Carriers should focus on the basics, shippers say
By Brian Milligan -- Purchasing, 11/18/1999
To keep shippers happy, carriers need to beef up technology and get shipments delivered undamaged and on time."It's carrier performance," says William Stewart, vice president of traffic and purchasing for the Virginia-based Westvaco. "There are still some problems we are facing with the carrier industry right now."
Times have changed. Technological advances in both trucking and rail freight industries have made it vastly easier for shippers to keep track of their shipments. Global positioning satellite systems now enable shippers to track truck deliveries and know that they will bring shipments in on time for just-in-time schedules.
The rail industry is slowly bouncing back from some of the problems it went through during the past two years. Wary of negative feedback, railroads are investing millions of dollars in infrastructure and personnel improvements, helping to alleviate any recurrent of the bottlenecking that occurred when Union Pacific acquired Southern Pacific Railroad. It is also starting to iron out some of the glitches that occurred when Conrail Inc. was purchased by Norfolk Southern Corp. and CSX Corp.
Improvements on both ends of the spectrum have come a long way. Shippers say that in the day and age of just-in-time scheduling at manufacturing plants, carriers are taking their marching orders very seriously.
Systems aren't flawless
But, of course, transportation systems aren't flawless. By their very nature, they are prone to delays.
"If you are relying on a mechanical thing that is moving down the road, it's Murphy's Law," says Norris Bice, distribution manager for the California-based Roplast Industries Inc. "If something can go wrong, it will go wrong. If a truck can get into an accident, if you rely on that not happening, you may be let down. You have to be flexible at both ends."
And despite improvements, shippers say things can still get a lot better. To the point: Shippers say a good carrier is one that can:
- Provide competent drivers and dock workers who will get the loads delivered undamaged.
- Show a commitment to making just-in-time schedules.
- Update and expand on its Internet capabilities and provide the technology that will guarantee their ability to track shipments.
Should carriers be focussed on these concerns?
"Absolutely," says Yellow Freight representative Bill Zollars. "It's getting a lot more challenging to get people to look in our direction, especially in an industry like this."
To get the job done in a way that keeps shippers happy, many logistics managers say they have to be willing to pull a few tricks along the way. This could involve making partnerships that would have once seemed unusual or using another company's assets.
"Our objective is to never say no to a customer," Zollars says. "If it makes sense to use someone else's assets, we will explore that."
And keeping the customer happy is what the game is all about. So says Barry Webb, a consultant for Georgia-based management consulting services group PricewaterhouseCoopers LLP.
"Customer service is paramount when it comes to delivery," Webb says. "If a customer expects you to, you must show up between 10 and 12, providing the right material so they can use it on their assembly line right away. It's 'What I want, when I want it,' and it's the first hurdle carriers must clear.
"They've got to optimize their outbound and inbound freight to service their customer base," he continues.
Today's logistics companies say they are well aware of the challenges shippers expect them to meet, and what those shippers are looking for as they profile prospective carriers. They also say they are working hard to address the concerns.
A growing area of concern, many agree, is making their service increasingly Internet savvy. This means providing Internet sites that will help a customer make an order and follow it's path as it is shipped. Such sites, often referred to as extranets, are becoming increasingly popular and sought after, they say.
But, technology aside, most carriers agree that their primary concern will always be making sure that deliveries are on time. Those that can't react quickly enough will fall by the wayside.
"The window is getting shorter and shorter," says Zollars. "Companies have got to react quickly and provide flexibility and be responsive enough to meet their concerns.
"The other concern is reliability," he continues. "You're no good to someone if you can't deliver. Those who are going to be successful must be able to deliver on a promise."
Others, like Joyce Jordan, chief operating officer at Texas-based Fleetline Inc., say providing the right technology and keeping costs down is more important to shippers. In today's competitive industry, she says, the shipper is going to go with the company that can do it right for the lowest price.
"And the customers expect you to have the technology," Jordan says. "It is the cornerstone of service."
Being flexible
Many logistics company representatives say the most important thing they have learned is to be flexible for customers. This means that if anyone has a rigid schedule to meet, it is the shipper--not the carrier. The carrier must be willing to bend in their direction.
"You have to be able to show flexibility and adjust to the customer's needs," says Michael Bourke, managing director of global sales for the Tennessee-based Federal Express.
But ironically, at a time when computer technology is becoming increasingly a focus, some shippers say it is the old-fashioned, human touch that can make a difference. Shippers at California-based Roplast Industries Inc., for example, say they have had some problems with the way dock workers handle goods that are being stacked into a truck. They say LTL carriers sometimes stack items that are not supposed to be stacked into 28-foot trailers. These problems could be avoided, they say, if the workers simply read the instructions on the pallets, indicating that they are not to be stacked.
Some shippers don't place delivery problems on the carriers, but factors that weigh in on the carriers' service. Shippers at Roplast say carriers that must travel to California are increasingly running into problems related to the state's rising diesel fuel prices. John Nannery, a buyer for the plastic bag manufacturer, says the company depends on being able to make its deliveries to its distributors. But lately, it has had difficulty bringing in carriers who will negotiate interstate hauls.
"We're having a hard time bringing in trucks, if we're trying to negotiate a load to the East Coast," he says. "We're having a hard time bringing in drivers who want to pick it up. They don't want to spend the money to go out there.
"There would be more people willing to come in if the [gas] price were lower," he continues.
Bice says the carriers that service Roplast also tend to have problems with their drivers. Bice says he has noticed lately that drivers have difficulty negotiating their trucks, or getting deliveries safely to their destinations.
"I've seen guys taking five or six tries to back a 40-foot truck into a dock, and that tells me that this is an inexperienced driver," Bice says.
Webb says in today's marketplace, this sort of problem is not unique. Qualified workers can be tricky to find in many spectrums today, and carriers must be careful to not overlook this important resource in their business.
"The labor component has got to be there," he says. "These companies should be asking, 'What can I do to optimize my laborers?'"
Many logistics providers say they are well aware that their customers are looking for some improvements in these areas and are trying to meet them head-on.
Jim Fields, vice president of business development for Michigan-based Menlo Logistics, says his company aggressively seeks feedback from customers through customer focus groups.
"We are looking at what we could be able to do better in the industry," he says.
Fields says he boils down his customers' concerns to three areas: The need for fresh ideas on how to improve supply chain management, cost reduction, and meeting delivery schedules.
"They are looking for cheaper and better service," he says.
Fields also says that making just-in-time schedule delivery windows is actually less of a problem for Menlo Logistics carriers. He says the logistics industry is so tuned in today with JIT systems that it has become a constant area of focus and expertise.
"JIT supports the manufacturing strategy, and hopefully it involves consistent flow of supplies," he says. "We have to optimize the mode and make sure we deliver and become a significant service provider. We have to focus on the customers in this industry," he says.
Rail problems
Shippers who use rail freight also have experienced their share of problems. Westvaco's Stewart says it is a given that many companies experienced problems when the rail mergers took place. "It was the inconsistent delivery that seemed to come up at the same time that all these mergers were going on," he says.
But Stewart also says railroads still need to invest more money in their infrastructure. He says Westvaco has had problems with its goods being shipped in ancient boxcars that either are unsuitable or lead to damaging of the goods.
"The boxcar fleet in the U.S. is getting rather old," he says. "It's a little rag tag.
"Most of the major free-running boxcars were built in the 70s," he continues. "They need a major overhaul or total replacement. And since the rail industry has stopped making those investments, the business has moved to trucks."
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