Editor’s note: Written by Elton Chung, Co-Founder of NEXT Trucking. This is one in a series of periodic guest columns by industry thought leaders.
Running a truck company isn’t easy. On the best of days, most companies have just a few trucks on the road and employ a few drivers to keep the wheels turning. More and more, shippers require a variety of technologies, from track & trace to electronic data interchange, or EDI, as a sort of cost-to-play to carry goods, placing a new level of investment burden on carriers.
Throw in a global pandemic, and you’ve got yourself a mess.
Nearly every carrier, from the individual owner-operator through the large fleet has, almost inevitably, heard the following phrase lately: you make a compelling case, but I can’t justify switching carriers during this environment.
For most shippers, this isn’t an excuse to get off the phone; it’s the reality that transportation managers are dealing with. And as trucking companies have fallen by the wayside – the pandemic caused the loss of about 100,000 trucking jobs – their fears of failing while trying to replace a carrier have been replaced with the likeliness of failing while needing to replace a carrier.
Solving this challenge for a shipper can lead to a long-term engagement and relationship. Instead of fear, uncertainty, and doubt, carriers can instill confidence and stability. But getting things off to the right start is critical.
In transportation, this means aligning on standard operating procedures (SOPs) before a single shipment is picked up or delivered. Because logistics is really a game of exceptions, it’s critical to establish the process for managing the unexpected, and SOPs are a way to navigate the challenges.
As a best practice, an SOP should have three critical pieces of information. In some cases, these variables should be discussed and negotiated, since every shipper and carrier has its approach and systems. In others, however, there shouldn’t be wiggle room; establishing expectations is critical to ensuring a successful engagement.
One example of the latter. where flexibility is discouraged, is creating a contact list. Many shippers require a single point of contact for any exception. This is, however, not realistic. People take vacations and occasionally sleep. Instead of a “single neck to choke,” carriers can establish a phone tree that allows a shipper to know who to contact during an exception, no matter what time of day it is.
Phone tree requirements should go both ways. As a carrier, your driver may drive overnight, only to arrive at a warehouse where no one is available. This leads to detention fees – shippers hate paying those – and it also has the potential to disrupt the rest of a driver’s trip, cutting into their hours of service.
Another matter that should be addressed in an SOP is the right level of transparency. Many of the more advanced shippers are working to align their warehouse staffing with expected arrival times. They’re making it so there are more hands and bodies available when most trucks will be doing drop off and pick up, getting the most out of their teams. For these companies, a small variance in ETA can throw a monkey wrench into their plans. This is true of companies that shift their employee lunchtimes around in real-time. For other companies, however, a 35-minute adjustment to ETA, meaning a driver will arrive in the middle of their delivery window as opposed to the beginning, is nearly meaningless. The broad spectrum of approaches to transparency makes it difficult for carriers. What’s ideal for one shipper might be over-communication for another. Remember, there’s a fine line between being ‘thorough’ and being obnoxious.
There is another component when it comes to transparency that should be discussed before hitching a trailer; the way information will be shared. Many of the biggest shippers in America require their transport partners to incorporate EDI into their offerings. This can be a challenge for truckers of all sizes; there are 2,500+ varieties of EDI. A trucking company shouldn’t simply buy an EDI software in the hopes it will open up new opportunities with big shippers. EDI can be a very specific request. Other shippers might ask for a portal where a track and trace solution provides real-time updates. A third group might ask for a text message saying a driver is 30 minutes out. There is no right or wrong approach here. Shippers get to select what works best for them given their own circumstances. There is, however, a wrong way to approach transparency, and that’s to ignore it early and address it when it is too late.
The final component to consider in an SOP is invoicing terms. Erroneous billing is perhaps the best way to lose a business relationship, but also the most preventable. On the one hand, getting goods to their destination has already been accomplished, The heavy lifting is quite literally done. On the other, however, is the procurement department that may be working with hundreds of carriers. They get a lot of invoices, each of which might need to be checked against a contract to identify agreed-upon detention rates and other fees.
In addition to defining the agreed-upon amounts a bill should be for, it’s also critical for an SOP to include the billing terms. When will a bill be sent out? When will it be due? Is there a late fee associated with bills that take longer than anticipated? Agreeing to all of this in advance of the first shipment and then documenting the information for both parties, can help to avoid awkward conversations, and ensure that the relationship has clear expectations.
There are many truck drivers who subscribe to the idea that driving isn’t the hard part of their job… everything else is. For independent operators and small fleets, a successful onboarding call that leads to clear SOPs will help to maintain long term shipping relationships and alleviate a tremendous amount of distraction.
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