Shippers have been plagued with a combination of surging costs and declining service levels for the past two years.
As the market continues to loosen, shipper expectations are shifting toward faster deliveries and more consistent service. To achieve these goals, many shippers are relying on contracts and favoring their tried-and-true carrier partnerships instead of taking advantage of plummeting spot rates.
“As truckload capacity eases, service from our contract partners is improving, allowing us to shorten the window from order to delivery,” said Brendan Stinson, Shaw Industries senior manager of transportation services. “Procuring carrier partners that provide reliable service while reducing our freight spend helps us retain business and potentially gain market share.”
Stinson knows prioritizing contracts with proven, dependable carriers may not provide the same cost savings as moving freight to the spot market during a downturn. It does, however, allow Shaw to deliver on its customer commitment: “to do what we say we’re going to do.”
“Our corporate goal is to deliver 95% on time in full to the customer,” Stinson said. “Each segment of the Shaw supply chain must work collaboratively to achieve that goal. Continuous focus and attention on improving the customer experience, from our executive leadership team to each Shaw associate, is our top priority.
For Shaw and its customers, being able to plan orders reliably is ultimately more important than slight cost savings or even small speed increases, especially when accessing those benefits involves relying on a volatile spot market.
“With the majority of our freight being awarded on a contractual basis, our strategy has been to develop strong partnerships with carriers that will honor their award for the duration of the bid,” Stinson said. “This service-centric strategy may not be the lowest cost option, depending on the volatility of the spot market. These partnerships, however, allow us to mitigate freight increases and protect service when capacity tightens.”
This model has served Shaw well over the past two years. The company’s tender rejections have consistently remained below 5%, according to Stinson, allowing Shaw to minimize its exposure to surging rates in the thick of the coronavirus pandemic.
Since Shaw places such a high value on honoring its contracts, it is crucial the company provides a top-notch, request-for-proposal experience. The Shaw team has achieved this through its partnership with Emerge.
“After a trial run on a smaller, biannual bid, we made the decision to use the Emerge Freight Procurement Platform for our annual RFP,” Stinson said. “We found the platform to be user friendly and efficient while also receiving positive feedback from our carrier base.”
Emerge is well known for enabling shippers to issue more frequent RFPs, but the company also offers a slew of benefits for those who continue to prefer an annual bid process.
Shaw has found value in Emerge’s benchmarking tool, which has enabled the team to identify out-of-market rates and hone in on lanes of opportunity, according to Stinson. He has also appreciated Emerge’s eagerness to be collaborative partners with its customers.