How Are Shipper-Carrier Conversations Changing Today?

With so many factors impacting truckload transportation, including increased regulations and driver shortage, where are we today compared to a year ago? Have the needs of shippers changed over the past year?

Those were my opening questions to Bob Biesterfeld, VP of North American Truckload Services at C. H. Robinson, in a recent episode of Talking Logistics. Here’s what he said:

I think it’s clear to all of us that the market has changed. What [have] the drivers been? It’s [been] a number of different things. It seems like we’ve had a little bit of an [economic] recovery, at least a freight recovery, from an econometrics standpoint. No question that some of the new regulations [like Hours of Service]…have impacted the overall marketplace. But in terms of the needs of shippers…I don’t [believe] that has changed a lot over the course [of the year]. Smart shippers and strong shippers have strategies that persevere through different market conditions…Shippers are really focused on finding providers that are going to honor their commitments, finding providers that are going to bring creative and innovative solutions grounded in analytics and strong technology, and ultimately, shippers are looking for providers to deliver the right service at the right price, and either get product off their dock in an expedient manner or get it into their distribution centers in an expedient manner.

What probably has changed, according to Bob, is the needs of carriers, and that has impacted the decision-making process of shippers.

As regulations have changed the field of play for carriers and service providers, that’s causing shippers to prioritize a little bit different what their most important needs are. In the past five years, shippers have really been able to focus on extracting cost from the carrier transaction. Within the routing guide, if you weren’t first, you probably weren’t getting a whole lot of freight, and there wasn’t a whole lot of routing guide disruption. In today’s world, shippers are feeling that capacity is somewhat finite, and it hasn’t felt that way for a while, so they’re having to adjust strategies in order to deal with that…Shippers that want to be successful are really driving toward stronger collaboration with their providers because it feels like the environment we’re in may be more long term than short term.

So, is all of this volatility in the market changing the type of discussions shippers are having with carriers and 3PLs?

I think we’re definitely having different conversations today…I made the comment earlier that capacity is finite and it hasn’t felt that way before, so we’re having a lot of conversations with shippers about what is their asset and 3PL strategy. We hear from shippers that they want to experience assets differently than 3PLs, and smart shippers are finding the right balance of what that interplay looks like. If I’m in the seat of a shipper, I want to manage no more than the number of providers I need to execute my business on a daily basis, but we also know that the industry is broad, with 360,000 carriers of which half only have one piece of equipment, so shippers are trying to figure out how to best access carriers of multiple sizes, geographies, regionals, locals, nationals…so I think that’s a different conversation we’re having in the marketplace [compared to previous years].

A lot conversations about procurement, best practices in procurement, how can shippers establish regular rigor so that they don’t get into situations where some found themselves in quarter one or quarter two of this year where routing guides started to fail significantly because of maybe having paper rates in some cases versus having sustainable routing guide rates. Compliance has obviously changed within the routing guide this year, and I think that has introduced some relationship volatility. We talk about market volatility, but relationship volatility is something we’ve experienced this year. When you think about the stable market [we were in] the last number of years, I know a number of people — customers that I deal with, or carriers that I deal with, or internally within our organization — who haven’t experienced a dynamic change in the marketplace like this, so it’s the role of leadership to help, coach, teach, train, and bring companies together through those times of rapid market volatility.

One of the trends I’m seeing is a growing number of carriers starting to scorecard their shipper clients and sharing the information with them. I asked Bob if he was seeing this trend too and what impact it’s having on shipper-carrier relationships. I encourage you to watch the full episode for his response and additional insights on this topic, including Bob’s perspective on the steps shippers are taking to become “shippers of choice” for carriers. After watching, post a question or comment for Bob and keep the conversation going!

Note: C.H. Robinson is a Talking Logistics sponsor.