In today’s logistics industry, shippers and carriers relations have reached an impasse. Unfortunately, with substantial increases in demand due to global trade and rapid growth in e-commerce, shippers and carriers are being forced to re-evaluate their partnerships with more scrutiny than ever before.
Companies must refocus their efforts on long-term sustainability and establish a reciprocal partnership for both shippers and carriers to succeed. Shippers must critically analyze why and how the shipper-carrier relationship must evolve and actively facilitate change. Conversely, carriers might be picky about the shippers they work with in today’s climate. To get the most favorable arrangements with carriers, shippers need to ensure that their business is both easy and profitable for the carrier. By becoming the “shipper of choice,” shippers can receive numerous benefits from their carrier partners, not the least of which is a discount.
Here’s how to become a shipper of choice to assure capacity, lower prices, and long-term, dependable collaborations.
Re-Imagining the Shipper-Carrier Relationship
The relationship between the shipper and the carrier must become bidirectional. When shippers actively engage with carriers, the carrier is much more likely to go above and beyond the contract’s original terms to offer services. Unfortunately, many shippers currently see carriers as the sole service providers. In reality, shippers must also assist carriers through effective collaboration, for example, by supplying the most up-to-date and correct data and information about their shipments well in advance. Both sides and the whole industry benefit from a bidirectional shipper-carrier connection.
Technological solutions such as Collaborative TMS help build bidirectional relationships that instill trust. Collaborative TMS involves carriers across all five essential business activities: collaborative business planning, order forecasting, order generation, freight order confirmation, and payment processes. Since the involvement of the carriers is high in the entire process and they have high visibility of the business, they become partners, and the responsibility is then shared. Such partnership can be crucial in food, grocery, and cold chains.
Between 30 and 40 percent of the food supply in the United States is discarded each year. According to the USDA Economic Research Service estimates, 31% of this loss occurs at the store or customer level. Another 40% occurs farther up the supply chain due to a lack of field workers to complete entire harvests or an inadequate cold supply chain network. Much of this food wastage can be reduced by sharing the information for the next few weeks in advance, instead of just a couple of days. This collaboration will also help the carrier make the necessary arrangements, such as suitable trucks with cold chain capability.
Better collaboration between shippers and carriers can also reduce carbon emissions generated by the supply chain. Traditional cold chain systems use a lot of energy, much of which is sourced from fossil fuels, and use refrigerants that are hundreds of times more harmful than carbon dioxide and transportation that runs on gasoline and diesel, all of which are bad for the environment. Re-imagining and redesigning carrier and shipper relations will also help sustainability initiatives and improve margins for the carriers. This will help the shippers build a reputation with the carriers and move up their preference list.
What is a Super Shipper, and why become one?
A ‘Super Shipper’ is the most appealing freight and communication to freight carriers. It is also often called the Shipper of Choice. Being the Super Shipper may relieve many logistical headaches and improve business operations. Shippers compete for carriers’ business due to a driver shortage, increased logistics costs, and changing rules. Shippers must discover innovative, compelling ways to attract carriers and become a shipper of choice now more than ever.
A 5-step action plan to become the ‘Super Shipper.’
Here is a 5-step action plan to make your company and freight more attractive to established and experienced freight carriers, ensuring more capacity and better service in the future.
- Step 1: Collaborate extensively. Provide Forecasts and Lead Time
Both individual stakeholder benefits and end-to-end SC benefits are gained through Collaborative TMS. Developing business plans with their carriers and building long-term strategies better supports partners and the preferred shipper.
- Step 2: Offer flexible shipment schedules and FTL optimizations.
Shippers may become more popular by offering flexible schedules, large delivery windows, and faster yard check-in and check-out. Shippers who can provide 24/7 dock access have an advantage because it allows carriers more flexibility, which is advantageous in the face of rising demand. Providing flexibility such as off-peak hours shipping and shipping on the weekends is another method to become the shipper of choice.
- Step 3: Optimize freight routing
Most carriers are interested in shippers that can improve freight routing and permit efficient “one pick, one drop” loads. In reality, intelligent asset usage and route optimization benefit shippers and carriers by enhancing service and reducing costs.
- Step 4: Flexible contract negotiations
Shippers typically auction their network once a year, but some are altering the terms and durations of contracts due to current market conditions. Many shippers are increasingly requesting volume guarantees or price protection connected to performance or set year-over-year price increases to secure prices and maintain capacity. Using contract flexibility during pricing discussions will help earn favored status.
- Step 5: Benchmark
Shippers should assess their performance against industry counterparts during periods of reduced carrier capacity to establish the attractiveness of their contract to carriers in terms of efficiency, flexibility, and price margins. Benchmarking how the company stacks up against competitors can help focus on particular areas that will help develop a carrier-friendly environment.
If you are looking for great Collaborative TMS solutions, Turvo is the right partner. Turvo provides the world’s leading Collaborative TMS application designed for the supply chain. Turvo connects people and organizations, allowing shippers, logistics providers, and carriers to unite their supply chains, deliver outstanding customer experiences, collaborate in real-time, and accelerate growth. The technology unifies all systems, internal and external, providing one end-to-end solution to execute all operations and analytics while eliminating redundant manual tasks and automating business processes. Turvo’s customers include some of the world’s most considerable Fortune 500 logistics service providers, shippers, and freight brokers. Turvo is based in the San Francisco Bay Area with offices in Dallas, Texas, and Hyderabad, India.