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Smart Shippers Are Taking the Long View in Transportation

As I wrote about several weeks ago, various data points related to the trucking industry suggest we’re in a shipper’s market — that is, there is excess trucking capacity relative to demand, which is putting downward pressure on rates. How are shippers responding to this market environment?

“Many shippers have effectively elected to toss to the wayside any talk of partnerships, relationships, cooperation, collaboration, etc.,” according to a recent report by Stifel Inc. “Shippers are under enormous pressure to cut transportation costs and seem not to be satisfied with the massive fuel surcharge reductions racked up over the past year and a half.”

Smart shippers, however, are not following the masses; they are taking a longer-term view of the transportation market, as Matthew Menner, Senior Vice President at Transplace, discussed in a recent episode of Talking Logistics:

“We see most of our customers taking the long view. They know exactly how fickle this industry is and how quickly it can turn. Eighteen months ago we were in a carrier’s market. Carriers were reporting the best earnings, the best operating ratios, and the best top-line revenue growth they had seen in a decade. So the tables can turn quickly.

While smart shippers are trying to do a little bit of clawback to realign back to what is defined as current competitive rates based on their freight network and freight characteristics, they are not seeing this as an opportunity to take mass gains back and potentially suffer the long-term consequences of such actions.”

Read more here.
April 13, 2016