Case Study’s a Real Eye-Opener
More Efficiency, Ethical Behavior Needed in the Supply Chain
On the subject of shipping with an eye toward efficiency and long-term costs, here’s a business world “case study” that’s a real eye-opener.
A while back now, the asset-based carrier Zip Xpress Inc. – that’s us – had just opened all of Florida as a new service point. We were more than eager for lots of freight to fill our new schedules to the Sunshine State.
The case in point: A Florida-bound truckload weighing in at 4,000 pounds was posted on the DAT – the Internet “load board” where brokers can make posts for carriers to bid on business. Great. Zip’s quick bid on the job was the lowest, so we secured this “Truck Load” for our new service point. We were looking forward to rolling south with a snugly packed trailer of product.
When inspecting our supposedly two-ton shipment, we discovered that there were only four pallets of product making up this so-called “Truck Load.” We immediately rang back the broker and asked this: “Can we make this a better load for everyone? Do we have your permission to optimize this?” Sure, said the broker, you can load other product safely as long as we get the exact service you promised. Keep in mind that the broker kept charging for full trucks even though they weren’t. For Zip Xpress, one good thing led to another with our efficient loading practices, including three additional weekly moves to Colorado, Nevada, and California – all of which were previously shipped as “Truck Load” but were definitely “Partials” at best.
Happy broker, happy Zip Xpress full loads.
This Michigan-originated relationship continued for five years, but then the product client – a major national retailer, in this case – contracted with another vendor that could make the company’s product cheaper and ship it at a lower cost, too. That was the end of those runs for all of us.
Of course, the retailer and its broker in this case stopped routing to Zip Xpress, but guess who lost out the most in this scenario? The small shipper/company and its employees. They had no control over the routing changes and were left defenseless. Many jobs were lost. This tragedy could have been prevented had the broker heeded our advice of not overcharging … for years! Of billing the retailer for full trucks while, all the time, Zip was providing very attractive “Partial or Head Load” rates based on actual square footage used on each trailer.
How it all played out … until it all fell apart
Shipper: Small company in Battle Creek, Michigan
Destinations: Ocala, Florida; Denver; Sparks, Nevada; Ontario, California
Commodity: Cardboard Displays
Service requirements: Weekly Thursday pickup, with 7 a.m. Monday delivery
Broker: Major broker, with operational offices inside national retailer’s headquarters, working with the retailer’s logistics staff
Average Zip Xpress Inc. charge to the broker, all lanes: $1,415
Average broker charge to the national retailer: $2,800
Lessons learned? Maybe, maybe not
While we were happily moving client product that we carefully reloaded and optimized, we also relayed this message several times to the broker: “Don’t kill the golden goose.” In other words, let your big retailer know what you have collaborated to do with the carrier; that you have done it to reduce their rates and exercise your fiduciary responsibility to the customer. Clearly that message was never heeded … and now that broker is no longer the retailer’s logistics provider.
Yes, many jobs were lost. Unfortunately, the same behaviors with inappropriate “Truck Load” charges continue.
Lessons learned? Apparently not.
There’s money to be saved in proper shipping
If you are a manufacturer … particularly of “Partial Load” materials … if your broker is routing the carriers, you are almost defenseless to guard against a situation such as the retailer’s years of overcharges. There is always someone within these large companies whose sole job is to find ways to reduce overall cost of product and transportation. However, as we have seen, there can be big inefficiencies baked right into the transport charges. Ironically, Zip Xpress did finally get to meet with the retailer’s corporate decision-makers, but only after the move was made to drop the Battle Creek vendor. At that meeting, the retailer’s Vice President of Logistics viewed photos we provided of their pathetically loaded “Full” trailers.
His response was, “Where has Zip Xpress been … for five years?!”
Our polite reply, sadly enough, was, “Trying to get through corporate layers … to see you, sir.”
We are better than this; the answers are out there.