Veterans of the metals logistics industry share thoughts on how service centers can best maximize their shipping programs.After several years of unbelievable tightness in the transportation market, options have opened up a little for shippers in 2023. While by no means is the market in perfect balance, trucks and railcars are a little more available as the overall level of business activity has dipped.
Metal service centers who spent the past few years scrambling to find freight options in the post-COVID landscape might be tempted to sit back and relax. Or, negotiate more aggressively with carriers to get back some of what was lost when the transportation providers had all the leverage.
Just because there’s a little breathing room in the market today doesn’t mean shippers should take their eye off the logistics ball. For one, the market will undoubtedly change again. And, for another, there are still benefits to getting the most out of your transportation dollars for when it’s not so tight again.
Metal Center News talked to a handful of freight experts on the steps service center operators can take to cut expenses and make themselves a shipper of choice.
The Keys to Healthy ShippingThere are a number of ways service centers can make themselves desirable, starting with communicating, and then communicating some more. Regularly keeping in touch with the carriers on what they need will ease the process once the truck arrives at the warehouse.
“Overcommunicate. That could be delivery windows, appointments, that a lift gate is required. Any source of extra service that’s needed, when it’s not communicated, not only delays the transit, it likely incurs additional costs,” says Kevin Day, president of LTL division for AFS Logistics, a third-party logistics specialist headquartered in Shreveport, La.
And, it’s not a one-way street. “The carriers have to communicate with the people in charge with shipping. If you do that, you’ll be all right,” says Scott Colvin, Steel Express Logistics, Culver, S.D.
Flexibility is also quite useful. While trucking companies try to hit their ETAs, they are still often at the whim of variables outside their control, such as inclement weather and traffic snarls. Being able to work with the carrier when things don’t go according to plan will go a long way to solidifying relationships.
“[Such flexibility] might include extended hours of operation or weekend pickups, as well as the ability to drop off or pick up shipments at multiple locations. By being responsive to the needs of carriers, service centers can help optimize their schedules and maximize their efficiency,” says Paul Blissett of King of Freight, Wichita, Kan.
With the market changing, some shippers may be tempted to negotiate hard with the carriers on pricing, or simply grab the lowest price on the market. Andy Dyer, president of the managed transportation business unit for AFS Logistics cautions against that approach.
“People have to have a healthy amount of skepticism with the cheapest rate they can find. It’s not that they won’t get that carrier today, but a question of whether that carrier is going to be there 3-6-9 months from now,” Dyer warns, noting that a carrier’s safety rating, its history of payables and receivables and its insurance standing, are all as important as the price. “Nobody wants to have their freight stuck on the side of the road when a carrier goes out of business.”
Glenn Riggs broke down keys into separate groups, those who operate their own fleets and distributors who use outside carriers. He advises service centers who own their fleets to invest in modern technologies and telematics systems. “These tools enable better route planning, real-time tracking and fleet management, leading to improved efficiency and reduced costs,” says Riggs, chief strategy officer for Odyssey Logistics, Danbury, Conn.
“For those who work with carriers, establishing strong partnerships with reliable and experienced multinational logistics providers that specialize in the metals industry can reduce risk out from their transportation network. Multimodal providers can offer warehouse space, railcar service and truck equipment to move and store metals cost effectively.”
“Fleet owners need to be connected to back haul opportunities. Unless you’re operating with a significant amount of returnable containers, access to back haul opportunities becomes that much more urgent for a fleet operator,” adds Day.
As long-time participants in the space, the executives are familiar with areas where distributors go wrong.
“One of the biggest mistakes steel shippers make is inadequate packaging,” says Blissett. “Steel products can be easily damaged during transportation if they are not packaged properly.”
Somewhat related, poor loading is similarly a problem. “Steel products should be loaded onto trucks in a way that ensures their safety during transportation.
And those customers who routinely make mistakes will find themselves out of favor with the carrier base. “A lot of carriers, including me, we know certain places [with a history of issues] that if we have to go we’re going to add to their rate,” says Colvin.
Ultimately, the metal service center community needs a healthy trucking industry, so the ability of the carriers to stay financially buoyant is important to not just the trucking companies, but distributors as well.
“To support carriers, metal service centers can lean into emerging technologies to effectively implement efficient receiving and loading processes. This enhances efficiencies and sustainability while ensuring a healthy carrier base with long-term relationships,” says Riggs.
Day says one way of keeping carriers happy is to throw them some simple hauls from time to time. “Mix in some good freight with overlength freight to keep healthy relationships both from a pricing standpoint and a relationship standpoint.”
Blissett says it comes down to the fundamentals. “To help maintain a healthy carrier base, service centers should focus on providing accurate product information, offering flexible pickup and delivery options and establishing clear communication channels.”
Finally, Dyer says, “Don’t lose sight of driver retention. It might be a little easier to keep the driver today, but that’s not to say it will be nine months from now. Don’t focus on short-term need. A reliable well-trained safe driver is a valuable piece of talent to have.”
What About Rail?Becoming a shipper of choice for the railroad system is as simple as “being as easy to work with as possible,” says Todd Tranausky, vice president of rail and intermodal for FTR Associates, Bloomington, Ind.
In recent years, the railroads have implemented precision rail loading as part of their effort to increase train lanes and reduce the days of service some shippers get. What works best for the shipper was not one of their highest priorities.
Thus, it’s incumbent upon the shipper to improve efficiencies at their own plants.
It starts with making it convenient for the railroad carriers to have easy access to the facility. “Being an open-gate facility. Putting a lock on your facility so when the railroad has cars they can come service you and you don’t need to be open,” Tranausky says. “They can stock your cars when you have true availability, which makes sure you get reliable service and you’re not waiting five to six days at a time.”
Another crucial element for shippers is to do inspections on your rail equipment before releasing a car, making sure everything is closed and loaded properly.
“It’s a lot cheaper and a lot less disruptive to fix that defect when it’s at your facility than it is to release it and find it somewhere en route and you have to pay AAR rates,” he says. “Even if you have to call a mobile crew to come out to your facility, it’s cheaper than having it fail on the road.”
Proper maintenance is, of course, of heightened importance this year as a result of several notable derailments, most significantly the Norfolk Southern incident in Feburary in Ohio. “That’s definitely in the spotlight now,” he says.
Metals activity on the rails has been increasing in the past year at faster rates than other commodities. Metals shipments have grown in the 3 to 5 percent range, which covers all aspects of the supply chain from ores to scrap to fabricated products. Tranausky says the rail companies have seen some easy pickups since transitioning to growth mode.
“Scrap and fabricated metal is not the easiest thing to move by truck. Rail has taken advantage of some natural growth opportunities in the space to capitalize on as it pivots to growth.”
Just as shippers have steps to take to become a shipper of choice, the railroads have work to do to become a mode of preference, Tranausky acknowledges. “They need to make sure when a metal supplier makes a decision to ship by rail and the railroad says it will be there by Thursday at two, it’s not there a week later at four. The biggest single reason shippers moved away from rail to truck or some other mode is they get fed up with that reality,” he says.
“Rail doesn’t need to be cheaper than truck or barge. It just has to be consistent.”
[Caption:]
While still tight, the trucking market has gotten a little more comfortable in 2022.
(Photo courtesy Odyssey Logistics)