Opinion: Improving Carrier Sustainability

This Opinion piece appears in the March 2  print edition of Transport Topics. Click here to subscribe today.

By Rich Luhrs

Senior Vice President

CarrierDirect

In today’s rapidly evolving technological world, it can be hard to remember that carrier profitability is based on very simple ingredients — and easy to become so techno-dependent that the basic fundamentals of freight transportation are buried under mounds of data.

However, the keys to success in freight transportation lie in minimization of distance, maximization of payload and adherence to a disciplined business model.

Here are seven fundamentals that create the difference between industry leaders and the other guys:

• Concentrate on Your Largest Expense

The cost of labor continues to outweigh all other entries in your operating statement.

A recent survey showed fleets that best manage labor and productivity are those producing the highest profits, the best service and the most loyal workforce. A productive worker demonstrates higher respect for the employer and enjoys an elevated level of income and job satisfaction. The road map to this status requires measurement and identification of peak output, scrupulous matching of manpower to workload and a passion for excellence.

• Focus on Collaborative Sales and Pricing

Senior management often is content to accept sales representatives’ desire to provide an easy-to-present, lowest-cost transport solution. Conversely, pricing managers are seen as guardians of cast-in-stone freight margins that may not provide a realistic shipper-carrier dialogue.

The healthiest carriers take a more collaborative approach, where both sales and pricing personnel participate in fact-based communication that creates a united, informed cadre of professionals who are able to articulate a logical pricing package that is tailored to the shipper.

• Share the Wealth

Regardless of how many trucks, computers, tools, forklifts, terminals, gallons of diesel, laser scanners or flat-screen metric displays a company has, the greatest asset remains its human capital.

In the face of increasing robotics and computerization, people continue to provide the most valuable building blocks to success. But accepting standard hourly or salaried wages is not enough.

We are emerging into an environment in which employers increasingly are creating a “partnership of prosperity,” which includes improving employees’ lifestyles and personal success. In addition to cash bonuses, onsite fitness centers, day care, family counseling and organic-food cafeterias are standard at many companies.

• Recruiting and Retaining Drivers

Although the driver shortage has produced a flurry of costly recruitment and retention programs, the only real success has been at carriers that have become “destination” employers — companies for which drivers yearn to work. These carriers understand the value of drivers and take the steps needed to attract and maintain them.

Carriers that realize they do not provide trucks but do provide drivers qualified to use a truck as a tool in satisfying a shipper will win out in the end.

They tap into the entrepreneurial nature of the best drivers and offer cooperative business propositions where:

• Delays and wasted time are eliminated.

• Rates are not compromised.

• Shipments support a fair yield for both company and driver.

• Dispatchers and driver managers are trained to focus on making the driver an equal.

Programs to achieve this include: profit sharing; creating a “status model” where drivers aspire to attain increased prestige and perks; and lifestyle changes that keep them loyal and satisfied.

Remember, the now electronically amplified driver grapevine is the fastest and most direct marketing tool for carriers.

• Watch the Little Acorns

Cost control is a journey, not a destination. The art of purchasing has been one of the chief beneficiaries of the Internet age, with savings opportunities appearing at seemingly every turn. The basic price point has become a moving target, but resource investments in this area can pay back remarkable dividends.

Cooperative buying groups, cost containment consultants and online bidding for standard commodities hold substantive potential for cost reduction. This is another opportunity to incentivize your employees.

• Beware of Me, Too

Carriers that previously took comfort in studying competitors to eagerly embrace their practices and programs are finding that being a step behind is too great a distance to make up.

It is now painfully clear that today’s successes are merely place holders for an even more dynamic and efficient alternative tomorrow.

But if you follow a current market shaker, you may be left at a dead end when the next inevitable plan comes along and moves in a different, usually unexpected, direction.

• Keep a Steady Drumbeat

The true leader knows how to generate a corporate “drumbeat” that galvanizes effort and marches the company’s assets in a unified manner toward a clearly perceived vision.

This leadership style means you don’t blink; you say what you mean and mean what you say when translating mandates into actions. This drumbeat becomes so ingrained in the minds of staffers that follow-up and adherence to quality activities become second nature and reflect a cultural mindset of excellence and constant improvement.

We are experiencing the most exciting era in transportation history — the culmination of a journey that started with deregulation and now is fueled by technology. But rather than letting the dazzle of bright lights create a blinding glare, we must remember the fundamentals will always illuminate the road ahead.

Luhrs has decades of experience in the transportation industry, working on strategic initiatives, acquisition and mergers, and carrier management and development. His white paper, “7 New Year’s Resolutions in Carrier Sustainability,” is the basis of this article. He can be reached at rluhrs@carrierdirect.co.