Hot Take
Good customers gone bad. Anyone who has onboarded a customer knows that there are a bunch of hidden little issues that just happen to come up through the course of onboarding. Even the best-laid plans sometimes have to be thrown out the window when it comes to actually starting to ship. The customer you sign can quickly become something else entirely a couple months down the road.
How do you know when customers have reached the expiration date and it’s time for them to think about looking elsewhere for services? Some signs are blatant, like a customer becoming rude and disrespectful to your employees. Others are a bit trickier. Are they becoming harder and harder to get ahold of? A slow fade away is ideal with a random date but not what you want in a professional setting. If customers aren’t telling you they’re unhappy, or happy for that matter, you have to check with their level of satisfaction so they don’t ghost you and find something else.
Sure there are points of frustration with new customers that aren’t necessarily deal breakers. There’s always going to be a new shipping location they “forgot” to include in the bid and one that’s just a new relief warehouse. There are always going to be moments when someone leaves the customer and you’re left wondering whom you should contact for everything now. Those aren’t deal breakers you walk away from. That’s the “charm” of the business.
Some of my favorite moments when I knew we could have found better customers was when they stopped paying all invoices. Instead of letting the pricing department work with their carriers on a better tariff and mitigate accessorials that would actually benefit their business, they just refused to pay anything. When the account went 30, 60, 90, 180 or more days past due and their carriers stopped hauling freight, the customer was left wondering what happened? Turns out no one works for free and instead of just not paying the accessorial charge they weren’t happy about, but paying the rest of the invoices, they in turn held the line and ruined their reputation with carriers.
Everyone has a customer they love and has been their calm, quiet, reliable one that doesn’t get crazy. More often than not there are those problem children who will whine for some new situation they aren’t happy about, and it’s back to the drawing board on how to keep them happy — or its best to just let them go on with their lives separately.
Quick Hits
Our friends over at Amazon Freight are expanding their driver contractor model to Europe. Their goal by partnering with small trucking companies throughout Germany, Spain, Poland and France is to attract hundreds of would-be entrepreneurs to their network. Currently all of the Amazon drivers in the U.S. are independent contractors; Amazon employs zero delivery drivers.
The company is hoping that by taking the model that works so well here in the U.S. to Europe it can service those customers with the same speed and quality that those here in the States have. Currently Amazon Freight has partnered with larger contractors in the U.K. as a delivery service partner. The small trucking companies would be held responsible for their drivers meeting Amazon’s rigid delivery metrics.
Ninety-eight bottles of beer on the wall, take two down and pass them around, 96 ships in the San Pedro Bay right now. We have hit an all-time record folks: We have nearly 100 ships waiting for berths at the ports of Los Angeles and Long Beach. There are 10 container ships within 40 miles of the ports but an additional 56 waiting farther out to sea in the designated “Safety and Air Quality Area.” Not only are there 96 ships waiting, but there are 31 ships at berth, making a grand total of 127 ships at Los Angeles and Long Beach.
The Marine Exchange has a new queuing system that reserves a ship’s spot in line based on its calculated time of arrival, kind of like when you put yourself in line for brunch before you get to the restaurant. It calculates the arrival time based on when it would have hypothetically arrived from its last port of call, allowing ships to wait anywhere they want outside of the 40 miles off the coast, both within and outside of the Safety and Air Quality Area — could be on the other side of the Pacific for all they care. The number of ships in the queue hasn’t really changed; this system is just designed to improve safety and air quality.
Market Check
Well, well, well, how the turntables have turned. For the first time in a hot minute we’ve seen the Outbound Tender Reject Index dip below 20 twice within about a one-month period. Typically anything above 10% indicates some inflationary spot rates and anything above 20% signifies extremely tight capacity. Seeing as how we are under 20% with a whopping 19.22%, I’d say it seems promising that some of the ludicrous rates are starting to fall … for now.
As we head into the middle of December and drivers inevitably start to take off for the holiday and New Year’s, I would expect those inflated rates to return and capacity to tighten. If you have a shipper/customer that can move some freight early, it might not be a bad idea to pull some of that forward to save some extra money and headaches later.
Who’s with Who
Knight-Swift Transportation has acquired RAC MME Holdings, a parent of LTL carrier Midwest Motor Express and truckload carrier Midnite Express. Previously Knight-Swift has acquired LTL carrier AAA Cooper Transportation. With the recent acquisition, the company is one step closer to a nationwide LTL network.
Ashley Furniture acquired asset-based logistics provider Wilson Logistics, which is already an affiliate of Ashley Furniture, now expanding their brokerage and distribution operations in the western U.S. Ashley Furniture is the largest manufacturer of home furnishings in the world. With many retailers and shippers facing uncertain trucking markets, I would expect a few more deals similar to this one throughout a lot of 2022.
The more you know
FreightWaves’ Domestic Supply Chain Summit is Dec. 15. Learn more here.