Check Call: Call the fire department

Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.

Inside this edition: Preventing daily fires … the pessimistic outlook on carrier retention … The newest fixer-upper

That fire seems like a problem. Everything is on fire and the biggest blaze gets put out first. The daily life of a broker is only set to get worse as Q4 rapidly approaches. What if some of the fires brokers face could be “fireproofed” — taken care of before they became even tiny embers? Dwell times are rising at rail yards and ports around the country, an issue that will only continue to get worse as consumers head out in droves to pick up holiday presents. Demand will pick up, and shippers will be left with goods sitting at ports, warehouses, rail yards, basically. No one can predict every move a shipper will make, but maybe a few moves can be a collaborative approach.

Caught ya by surprise. For example, starting conversations with shippers about any potential overflow facilities planned for the following quarter. Knowing when a facility is opening could prevent a handful of people from having their day come to a screeching halt because a shipper decided to open a new distribution center without telling anyone about it until it appears on a bill of lading. Knowing about it ahead of time lets you get it in the system and notify carriers, not to mention get better pricing options instead of just whatever the carrier will give you in the moment because it has to move now.
Only you can prevent forest fires. Being a little proactive about it will help shippers more effectively secure capacity and plan appropriately. A lot of shippers might have to reshuffle some inventory before the end of the year. Working on a plan to get that done now will save so many headaches. This is the time to flex that value add through consultative services, technology, freight audit and payment. What can you add to customers’ portfolios that makes it less likely for their heads to turn to another 3PL?

Thoughts and feelings. Turns out most freight brokers have a lot of them, specifically regarding the looming recession. The No. 1 thing causing people to get a little nervous? Customer retention — something that was a little less of a concern throughout the past few years. Economic downturns make everyone tighten the purse strings a little, which is why customer relationships are key moving forward. The loosening of capacity in the spot market means price competition is fierce. There will be more and more competitors knocking on customers’ doors promising lower prices.

Please don’t leave. With the falloff in consumers’ discretionary spending, there are fewer loads in the spot market now than a year ago. Outbound tender rejections dropping below 6% tell us that carriers are not rejecting contract freight, as contract rates are paying better than the spot market. Fewer loads are hitting the spot market, which creates an oversupply of truck capacity. The only thing we have to look forward to is that everyone will be surprised together. Uncertainty is here to stay throughout the rest of the year. Continue to add value and don’t be scared to talk to your customers and see what they’re thinking. They won’t bite. Get the whole scoop on how the industry is feeling in the “Freight brokers say retaining customers is a major concern” white paper.

Market Check. The high price of diesel has been the topic of the summer, so it’s only fitting that as the summer comes to a close the price of diesel is coming down. National diesel prices are at $5.02 per gallon. Some of the biggest freight markets in the U.S. have prices all over the board. In a surprise to no one, Ontario, California, comes in on top with diesel prices at $6.15 a gallon, down from nearly $7. Knowing the Department of Energy’s average fuel rate is crucial to fuel surcharges and how to best inform shippers who are a little hesitant to adopt a fuel surcharge schedule.

Who’s with whom? Heartland Express is buying another fixer-upper. The company is probably one or two acquisitions away from greeting its own HGTV show. This time Heartland acquired Contract Freighters Inc.’s truckload unit and its logistics side in Mexico from TFI International. CFI will continue independently with its dedicated and brokerage business. Heartland is striving to achieve an operating revenue of 85% within three years at CFI. Watch out, Chip and Joanna. Heartland Express is coming for your “Fixer Upper” title. I think the shiplap is safe though.

Quotable moment from Todd Maiden’s article: “They were doing a lot of things last year, and they did not execute well on getting rate increases … they got some. I think they would admit as well they should have gotten more,” Mike Gerdin, chairman, president and CEO at Heartland, said on a Monday call with analysts. “I think that we can just give it more attention, so to speak, than TFI was able to with all the things that they’re doing.”