Shipper's Solution?
As diesel prices continue to remain elevated and capacity is still tight, what do you see as the next logical step? Shippers have a need for transportation. They can sell all the products they can manufacture, but if they just pile up in the warehouses, their customers will cancel orders and find the products they need elsewhere. So what are shippers to do when trucks are not available? And for the ones that are available, if the cost is too high to absorb, what can shippers do?
Recently, some internet chatter about truck drivers going to strike on October 1st has been all the buzz. While I don’t think it will amount to much, I do think their timing is way off. Truckers are not the only ones feeling the squeeze of high prices. Every consumer feels it when they shop for basic essentials. Shippers feel it too, and they are looking for viable solutions to the high cost of transportation. Could that mean investing in their own fleets?
Think about it: there is a cost-value balance. Shippers can justify the cost of transportation as long as they get or perceive value in it. Once the price becomes too high, the value evaporates and they search for alternatives. At what price point does the shipper conclude that buying their own trucks is more cost-effective than hiring carriers to handle their transportation needs? It will be different for all shippers, but rest assured, there is a price point.
As an example, the last time you moved from one house to another, did you hire movers or rent a truck and buy packing materials? If the mover’s quote was near the cost of the rental and supplies, you would probably just hire them to do the job, right? But if it was multitudes higher, you would consider doing it yourself, if you are able to do so. The point is, you had a price point where it made sense to choose an alternative way to transport your belongings. Maybe the truck rental was too much and you just used a pickup and borrowed a trailer. Again, we are back to the price point dictating the path of least expense.
Shippers have the same opportunity. When the price is too high, they can and will find a less costly way to move their goods. And when you couple the high cost of transportation with a strain on capacity, well, you can see the shipper’s dilemma. Even if they are willing to pay the high price, if no trucks are available at any price, what are they to do? Buy their own fleets. Still think the truckers calling for a strike is a good idea? Leave shippers without service and they will find a way to work without you.
What does all of this mean to the owner-operators out there? Instead of a “strike” (which, by all accounts, is more of a protest), why don’t you try to be the professional you claim to be and sit down with your customer(s) and negotiate for amicable rates? A reasonable shipper and a reasonable owner-operator can have a business-to-business discussion about their shared interests to find a balance satisfactory to both parties. If they cannot, then they need to part ways.
If more shippers start to build private fleets, it can impact the spot market rates as well as contract rates. They need reliable transportation, and if they control their own fleet, they will have reliability even when capacity is tight.
Don’t put yourself in a position to be replaced; it can happen faster than you think. Instead of complaining about a problem, work on solutions.
Strike, protest, or have a complete temper tantrum at the fuel island, it will not fix your problems. It only creates more reasons for shippers to eliminate the source of their problem: you.
Focus 90% of your time on solutions and only 10% of your time on problems.
- Anthony J. D’Angelo
P.S. This is posted on October 5th. I worked through the supposed strike and I will continue to solve transportation problems for my customers.
See you down the road,
Greg