Tucker Blog

Tuesday, May 3, 2011

Preparing For Tight Trucking Capacity

Add Lead Time, Flexibility and “Attractiveness” to Your Operations

Tucker has successfully navigated through several recessions and recoveries in our 50 years. Use our insight to help your company leverage the marketplace for competitive advantage.

Transportation Fundamentals are Improving Quickly – Important Implications

1. During the recession, the trucking industry reduced its size by more than 15%
2. Truck tonnage increased dramatically in 2010 vs. 2009. LA/Long Beach Port reported largest ever year to year gain in December 2010. Tonnage has continued to increase in 2011.
3. Analysts are referring to 2011 and 2012 as an impending “crisis” period for finding available trucks.
4. When trucks become harder to get, it leads to higher prices, as the nation experienced from 2003-2006. Analysts expect strong pricing power has begun returning to carriers in 2011, through 2013.
5. Carriers are carefully evaluating customers and “firing” some, if there is not enough return on their service investment.
6. To “keep the revenues in-house” carriers may double-broker freight, giving it to another carrier to haul. This often is illegal, and does erase any due diligence and SOP understanding the shipper instilled in the carrier. In times like these, take measures to ensure zero incidents of this. 7. Last minute notice usually means higher prices, because carriers are booking trucks easily and quickly.
8. New Regulations Further Threaten Trucking:
a. CSA 2010, the DOT’s new carrier safety program places enormous burden on driver behavior, forcing as high as 10% of drivers from the industry, to avoid detrimental carrier scores.
b. New Hours of Service may reduce productivity by 7%-9% in 2011, if released with changes.
c. Electronic On-board recorders (EOBRs) electronically enforcing driver hours, with zero tolerances for added time.

How to Weather the Tight Capacity Storm? Be Attractive to Carriers and Drivers.

1. Save freight costs by booking in advance. It maximizes carrier efficiency in pre-planning their trucks.
2. Maximize Communication & Lead Time = Minimized Expediting Costs. With two or more days notice, expediting needs are reduced dramatically, and maximizes the number of carriers available.
3. Maximize flexibility. Offer drop & hook/drop trailer, expand loading/unloading hours, etc.
4. Get the truck first. A powerful lesson learned from 2003-6 was first learned in kindergarten. The early bird catches the truck. The earlier, the better. Book the truck first. It’s simple and effective.
5. Be more attractive than other shippers. With plenty of freight choices available to carriers and drivers, be attractive. While Tucker always pays, and pays quickly, it takes more to remain “attractive” including: fast loading, flexible scheduling, clean freight, respecting drivers’ time and treating them as professionals.

When customers know expectations and anticipate challenges, they can work within their own organizations and with their clients to better manage and adapt service and operations effectively.

Prepared for you by Tucker Company Worldwide, Spring 2011