Recently on the Freightvine podcast, host Chris Caplice sat down with Ron Guzzi from The Home Depot to discuss the impact of driver detention on their supply chain operations. And why The Home Depot was not only determined to reduce dwell time, but also to keep its shipper of choice status intact.
The term “shipper of choice” is one that gets used and abused throughout the transportation industry. It’s a buzzword that rarely translates into actions or programs which provide meaningful impact on the relationship between a carrier and the shipper. The Home Depot has made a concerted effort to change that internally and lead by example.
What does being a shipper of choice mean? It can be used in many ways—thus my contention that it can sometimes be a buzzword—but at its core, “choice” implies that carriers have the freedom to select which shipper’s freight they haul. To be “chosen,” shippers need to enact programs or ways of doing business that either augment a carrier’s efficiency and profitability or at least not negatively impact it.
Recent data from ATRI indicates that about half of all loads have anywhere from 1 to 4 hours of dwell time or detention, and a full 25% experience in excess of 4 hours. Not all shippers have the necessary visibility or data to identify the root cause(s) or understand the dwell times that exist in their networks. Having visibility to dig out the cause is critical, as Ron and his team experienced. Starting with examining the data available to them, The Home Depot found that lanes and vendors that had the highest detention had a corresponding 7-10% premium on the carrier’s rate.
Anecdotally, several large carriers also provided feedback that they just weren’t going to bid on some of The Home Depot’s lanes due to the lack of efficiency and havoc they could play in their operations. Armed with both of these facts, Ron’s team was able to affect change within the organization by involving both the Channel Management team, who owns the vendor relationships, and the Merchandising team, who owns the purchasing decision. By having a defined goal and strategy, they were able to cause meaningful changes with their vendors and make an impact.
Reducing detention isn’t the only initiative in The Home Depot’s program for being a shipper of choice. They also enacted a driver focus, where they looked at things such as improved vending machines, bathrooms, and providing Wi-Fi at their DC locations. Sometimes these simple things have a larger impact than can be tangibly measured.
Forecasting accurate volumes is also critical in securing the right levels of capacity. The Home Depot has been successful in improving their forecasting accuracy from 35% to 70%. They provide this level of detail to their carriers every week looking out over the next 6 weeks. Carriers can then plan accordingly if there are projected spikes. All networks have spikes and forecasts are often wrong the instant they are published, but any information that can be provided to carriers in advance is typically welcomed.
At its most basic level, the program that The Home Depot has put into place is a focused effort to factor the carrier into the equation and to forge a lasting relationship. Carriers do have a choice on which freight they haul in the long-term. It may not be as evident right now when the market is soft, but ultimately the pendulum will swing in the other direction.
This episode recap was written by Cindy Bosecker, Director, FMIC.
Market Update & Forecast: 13 February 2020
Dry Van
Active contract rates have been relatively flat, while spot rates went down by 2%. Replacement rates were also flat.
Temp-Control
Active contract rates decreased by 1%, and spot rates were also down by 2.5%. Replacement rates were flat.
Intermodal
Both active contract rates and spot rates were flat, with replacement rates down just 0.5%.
The market appears to be treading water without significant change either way. In January, rates spiked slightly, but that appears to have already calmed.
