When building great shipper and carrier relationships, a shipping rate that works for both parties is essential. Over 90% of the freight being transported in the United States is being handled by owner-operators. This gives the shipper the opportunity to use multiple carriers (outside of major companies), and give loads to the lowest bidder. Additionally, it allows the shipper to have access to other carriers when their main carrier can’t run their load. But is this a good or bad thing for the shipper? Constantly working with different carriers can put shippers at a higher risk for distribution problems.
The best option for a shipper is to use the same carrier over and over if possible. It is known that many new trucking companies go out of business by year two. Competition can be strong with many truck drivers battling for loads, and willing to run freight for a low rate. But are low rates better than high-quality service? Bidding for work allows new truckers to make money, gain experience, and build relationships.
But bidding for work as a long-term business model for a trucking service can end in failure. Shippers depend on dependable carriers and carriers depend on shippers. Knowing this fact I would say shipper and carrier relationships are very important. The trucking industry can be like the Wild Wild West with truckers competing for work. Its hard for a trucker to stay in business when they have to scratch and scramble for loads every day.
Eventually, carriers would like to build closer relationships with shippers to get consistent work. When a shipper finds a dependable trucking company who has proven to be reliable, they should contract with that company. The carrier and shipper should come to a reasonable price and terms so both shipper and Carrier can see decent profits. It isn’t always a good thing for a shipper to have multiple carriers bid for work, but it’s not always bad either. Using multiple carriers can give a shipper the opportunity to find a trucking service that fit their business model best and make an agreement with them.
Most shippers probably don’t know that lots of truckers are barely getting by with running cheap loads for them. A trucker may bid low for freight just to keep money coming in, to pay their expenses. High fuel, insurance, truck maintenance, and tolls can sink a trucking company. Shippers must pay what they can to their personal carriers to see that they are making a decent profit. If a trucking company doesn’t see decent profits for running loads for shippers, then they won’t be able to provide top-notch service for the shipper. Carriers have to maintain their fleet in order to keep their trucks in good condition, but it’s not cheap.
Moreover, truckers need to get paid a decent shipping rate to provide good service. There are tons of articles that suggest that the trucking industry needs about 900,000 truckers to handle demand. But at the same time, many trucking companies are struggling to stay in business. I believe there is enough money circulating in the trucking industry for everyone involved to make a profit worth their time. The number one goal for shippers and carriers is to make as much profit as possible, but both parties will need to come together, and find that ‘sweet spot’ so that both can benefit.
Shipper and carrier relationships will have to continually improve so that everyone can make decent profits. If a shipper and carrier initially agreed to a shipping rate that later suggests one party is taking a big hit, they should re-negotiate the shipping rate or terms to assure both parties make enough money, and have reasonable terms. Take care, and visit often for more post.