Why It’s Important To Have A Good Relationship Between Shippers and Carriers.
Shippers and carriers must have a good relationship for it to be beneficial to both parties. However, several factors can cause the relationship to change. An increase in tariffs from the carrier’s end can impact the dynamic. But shippers trying to get higher priority status for their freight can also influence the partnership.
As market trends continue to shift, the relationship between shippers and carriers can become uncertain. Understanding these trends and finding ways to adapt helps ensure a profitable working relationship for both parties.
A shipper is a person or business with products that require transport. It can be local, across the country, or internationally. A carrier is an individual or company responsible for transporting the products and minimizing loss during transport.
If the transported items do not arrive at the intended destination, the carrier is responsible for the shipper’s financial loss. True, the shipper will reclaim their losses if the carrier loses their package. However, it won’t compensate them for the profit the company would’ve made if the product had arrived safely.
A lost package will strain a relationship between a shipper and carrier, but there are ways this is avoidable. One is to have excellent communication between both parties from the moment the carrier signs on to ship the product. Knowing where the package is throughout the preparation and transport process is a must.
To keep up with the logistics of shipping a package, whether it’s across a city or border, it’s helpful if the carrier employs the latest technology. Modern technology offers systems that allow shippers to manage large numbers of packages without losing track of a single one. No system is flawless, but improvements to technology mean a lower margin of error overall.
Package tracking is one tool that lets shippers know where their product is. It’s a feature that consumers love, too, of course. Open communication between the carrier and the shipping employees responsible for transport is also key.
Warehouses are an important part of transportation services. Not all packages are immediately shipped. Sometimes, there is a waiting period. The recipient at the ultimate destination may not need the inventory at the destination and the shipper needs the carrier to store the packages until the mailing date.
Concrete and steel warehouses, provided by the carrier, give shippers a safe place to store their products until the packages are ready for transport. Along with a sturdy building, the warehouses should also be bonded. It gives shippers and carriers protection if the products sustain damage during storage.
To ensure a smooth relationship and transportation of packages, the warehouse should also have access to all of the carrier’s services. It includes import and export, transloading, freight forwarding, and quality product inspection from the warehouse to the receiver.
Various products require different storage conditions, and the carriers need to meet the standards the shipper set down. Some products do not have temperature requirements and dry warehousing is a viable storage option. Warehouses with racks make sorting and storing packages easy, and convenient when it’s time to ship the product.
Refrigerated warehouses are another option carriers provide, along with food-grade ones. Farmers and carriers have had a long relationship. Farmers depend on carriers to transport their products. Both shippers and carriers must meet strict standards to meet the evolving regulations concerning the storage and transportation of food items.
Shippers and carriers are dependent on each other. Shippers depend on carriers to transport their packages. Carriers rely on shippers for revenue. However, there is more to the relationship.
There is an element of trust. The company sending the package trusts that the technology the
carrier uses will ensure safe delivery.
Recent changes in the market are causing shippers and carriers to reevaluate their relationships. freight rates for parcels, LTL, full truckloads, multimodal and international packages are increasing. Rate increases trickle down to shippers, so they need to charge more to make up for losses. Renegotiation may happen among all involved parties at that point.
Shippers are also looking for ways to make their packages more attractive to carriers. It’s the first step towards getting “shipper-of-choice” status, where a shipper’s packages are given higher-priority over others.
These are the trends that will affect established relationships between shippers and carriers.
Multimodal shipping is increasing and this means another look at contracts. Multimodal shipping is when different modes of transportation are used to ship a package. For example, first by truck then to a plane or boat.
Before the increase in popularity of multimodal shipping, a separate contract was necessary for each transportation mode. Now only one agreement is needed to cover the package throughout each stage, from leaving the shipper to arriving at the destination.
The single contract used with multimodal shipping, combined with the increase in freight rates, will result in more communication than previously. Carriers will need to pass down the increases to shippers. Those sending the packages will also have to review and update contracts.
Problems in the relationship can occur when there is a communication breakdown. Carriers that don’t have accurate information or have to go through complicated and time-consuming verification steps are less likely to pick up the shipper’s package when it arrives. If the carrier does agree to transport the box, it’s often at a higher freight rate.
Rates have been steadily increasing with overseas shipping. Even during a strong economy, there is always uncertainty. The Federal Reserve’s recent actions over the past few years and the current economy has left shippers and carriers wondering if new tariffs on overseas shipping are coming.
It’s not only U.S. tariffs with overseas or across the border shipping. It is also the tariffs the affected countries could levy in retaliation. For shippers and carriers, the possibility of dual charges is more than enough to open communication lines. With improved relations between the shipper and carrier, they can negotiate the rate and value-added service and bypass the higher tariff rates.
By working together, the shipper and carrier can lower the cost of transporting goods across the border or overseas.
Warehouse capacity for storage is already forecasted as a potential problem, and a lack of drivers is also causing concerns. Whether it’s products from farmers in a food-grade warehouse or packages that require refrigeration, eventually the items need storing in a warehouse and/or transporting to the receiver.
A shortage of drivers is a problem on both ends. Shippers won’t be able to get their products out and carriers won’t be able to deliver the packages. Without drivers to meet the needs of the shipper, neither party will realize a profit. The same also applies to capacity. Not every package is ready for shipment the day the carrier receives it.
The American Trucking Association reported an estimated shortage of 60,800 drivers in 2018. It’s a slight increase over 2017 when the trucking industry said it was short at least 50,700 drivers needed to keep the supply chain moving on schedule. Industry experts predict that the shortage of drivers could reach 160,000 by 2028.
There are several reasons why carriers are finding it challenging to hire and keep drivers. Company loyalty among drivers has been steadily decreasing. It’s now more common for drivers to switch companies every few years instead of staying with one throughout their career.
A new law also affects drivers. Referred to by those in the industry as the “Drug and Alcohol Clearinghouse”, a large number of drivers exited the labor pool instead of submitting to the test.
Communication is vital. Carriers must let shippers know if there is a driver or a capacity shortage. Shippers also need to be aware that carriers can refuse their items due to a lack of drivers or storage space. With good communication between shippers, carriers, and drivers, each can make plans if there are forecasted delays, whether it’s with storage or transportation.
The lack of capacity and drivers makes shippers realize the benefits of reaching “shipper of choice” status. The rank means that the packages from the shipper receive priority ahead of others. For example, if the carrier has a line of packages from other shippers to either store or transport, the one with “shipper of choice” status is automatically moved to the front of the line.
The higher status also reduces tariffs, especially those associated with overseas shipping. It makes it easier for shippers to balance costs versus service from the carrier. To ensure a beneficial mutual relationship, the shippers should contact their carriers to make sure the packages continue to receive higher priority.
Recalls of multiple foods increased in 2018 according to Food Logistics due to uncertainty with sourcing and transportation. These recalls affect both the shipper and the carrier. The surge in food recalls has resulted in the shippers and carriers both doing more to improve communications throughout the transportation process.
Some of the steps both parties are taking include continuing measuring and analyzing performance. It includes all stages of transporting, even during storage. Ways to enhance efficiency also feature heavily in discussions between shippers and carriers. Safety improvements are another point of mutually beneficial negotiation.
While the level of scrutiny regarding compliance issues is predicted to increase in the food industry, it’s not the only one affected. The shipping and transporting of medical and pharmaceutical packages also needs to meet compliance standards. Thorough checks help meet those minimums.
One of the compliance standards is tracking packages during transportation. It includes shippers and receivers knowing where the package is at all times, whether in transit or storage. An accurate chain of custody is also required, and this means collaboration and communication between shippers and carriers.
Without drivers, carriers wouldn’t operate. Drivers are also essential for shippers that need to get packages out. The combination of a shortage of drivers and logistics makes communication on both parties’ ends essential. It includes carriers with their drivers and shippers with the company transporting their packages.
To prevent transportation delays, carriers need to communicate with their drivers. A set timeframe for driver arrival is ideal. However, the flexibility to work around unforeseen delays is a perk of the communication process.
A set delivery schedule and route benefits shippers and transports when it comes to costs. It can reduce capacity concerns and drivers’ dwell time. When drivers are sitting it affects shippers and carriers. Shippers because their packages aren’t moving and carriers are paying wages to idle employees. Carriers also lose revenue in goods that remain unmoved.
Drivers with set delivery times ensure that the packages keep moving. It also reduces dwell time, which lowers surcharges associated with freight transportation and storage.
The relationship between shippers and receivers is crucial. However, recent market trends are threatening to strain the relationship. Increases in freight rates and a shortage in both capacity and drivers can also take a toll.
Both parties are looking for ways to lower their costs and this is why communication is vital. Whether it’s a shipper ensuring their package’s priority status or a carrier giving the driver accurate information, all parties involved need to collaborate. The result is higher efficiency, lower expenses, and happier customers on either end of the transaction.
Gilbert International is one example of a carrier that is implementing unique solutions to meet the changing market trends. Along with transportation and logistics, the company also offers distribution warehousing to its clients. When shippers and carriers work together, the supply chain remains intact from start to finish.