What does it take to be a shipper of choice?
Or maybe the question should be: What does it take to be a Shipper of Choice?
The lowercase first version describes generally a customer that carriers consider it a pleasure to do business with.
The capitalized second use refers to a shipper that has earned a distinction from an outside observer, like FreightWaves, or possibly from a carrier publicly or internally bestowing the honor on a shipper that has earned it by reaching certain metrics.
On a SONAR webinar Wednesday, Tim Guin, a longtime trucking veteran with such companies as Swift and now chief commercial officer at Iowa-based trucking company Hirschbach, sat down with Tony Mulvey of FreightWaves to discuss what his company wants to see in a shipper looking to earn the Choice distinction.
The overall picture
Guin, a basketball fan, made reference to the RPI Power Rankings of college basketball teams as an analogy for how Hirschbach comprehensively evaluates its customers, who by definition are shippers.
The power rankings “look at a team from a holistic standpoint,” Guin said. So does Hirschbach, he added.
“Right off the bat for me, it’s about a customer that has a strategy and it’s successful,” Guin said. He looks for a customer that “has a brand that’s sustainable.”
He’s cautious about newcomers that show up out of nowhere. “Because we all know that you can really get in some trouble chasing a customer that is the next best thing, then has a lot of turnover in leadership and the next thing you know, a year later, you’re trying to replace that customer for whatever reason,” Guin said.
KYC
Having gotten past those sorts of broad questions, he said the goal then is to “know your customer” — KYC — on more than just a general basis. “One of the first things we ask a customer is what’s your long-term strategy and vision for your transportation plan, and where can we help you to be successful?” Guin said.
But it can get more specific than that. For example, he said shippers (and potential customers) will be asked how much they participate in the spot market. “If we know that a customer is playing in the spot market with a high percentage of 20% plus, then we know we have to be careful there, because we can’t chase the day-in, day-out spot rate,” Guin said.
Other questions that might be asked: “Is the business consistent? And can we depend on their volume?”
Even more granular questions, this time on finances
Guin referred to the days sales outstanding metric, which measures payment time. He said it was “one of those things right off the bat that we really look for.” But there are other questions around the issue of “do they pay their bills?”
“What kind of technology do they have?” Guin said. “How fast does their freight move?” He added that if Hirschbach wins an RFP to move freight, the company then measures the volumes coming through to see if the customer had accurately forecast the demand for his company’s services. If the forecast proved accurate, he said, “it’s very valuable to us.”
How does a shipper treat a carrier’s drivers?
Guin said his company has lots of feedback on that issue, via an app drivers use to rate their experience at the company’s customers.
“Drivers get paid by the mile,” Guin said. “And how they’re treated at the gate, how they’re treated at the dock is one thing. But it’s also about having a process and having facilities and that’s important.”
But, Guin added, “getting in and out in a timely manner and not being held up is the number one thing. I think that’s something that is underestimated more than anything else.”
What goes around …
A key aspect of the carrier-shipper relationship, he said, is that the shipper needs to be able to accept feedback.
And most of them want that feedback, he added. But not all of them know what to do with it.
“The ones that listen and make changes and innovate, they’re the ones you want to have those long-term strategic relationships with,” Guin said.
For those that don’t accept feedback, or look at the carrier-shipper relationship as strictly transactional, the type of soft market now that benefits shippers is not going to stick around forever, Guin said. Shippers that are purely transactional, he said, “are the ones that are going to get burned when the market turns. The shippers of choice who are trying to make an effort, they won’t get burned as bad.”
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