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opinions Mike McCarron

Everything is negotiable in ELD era

Posted: April 10, 2018 by Mike McCarron

For years, I’ve been chuckling under my breath at transportation conferences whenever I hear shippers speak about how important it is to be “good business partners” with their carriers.

Experience has shown me that once they walk off the stage, their actions tell another story. The “win-win” rhetoric gives way to “we win, you lose” when it comes time to work on a contract.

That’s starting to change.

The end of the “soft enforcement” period for electronic logging devices (ELDs) on April 1 put a few more balls in your hopper.

It’s estimated that some 27,000 ELD violations were recorded from the start of the mandate on Dec. 18 through the end of February. There’s no reason to think that pace hasn’t continued. Now that ELD penalties are in force, the cost of violations is rising.

What does that mean for carriers and shippers?

First, drivers and owner-operators who are already put off by ELDs are more annoyed than ever, and the carriers I talk to are totally preoccupied with keeping them around, while at the same time attracting new drivers from a pool of candidates that doesn’t exist.

Second, shippers are friggin’ desperate right now.

I don’t own trucks anymore, but I recall that one way to make drivers happy is to pay them more. And it seems to me the way to do it is to get customers to pick up the tab.

If you’re telling shippers that you can provide capacity while at the same you’re worried that your drivers are going to walk, you’re missing out on a huge opportunity to help your drivers, your customers, and yourself.

Here’s how to do it:

Put it on the table

Shippers know it takes more than a good rate to attract a great carrier. So put everything on the table: rates and accessorial charges, payment terms, bidding opportunities, transit times that stay within hours of service rules, and other things that can improve your business relationship and your cash flow. Everything is negotiable.

Get creative

Priority pricing is everywhere these days. You’re going to pay more for the same seats to see a Leafs-Habs tilt compared to when the Coyotes come to town on a Tuesday. So here’s an idea: negotiate a premium paid by the shipper that would go straight to the driver and guarantee his availability. Or work out a deal to pay the driver hourly for a particular customer or lane. Your drivers will appreciate it. You might even lure a few away from competitors who aren’t prepared or creative enough to do the same.

Time is money

The shipper plays a role in how much money your driver earns, and therefore how likely the driver will stick with you. Tell the shipper how he can make sure your driver can get in and out of the yard fast so he can spend his time logging paid miles—or be compensated when he can’t.

Convenience factors

Safe and secure parking, drop-and-hook capabilities, electrical hookups, and access to washrooms and wi-fi aren’t high-cost items for shippers, but they might have huge value to your drivers. What can your shipper do about it?

I’m not blind to think that price won’t be a factor in every contract. But the truth is, with shippers so desperate, carriers have an opportunity to negotiate a better deal for themselves, their drivers, and their customers. It’s a win-win-win.

Mike McCarron is the president of Left Lane Associates, a firm that specializes in growth strategies, both organic and through mergers and acquisitions. A 33-year industry veteran, Mike founded MSM Transportation, which he sold in 2012. He can be reached at mike@leftlaneassociates.ca, 1-844-311-7335, or @AceMcC on Twitter.

 

 

 

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