Regulations for the transportation industry are making the need for collaboration between shipper, customer, and carrier more important than ever.
At the Council of Supply Chain Management Professionals (CSCMP) conference in California this past September, supply chain professionals, shippers, and carriers came together to discuss the trends, topics, and major issues facing supply chain professionals and the companies they work for.
One of the phrases heard time and again was the necessity of being a “Driver-Friendly account.” A driver-friendly account is a goal that manufacturers and retailers using any mode of transportation set in place to keep the driver moving at the time of pickup and delivery. To be specific, the product being shipped needs to be ready at the time of pickup as well as received quickly so the driver is unloaded in a timely manner. That sounds great; but it doesn’t necessarily deal with the reality facing all of us in the transportation industry: government regulations on hours of service (HOS), electronic logs (ELDs), and the ever-present driver shortage. Shippers should really question themselves as to whether their shipping/receiving protocol is “friendly” to the upcoming federal mandates for drivers and carriers.
The Hours of Service Change and ELDs: Most in the transportation world have an understanding of the 2012/2013 HOS rules but for those who don’t, here’s a 30,000 foot layout of the provision as well as a link. (https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-regulations) In 2012, the hours of service ruling came into effect, tightening the typical tractor trailer driver’s work and drive hours as well as shortening shifts by as much as 12 hours in a week. The ruling also changed the way a driver could take breaks as well as come back on duty by enforcing the 1-5 rule, which currently is suspended for further study.
These changes reduced the transportation providers’ productivity by as much as 3-5%. (Per DAT http://www.dat.com/blog/post/hours-of-service-study-carrier-rate-increases-productivity-loss) Some may argue that the carriers made up this loss of productivity by increasing rates, but increasing rates still does not solve the problem of not enough time to haul the freight. Bottom line, the transportation industry was expected to operate within these new rules by making as few changes as possible so as not to negatively impact their customer, the shipper. The burden was effectively on the carrier to satisfy both federal regulations and customer demand and expectations.
Fast forward to 2015 where the struggle still continues to change DC and warehouse operating procedures that could aid in turning product in and out of DC’s faster. Carriers and shippers need to work together to understand how the HOS ruling has changed the carriers’ length of haul and productivity. Shippers and carriers need to work together to ensure that every party gets what they need to succeed in the ultimate goal: getting the product to its final destination on time and on budget. What worked in the past will not necessarily work in the present when it comes to delivery of goods. Many of the supply chains and delivery channels were set up before the current HOS rules went into effect, yet most procedures on shipping and receiving docks did not change to accommodate the new rules.
This balancing act will become more difficult for carriers when the ELD mandate, which is due out this month, is published. The mandate, which will remove paper logs and make the drivers log-keeping a more automated process, means that companies still using paper logs can expect tighter constraints on driver time. All involved in the movement of goods need to keep in mind that the driver’s clock is always ticking, so a 15-minute delay on pickup could equate to an hour and half delay for the receiver. Or worse yet, it could result in an overnight delay due to the driver running out of hours (the HOS ruling). The driver’s clock has turned into a very slippery slope.
The Driver Shortage: One of the major industry issues that can keep shipper and carrier goals from being realized is the ongoing driver shortage, which has been forecasted to worsen with the current HOS mandate and the impending electronic log ruling. With driver time now so compressed, it’s vital that carriers and shippers re-think driver compensation and treatment. Recently I heard of an example (I was listening to Road Dog Trucking on SiriusXM radio) where a driver had to wait eight hours to get unloaded. The result: he made only $60 in all that time and worse, lost his return load which would have made him additional money. Drivers are talking and we all need to listen. They want to be home with their families, feel respected and, most of all, appreciated. Remember, without drivers, carriers have no business and shippers can’t move their product.
Some shippers and customers might turn to a third party for dedicated carriage and that would certainly relieve them of the day-to-day concerns of finding drivers, maintaining trucks, and utilizing the best logistics technology to make the supply chain more efficient. However, that can only go so far; 1) It will still be important for shippers and customers to do all they can at load and delivery points to keep drivers moving; and 2) Carriers also need to look at where the problems are and go back to their customers with suggestions. In some cases, manufacturers and retailers may need to make the tough decision to add additional shifts at DCs; other options to be considered could be: back loading, cross-docking, moving a brick-and-mortar location, or building a more centralized DC. Some of these options may be costly, but the impact on the overall transportation in the supply chain could reduce hidden costs for retailers and manufacturers through reduced late fees, better spot market rates, etc.
The fact is, as demand ramps up and the driver shortage worsens, all of us must work together as a cohesive unit toward a common goal of on-time service, consistent rates, and happy drivers.
How many of your customers are working to be customer-friendly?