shipper-carrier-collaboration/">Some Takeaways from the 2014 Surface Transportation Summit   Part 2 – Shipper-Carrier Collaboration</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
]]></description>
										<content:encoded><![CDATA[<p>At the 2013 Summit, <strong>Jacquie Meyers, President </strong>of<strong> Meyers Transportation Services</strong>, 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.</p>
<p>This year Jacquie was joined by <strong>Elias Demangos, President &amp; CEO, Fortigo Transportation Management Group</strong>, <strong>Anna Petrova, Associate Director, Supply Chain, Ferrero Canada Ltd.</strong>, and <strong>Susan Promane, Director, Supply Chain, Whirlpool Canada</strong>. 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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>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.”</p>
<p>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.</p>
<p>&nbsp;</p>
<p>To stay up to date on Best Practices in Freight Management, please join our group (https://www.linkedin.com/groups?gid=4357309&amp;mostPopular=&amp;trk=tyah&amp;trkInfo=tarId%3A1409587506329%2Ctas%3Afreight%20management%20best%2Cidx%3A1-1-1 ) on <strong>LinkedIn</strong> or subscribe to <strong>Dan’s Transportation Newspaper</strong> (paper.li/DanGoodwill/1342211466). To follow me on <strong>Twitter</strong>, go to @DanGoodwill.</p>
<p>The post <a href="https://www.dantranscon.com/some-takeaways-from-the-2014-surface-transportation-summit-part-2-shipper-carrier-collaboration/">Some Takeaways from the 2014 Surface Transportation Summit   Part 2 – Shipper-Carrier Collaboration</a> appeared first on <a href="https://www.dantranscon.com">DG&amp;A Freight Consultants</a>.</p>
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