Where’s “my” freight?

[Mike]

A well-known national shipper approached one of our mid-market truckload clients in January. This shipper was worried about capacity and wanted our client to commit to a specific number of loads per week on a specific lane. The carrier positioned spot trailers, secured capacity by increasing a commitment at the destination, mapped EDI, implemented service tracking metrics and trained personnel. The business worked well for our client and appeared to work well for the shipper, until last week when our client inquired why they had received no tenders as of Thursday. The shipper’s emailed response:

“The carriers that are accepting the freight are large brokers who have a lower rate, so they are receiving the tenders first and they are accepting them. Any movement on your rate to get you in a better position?”

Those few words convey a lot. This business morphed from a “commitment” and “partnership” to a transaction. It was a “commitment” when the shipper was concerned about 2019 capacity. The same business turned transactional when the supply and demand relationship changed and provided an economic incentive for the shipper to utilize the spot market.

The situation above is not isolated or unusual, and unfortunately is not surprising to industry veterans. My firm compared the business that our clients transacted with a publicly traded broker from October 2018 to April 2019; loads hauled by our clients for that particular broker increased 43 percent while the quality of those loads declined precipitously.

Commentary: Where's "my" freight?

The highly anticipated truckload capacity crisis and the ensuing truckload rate party lasted from late 2017 through late 2018. Beginning in early 2019 – surprise – the rate party was over. It feels like carriers have quickly gone from the best party since deregulation in 1980 to potentially the...

www.freightwaves.com

 

[mndriver]

@JunkYardDog5958
@Ranger_375

 

[Electric Chicken]

So basically the carrier creamed in its pants at the thought of all those loads...and signed a lopsided contract.

It'd be awesome if that carrier was one who screws lease ops with similar deals.

 

[Mike]

So basically the carrier creamed in its pants at the thought of all those loads...and signed a lopsided contract.

It'd be awesome if that carrier was one who screws lease ops with similar deals.

Not sure what all that means, but.....

There was a push during 2018 to get lanes under contract for fear of rates going higher.

Lots of contracts were signed, which is why there is more freight this year, but less seen on the spot market.

Now, with rates down, brokers are coming in and offering to cover these lanes at a lower rate, therefore making those contracts meaningless.

Lots of carriers were bashing other carriers for taking advantage of the spot market last year, claiming that building these relationships would be the best long term way of doing business.

Now, those relationships are falling apart as those loads are showing back up on the spot market thanks to bottom feeding brokerages cutting rates to take those contracts.

Unless, as a carrier, you had a lawyer ensuring air tight contracts, you were basically wasting your time with most shippers, and for that matter, with most contracts signed with brokers for dedicated freight.

If you happened to form any truly honest partnerships, ones that hold up through this year, best to hang on to them because they are few and far between.