DC Velocity - Tip Sheet 2012

have a realistic understanding of their carriers’ capabilities and must negotiate in good faith based on that knowledge.

Conaway said for shippers, a little knowledge
could go a long way. He said many of his customers’
Conaway said the solution often
doesn’t show up as a cost reduction
on the shipper’s freight bill. Rather,
it manifests itself in the benefits of
fixing internal defects that lead to
improved customer satisfaction
metrics.

2Don’t skimp on the data (but make sure it’s both accurate and up-to-date). It’s been said that “there is no bad freight, just bad pricing.” And bad pricing frequently stems from being forced to work with incorrect and insufficient shipper data, according to carrier executives.

Schneider generates up to 35 percent of its volumes through the competitive bidding process. However, the data contained in many bids is often stale or inaccurate, according to Van Alstine. As a result, Schneider finds itself in the uncomfortable position of revising its initial bid based on subsequent changes in the data elements, he said.

“I believe carriers … are going to be far more diligent in tethering their pricing to the bid data and far more assertive on recalibrating their pricing to the actual freight experience,” he said.

Kenneth Burroughs, vice president of revenue management for UPS Freight, the LTL unit of UPS Inc., urges shippers to provide as much information as possible about their business and freight. “Our advice is to give us all of the available data, and let us sift through it and see if we can build a proper network solution around it,” he said.

Burroughs said that without robust data streams, it becomes difficult for UPS Freight to assign the proper amount of truck cube to the freight, the paramount objective of any successful shipper-LTL

“We really need good, accurate data that we can
model,” he said. “Unless we already have a lot of
experience with that customer, we don’t know how
the characteristics of [its] freight will fit into our
network.”
The lack of visibility has in the past made for
unpleasant surprises when UPS Freight received the
goods, according to Burroughs. “We were assured of
one thing, and we got something
else,” he said.

Full knowledge of the customer’s unique freight needs triggers a virtuous cycle, according to Burroughs. It gives UPS Freight insight into the customer’s business requirements, which then helps it build workable shipping and logistics solutions. Without that level of data detail, the task would be much harder, he said.

3Know your accessorials. The treatment of accessorial charges is a perpetual work in progress. In the past, carriers lacked the visibility into the various scenarios that triggered accessorials to price them correctly. And shippers have pushed back on many of the charges because they were unsure they were actually responsible for the exceptions that triggered them.

“Transport companies have much to improve upon in terms of the type of accessorials and the pricing of them,” said Conaway of Con-way Freight.

But the give-and-take process is coming to a head, and that’s a good thing.

High-tech advances, notably the advent of electronic on-board recorders (EOBRs) that monitor a truck’s every move, give neither side room to hide. Gone (or fast going) are the days when drivers prepared paper logbooks—and sometimes fudged the information in them—and their employers would be none the wiser. EOBRs, whose mandatory use is the subject of legal action but which are now being used by many large truckers, do away with paper logs and make it impossible for drivers to exceed their hours-of-service limits.