By Omar Singh, president and founder, Surge Transportation
So much of the conversation recently has been dominated by digital transformation of the supply chain that I thought it might be nice to take a moment to reflect on what got us here.
In the years before APIs, 10 years in my case, our approach was always to provide value as a strategic partner by positioning our relationship with customers in places that needed tweaking — maintenance. Maintenance in routing guides/supply chain can be short lead time, overflow, peak season, promotions, etc.
I have long thought that brokers should not compete against primaries, but rather they should be there to fill in the gaps when primaries cannot get to their awarded business for one reason or another. Honestly, in the years since digitization and APIs, the strategic positioning has not changed that much. It is a little bit more sexy to do it with digital integration, but what makes a valuable strategic partnership work has not changed.
The more things change, the more they stay the same.
Third-party capacity providers are not asset-based motor carriers, nor should we pretend to be. We do not have economies of scale that through volume purchasing allow us to acquire a truck or a trailer or fuel or a tire at a discount. In fact, the majority of the independent truckers who we work with do not have economies of scale either.
So then why seek to be valued by our customers in the same way that large asset-based fleets are — often by providing competitive pricing in exchange for consistent, sometimes even back-haul business? We cannot. The strategy in partnership should be to deliver value to our customers specifically because we are not asset-based rather than by pretending to be somebody who we are not. The prize then is that, like a mechanic, we maintain and repair moving parts of your transportation machine (routing guide): We don’t drive the machine, we fix it.
This maintenance and repair comes in many forms — our response time has to be faster to short-notice needs; our ability to swell has to be much greater; we need to be able to add lanes and assist on lanes with almost zero lead time; we need to cover peak season surges; we need to provide business continuity on high-volume lanes; we need to keep raw materials moving 100% of the time so that manufacturing lines never go down; and we respond to weather disasters.
These movements account for only about 10% of a shipper’s annual volume, but they are overwhelmingly the majority of the most critical shipments in the network and take up 90% of the operator’s attention; it is when parts of the machine start failing that we repair it.
To be certain, 90% of a shipper’s volume should move like the proverbial well-oiled machine: a bid process, an award to several carriers per lane, a routing guide, tenders, acceptance and on-time service.
There are many ways of strategically designing the logistics partnership to be different than that — to cover what is not covered. Some customers place continuity providers third or fourth on the routing guide so that we are already plugged in when primaries cannot cover shipments (routine maintenance). Some clients call on continuity providers for 30 to 45 days at a time to cover network changes until they can get an established carrier in place (breakdown repair). Some customers hold asset-based RFPs only, then hold separate non-asset-based RFPs after they have identified capacity gaps. Some customers do all of the above and much more.
Whatever your individual needs are, identify them preventively with a capable partner and build a service continuity plan. Face your freight year prepared for the ordinary and the extraordinary.
The fact that things are more digital and more automated currently doesn’t change good old-fashioned business fundamentals: Develop a strategic plan with a trusted and reliable partner. It just means that the transactions happen more quickly — but they are still the same transactions.
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Obstacles to Implementing FreightTech