Do You Want a Rate or Do You Want a Truck?

by Brian Kenney, VP Trinity Customized Logistics

Many shippers treat transportation as a commodity and buy it on the spot market every day.  In the current transportation market these shippers have noticed that the price of this commodity has continued to go up.   A significant reduction in capacity during the last few years combined with an increase in fuel costs and an increased demand for transportation services has driven the prices up dramatically in the first half of 2011.

Most carriers have benefited from increases in rates and increases in demand for their services.  As a result, carriers have options that they did not have last year.  Carriers can now pick the freight that works best for them from both a pricing and destination stand point.  Carriers no longer need to take “cheap” freight just to get their trucks moving.   If you look at the publicly traded trucking companies you will notice that the majority of them are doing very well right now.  They have been able to partner with shippers that understand the current market and realize that they need to pay for consistent, reliable transportation partners.

Carriers are not the only people taking a stand against “cheap” freight.  Many brokers/3PLs have seen an increased demand for their services and have decided to use their resources to service customers that understand the market and are willing to make a commitment to them and not just shop for the lowest rate on every load.

If you are that shipper that rate shops for transportation every day to get your freight moved you need to ask yourself, “do I want a rate or do I want a truck?”  Many carriers and brokers will still provide you with a rate, but when someone provides you a rate, that does not mean that they can provide you a truck.  If your plan is to go with the cheapest provider every time, you are inevitability going to end up paying more in the long run.  Chances are that a broker will provide you with the lowest rate and take your load hoping to find a truck at a price that allows them to make a few bucks.  If they can’t find a truck they will call you up at the last minute and give the load back to you.  At that point you no longer need a rate, you need a truck.  The majority of people that provided you with rates initially either no longer have capacity for your load or want a higher rate because of the short notice.  No matter what, you are paying more to get the load moved.

Before you contact a carrier or broker about moving your next load, remember that you are looking for a truck and not a rate.  Trucks are required to move freight and rates are just numbers on your computer screen.  The transportation market we are in dictates that shippers need to start treating transportation as a service and not a commodity.   It is important that you create a partnership with your transportation providers.  You have to make a commitment to them at a fair market rate and allow them to service your business.  Saving $5 on a load today is not worth a lack of loyalty from your carrier base.  You will recoup that $5 numerous times through a strong partnership with your carriers.  Carriers and Brokers will take a hit or go the extra mile to service a customer, but they will not to service a rate shopper.   A strong partnership between a shipper and a carrier is based on value and not based on price.  Take the steps to become a preferred customer to your transportation provider before you find yourself without any responding to your rate requests.

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