“Relationships Matter”

How many times have you heard that said in this industry? Bull run on freight and the saying comes out as a way to make shippers feel good about price increases they’re about to take. Bear run happens and it’s something said to make carriers feel better about pricing concessions that are likely to happen.

Define it though please.

What does a “relationship” mean to you, in your area of freight?

Not all relationships are good but they are relationships, anyone who has been divorced can attest to that. Everyone in the supply chain has people to answer to and that means there are always pressures around financial performance. Relationships will only go so far so starting from that perspective – what does it mean to have a good relationship with a counterpart?

“I have a great relationship with Sara over there, we can roll her freight 3 days before they get upset.”

Is that really a relationship or is it simply a crutch to excuse poor service? How long do you think that will last when someone else says “I have a great relationship with Sara, I’ll get her freight on time, all the time.” Relationships only go so far; they rarely excuse continued poor service and price long term. Quality relationships matter, not all relationships matter.

“I have a pretty good deal with Bill. The market’s hot, he knows it and will understand us raising prices and cutting committed capacity.” – maybe. Are you sure? Of what value to Bill then is that relationship with you?

Right now – people are assessing. We’re at a point where spot rates are going down after having gone up rather quickly over the last 2 years. I saw a tweet where repricing is happening, and carriers are cutting contract 20-30% to retain business. Shippers who are being told that they needed to remember relationships matter right now as they’re thinking about asking for rate concessions or new carriers at lower rates are comparing how their spend went up over the last 2 years to the average increase in the market. They’re asking themselves if they should be protecting their carriers with volume and paying more than market now if the carriers didn’t actually end up protecting them over the last 2 years with capacity and price. It’s definitely a 2-way street that doesn’t have to be a zero sum game.

When the market turns again (it always does, shifts happen), carriers will be in the same boat. Do they protect the shippers that helped them when shippers had pricing power with holding the line on price and capacity?

The other part of this is realizing, not everything requires a deep relationship with the other person for it to happen. What type of relationship do you have with your waste disposal company for your house? Garbage gets picked up every week but I’d bet outside of a wave or “hello” – the relationship with the guy on the truck isn’t all that robust and if he leaves one company for another – you’re unlikely to follow. It’s still a pretty important service and yet, absent relationships – the work gets done. That also happens in freight.

The largest segment of the freight world is likely dry van freight. Services by thousands of carriers moving thousands of loads every day. It picks at A delivers at B – rinse and repeat. How much of that really requires a “relationship” to happen? Tender goes out, tender’s accepted, freight picks and delivers and no one ever talks to another – it’s just the job, it’s what happens. 80% of a person’s effort is spent on 20% of the freight and its exceptions to smooth operations. How you react to that 20% determines the strength of the relationship that keeps the other 80% on your books.

As all thing’s transportation – execution matters the most. How you performed or executed within that relationship you claim is important creates situation you’ll find yourself during market shifts. Don’t confuse “having a great relationship” with “I can execute poorly and still retain business”.

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