US shippers had the aim to collaborate with transportation partners in 2018, specifically those who had the objective of becoming the most sought after shippers in the country and the choice of all organizations. However, if the economy slows down this new year, then they need to maintain relationships with carriers might not be the priority any longer, and the connection may boil down to becoming purely transactional.
That means attempting to establish more combined; collaborative transportation combinations are still on the record. One reason is shippers are not preparing for a significant drop in freight market in 2019. Shippers are again asking the same capacity they had the previous year, notes Greg Orr, Executive Vice President for US truckload at logistics operator TFI International. Spot truckload prices may be dropping — for now — but contract truckload and less-than-truckload (LTL) rates are still increasing, albeit more slightly than a year ago. And other pressures, including low lay-off rate, are likely to encourage collaboration. Low unemployment makes it more challenging for businesses to retain personnel needed to expand, and the company provides an alternative.
According to experts, what do shippers anticipate in 2019? More collaboration in transportation management, that is for sure. The plan is not for carriers to reach their orders; instead, the entire idea is to come concomitantly to address those problems. Those pain-points include freight capacity, operator and equipment deficiencies, and trade-related disturbance as well as infrastructure enhancements. The experts believe this year there are numerous opportunities to grab on to and enhance the entire logistics arena.
Shippers were hurt excessively in last year’s first-half volume crunch, says David Parker, Chair, and CEO of Covenant Transportation Group (CTG), a truckload operator. According to him, there is not one customer that they do not know who was impacted in 2018. And the significance of that has not been wasted on them. US shippers are suspicious of a repeat of last year’s capacity crunch and rate hikes. As per experts, a transportation manager’s job will cease to exists if he has another 2018 out there and cannot move his transportation. The transportation manager is not resting there telling me that we have got to lessen pricing or we are going to get kicked out. We are not having those kinds of discussions.
One subject truckload carriers are still discussing to shippers is a dedicated carriage. They have gotten closer to the consumer and that gives them more possibilities to show them that there is a way that they can conceivably save money through working with us to tighten their network into a dedicated contract. Exclusively trucking frequently is supposed more of a service than that of a collaboration, but it unquestionably involves a more meaningful commitment by both parties, with reciprocal sharing of business information, than merely interchanging a private fleet truck for carrier transportation. For several shippers, working with a transport provider on a dedicated agreement may be the gateway to profound collaboration.
Despite persistent talks about collaboration, there is not enough real collaboration which is being carried out, particularly among shippers. One can see that collaboration is a solemn thought, but fewer steps are being taken towards achieving the same. Some age-old obstacles to cooperation remain a reluctance to share internal business information; siloed industry verticals that make horizontal data distribution and collaboration across industries difficult; and complexity determining who wins in any multi-party endeavor at supply chain collaboration.