Being a "shipper of choice" can boost your chances of getting the service you need when trucking capacity is tight. But as our survey found, clear communication and respect for your carriers is good practice no matter what's happening in the market.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
When shippers can't find trucks to move their goods, the result is often lost sales—a problem that not only hits shippers' revenues but also impacts retailers, consumers, and other customers if goods don't arrive when they're needed.
In 2018, that scenario played out for many North American shippers as trucking capacity tightened to levels not seen in years, particularly in the truckload (TL) sector. The capacity crunch was a result of a combination of factors, including a robust economy that pushed up demand for trucking services, an aging driver population (and shortage of younger drivers to replace them), and new federal mandates for electronic logging devices (ELDs) that enforce restrictions on the number of hours a driver is allowed to operate a truck.
The truckload-capacity crisis began to ease in early 2019, but the question remained—how can shippers reliably secure trucks to haul their loads even as economic and industry variables shift beneath their feet? To answer that question and identify some best practices in transportation operations, DC Velocity teamed up with ARC Advisory Group, a Dedham, Mass., technology research and advisory firm, to survey logistics and transportation professionals about standards of excellence in managing transportation. Just under half (45 percent) of the respondents had vice president or director roles; the rest were managers or held other titles.
The results showed that the unprecedented market challenges of 2018 have led shippers to rethink and revise their goals and expectations. Rather than focusing on reducing freight costs or maximizing service levels—the traditional measures of effective truckload management—they're directing their energies toward earning "shipper of choice" status with their carrier partners—a distinction reserved for those who demonstrate a willingness to cooperate and collaborate with carriers rather than treating them as negotiating opponents.
"The difficulty of securing transportation capacity in 2018 made it clear that benchmarks focused solely on freight costs or service were not good enough," says survey author Steve Banker, ARC's vice president, supply chain services. "In times of tight capacity, shippers need to be able to reliably secure [transportation for their] loads. Attention has turned to measures associated with being a shipper of choice."
COMMUNICATE TO GET CAPACITY
Of course, setting a goal of becoming a shipper of choice is one thing; actually becoming one is another. To determine whether shippers were backing up their talk with action, the study looked at respondents' progress to date in that regard and solicited their views on the most effective ways to get there.
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. And indeed, only 54 percent of the respondents to our survey reported truckload first-tender acceptance rates of more than 90 percent.
Perhaps that's not surprising. When we asked respondents "Have you developed a reputation among carriers as a tough negotiator, engaging in a long procurement process that has historically sought below-market rates?" more than half (53 percent) admitted that they had.
Better communication can improve tender-acceptance rates and help ensure that truckload capacity will still be available to them when the supply gets low, Banker says. For example, shippers can improve their chances of securing needed truck space by giving carriers advance notice of a pending surge in required capacity. Nearly three-fourths (73 percent) of respondents said they engage in this practice.
Giving carriers more leadtime can also raise tender-acceptance rates. Fifty-seven percent of respondents said they give carriers two days or less to accept a load—a tight timetable that may inhibit fleets' ability to take on that business. By contrast, 11 percent of respondents reported giving carriers six days or longer before a load needed to be picked up.
Another way to improve carrier relations is to help fleets keep their trucks on the road, rather than sitting in warehouse yards or at loading docks. Some carriers charge detention fees for long waits, but avoiding the delay in the first place is a better solution. Most shippers in the survey said they are efficient at turning trucks in their yards, with only 9 percent of carriers being held up more than four hours at origin facilities and just 8 percent at destination facilities.
Consistency in such areas as dwell times helps carriers avoid unanticipated delays and stick to their schedules. Respondents reported that they are doing well in this regard, with 86 percent saying their dwell times were fairly consistent at origin facilities and 77 percent saying the same for destination facilities.
Shippers of choice build strategic partnerships with their carriers. One way to do that is by inviting carriers to participate in joint business reviews on topics like improving processes or boosting profitability. Among respondents who follow this practice, quarterly reviews are most common (cited by 38 percent), followed by biannual reviews (29 percent), annual reviews (27 percent), and monthly reviews (6 percent).
But being a shipper of choice is not just about helping to ensure carriers can make a fair profit on their loads; it's also about how shippers treat the carriers' drivers, Banker says. One often-cited measure of driver treatment is whether they're given access to bathrooms—that is, whether shippers allow drivers to use the restrooms at their facilities after long drives. There is plenty of room for improvement in this particular area: 21 percent of respondents reported that less than 25 percent of their destination facilities make restrooms available to drivers.
MANY ROUTES TO CUTTING COSTS
All that is not to say that shippers have stopped focusing on freight costs; in fact, freight rates are as important as ever. In their constant struggle to cut those costs, shippers often turn to benchmarking their routes—comparing their own rates with those for similar shipments and using that information as a bargaining tool. Eighty-two percent of respondents follow this practice at the lane level, the survey showed.
Benchmarking may be a great way to get a competitive rate, but it's not always easy to do. One way to ease the pain is to automate the process. Shippers today can choose from a wide variety of transportation management systems (TMS) that provide comparative rate data for a range of truck lanes and routes. Even so, the use of software for benchmarking is not yet universal practice, the study found. A full 22 percent of respondents said they are not using a TMS.
Another time-honored way to get discounted truckload rates is for a shipper to provide a backhaul associated with its original shipment, enabling the carrier to make money on the return trip rather than pulling an empty trailer. But the practice is difficult to carry out. A full 43 percent of respondents said they were "never" able to provide backhaul opportunities for their carriers.
Half of the respondents said that they centralize their truckload procurement, choosing to work with fewer, larger carriers on a larger number of lanes. In addition to keeping costs down through economies of scale, this approach also takes advantage of large carriers' ability to provide real-time shipment visibility, consulting services, and advanced analytics.
When shipping goods over less-predictable lanes or when sending last-minute ad hoc shipments, companies tend to turn to freight brokers or book capacity on the more-expensive spot market. But booking freight through long-term contracts is a less costly, more reliable approach, and indeed, half of the survey respondents said they follow that best practice.
KEEP YOUR EYE ON THE BALL
Despite the benefits of building stronger relationships with carrier partners, shippers tend to relax their efforts in times when capacity is plentiful.
"When shippers need trucks, they talk about partnerships, reasonable scheduling, treating drivers fairly, and providing consistent freight. However, when capacity is readily available, they change their tune and stress lower prices and more reliable service," Banker says.
But the periods when power shifts from shippers to carriers re-occur periodically, Banker warns, noting that the 2018 crunch was preceded by another significant capacity shortage in 2014. For that reason, "it makes sense for shippers to remain a shipper of choice in good times and bad times," he says. "It is only prudent risk management to work to become, and remain, a shipper of choice on an ongoing basis with at least some carriers on some lanes."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.