Imagine that when you were a kid you had wielded the power to confront the playground bully with a choice. He could hit you with everything he had, but he would have to pay you for the privilege. Or he could leave you alone, and it would cost him nothing. Ideally, the fee would be stiff enough to discourage him from hitting you, but failing that, at least you would get to buy something really cool. Unfortunately, that’s not how bullies operate.
At times, your customers may seem like bullies. When freight is slow and capacity is plentiful, your shipper has substantial leverage. He has the freight and is powerful. You must cover your fixed expenses and are weak. If you don’t play by his rules, you don’t get the freight. If the customer wants your driver to cool his heels for three or four hours, you might stew about it, but you live with it. If a shipper demands two or three stop-offs for no additional charge, perhaps you wince and accept it. You need the cash more than you need the productivity.
The new hours-of-service regulations force you to confront the bully. The old wisdom that “time is money” isn’t totally true under today’s rules. By logging off duty during delays, drivers absorb some of your losses in the form of uncompensated time. In reality, you still lose out because equipment utilization suffers, but at least your driver preserves some time for the next load. And because your customer knows that your drivers have this flexibility, you lose leverage.
Beginning Jan. 4, time becomes far more precious. Once a driver starts his work day he has only 14 hours to drive before taking his mandatory rest break, which will be two hours longer than today. Time really is money, and you must get either more time or more money from shippers that damage your productivity.
Just because the new hours rules force you to demand more, however, customers don’t have to accept those demands. The principles of supply and demand still apply. The customer may have alternatives to your services, or at least perceive that he does. Although the hours-of-service rules apply to everyone, varying degrees of technological capability and financial strength among carriers mean that the playing field isn’t level – even putting aside the unscrupulous operators that ignore or stretch the rules.
But as the new rules kick in, economic realities are on your side. Given the renewed driver shortage and the large number of trucking company failures and consolidations in recent years, shippers increasingly perceive trucking capacity as tight. A surging economy such as we saw in the third quarter of this year adds fuel to these worries.
The trucking industry is fortunate that the rules are changing in this environment. Carriers can win long-term changes in dock practices due to shippers’ near-term concerns over covering loads. Swift CEO Jerry Moyes summed up well in discussing the hours rules with investors last month: “We believe this is the best thing that has happened to our industry, our company and our drivers.”
It’s a golden opportunity, but it’s temporary. The next downturn or influx of capacity will embolden shippers and harden their stance. You can’t afford to take a wait-and-see attitude. Many carriers haven’t reviewed their accessorial charges in a while because they haven’t used them. If you haven’t done so already, establish a strong schedule of accessorial charges and implement the internal processes you need to collect them. Let your customers know that you are just as serious about collecting these fees as Jerry Moyes is.
If you are lucky, shippers will take the hint, and you won’t need to collect many detention or stoppage fees. But if that’s not the case, you will have some extra money to spend on something you really need, like truck drivers.
