Frank Lizzo is a director at Gibson Consulting and a Supply Chain Professional with significant industry and consulting experience in purchasing, logistics and operational improvement.
Here’s how to make it happen.
Over the past year, carriers and shippers across the country have been increasingly affected by an acute shortage of drivers. This shortage has driven rates upward and will continue to do so as companies with growing shipping volumes compete for a diminished and aging pool of drivers. The carriers are in the middle, pressured by demand for more capacity from shippers and challenged by competitors offering higher pay and bonuses to attract their best drivers. This demand for higher driver pay and hiring bonuses is translating to carrier rates increases for shippers.
More carriers are competing for a shrinking workforce of aging drivers
At many carriers, driver turnover is exceeding 50%. The cost of recruiting and hiring is increasing proportionally in order to address the increased turnover, and to respond to increasing hiring bonuses. The same is happening to driver pay as drivers now that the freedom to shop around for higher-paying carriers.
The average driver age is estimated to be almost 60 years old, and young, potential entrants into the workplace are growing less interested in driving as a career choice. One carrier reported that an applicant that they rejected had worked for 12 different carriers in the past 3 years. Others reported competitors peppering cars in their parking lot with hiring notices, as well as the lost of 10 out of 300 drivers in just one week. Drivers now hold significant leverage over their employers.
Change your strategy, or risk getting left behind
Shippers who continue to operate using the old method of forcing their carrier partners to maintain existing rates are finding themselves on the spot market, and paying higher rates to obtain required capacity. Their current carriers are incapable of finding drivers who are willing to accept lower rates, work harder and deal with difficult shippers.
The notion that shippers could help carriers attract and retain drivers by being an easier business for the driver to service represents not only a major shift in thinking, but also a strategic imperative for shippers. The term “shipper of choice” is now commonly being used by carriers to refer to the shippers that drivers prefer to service. This translates directly into lower rates and higher tender acceptance.
Progressive shippers recognize the urgent need to change their internal processes, demands and approaches to present a more accommodating face to the carrier community. This means focusing on understanding and addressing the drivers’ needs and interests. In general, any activity that decreases driver sitting or waiting time and increases billable miles is highly desired by drivers.
The following are some of the actions that shippers are adopting to make their businesses more attractive to carriers and their drivers:
Give Drivers Longer Pickup Lead Time
The longer notice that a shipper can provide of an impending pickup, the easier it is for a carrier to find a driver or to arrange other stops or backhauls to allow the driver to make more money.
Provide a Flexible Delivery Window
Delivery flexibility allows the driver to schedule the delivery for based on convenience, efficiency, Electronic Logging Devices (ELD) limitations, or consideration of his or her next pick up. Providing flexibility allows the carrier and driver to be more profitable by way of better planning or scheduling.
Add Consistency to Your Shipping Demand
Carriers who are presented with smooth or regularly scheduled demand can more easily attract regular drivers seeking predictable work. This will also improve customer service by maintaining a consistent pool of drivers who are familiar with the shipper’s products and customers.
Ensure Your Forecasts are Accurate
Where carriers have trucks and drivers committed at a shipper domicile, daily or weekly variations in demand for the vehicles creates inefficiencies for the carriers. Accurate, timely forecasts of daily and weekly service needs can allow carriers to shift drivers to other locations or shippers to increase their profitability.
Reduce Loading and Unloading Wait Time
Reducing wait times provides shippers more time for moving other loads and allows carriers to spend more time on the road, where they can increase their compensation. Drivers don’t make money when they’re sitting and waiting – they make money when they’re driving under load.
Offer Drop and Hook Accommodations
Eliminating loading and unloading time by offering drop and hook accommodation allows the driver to dramatically shift his available time from unpaid wait time to paid driving time.
Consider Options for Late Drivers
Drivers who arrive after docks have closed are often stranded with available but unusable time on their logs. Leaving docks open longer or providing for drop trailers allows the driver to continue their hours of service or to shift to another load.
Provide Overnight Parking
With the ELD system, carriers are more frequently forced into unplanned layovers. Any convenience provided to drivers that helps them accommodate planned or unplanned layovers is recognized and greatly appreciated.
Address Operational Conflicts
The top resistance or point of conflict generally occurs at shipping and loading docks. Shippers of choice respond quickly when carriers or drivers encounter operational problems and work to resolve conflict points for future loads.
Facilitate Multi-Stop Routing
Eliminating empty miles by pairing together inbound and outbound delivery and pickup at the same time offers a highly regarded premium to the carrier. This “matchmaking” strategy also provides the shipper with outbound capacity that may be difficult to obtain without a matching load.
Give Clear and Complete Order Instructions
Providing accurate addresses, loading dock identification, shipping hours and any special instructions can help eliminate driver confusion and delays.
Make Standing Appointments for Regular Drivers
With regular, predictable orders, drivers can secure assigned loading and unloading dock times for key carriers, reducing dock line time and load time.
Utilize a Web-Based Communication Portal
As shippers require more real-time data, providing systems that are easy for carriers to access and use reduces their work and avoids the need for manual intervention to create simple reports.
In today’s market, carriers and drivers have more options than ever before. That’s why it’s imperative that shippers understand and respond to carrier and driver needs and interests. It may take more work to attract carriers and appeal to their interests, but it will absolutely pay off in the form of lower rats and higher availability.