Customer relationships can make or break your business. They can help you maintain a steady income, connect you with possible other customers, or they can leave your business in the dust and look for a new provider.
But, maximizing profit margins is what ultimately drives a business forward. And in the transportation and logistics industry, we all know the challenges that we face. To overcome those obstacles, the two secrets to success are maximizing utilization and managing your network.
How can you accomplish these?
- Ensure that your trailers are carrying full loads on every trip
- Create efficient routes that account for your customers’ needs – time windows, frequency of deliveries, and contract requirements
- Design a network that allows your company to maximize its resources and eliminate inefficient routes
The costs associated with moving freight – fluctuating rates, driver compensation, and detention time at customer sites, among other things – can significantly eat into profit margins. To counteract the costs and balance revenue, consider reworking your companies network and maximizing your fleets utilization.
Secret #1: Maximizing Utilization
Sometimes doing such things will change the way you operate in certain lanes, which can affect relationships with your customers due to either operational changes or rising freight rates. Managing how you make changes and communicate with your stakeholders is key to maintaining good relationships with your customers.
Managing Client Relationships for Improved Driver Retention
By effectively managing client relationships, there’s a higher chance of overcoming one of the biggest challenges that the industry faces: driver retention. Longer detention rates mean that your trucks aren’t on the road as long as they could be, which affects your drivers’ pay. Coupled with new electronic logging device requirements, the hours of service (time drivers spend on the road) becomes even more significant of a factor for keeping drivers under contract. When your drivers are able to maximize their pay, you increase the likelihood of boosting your driver retention rates.
The Impact of Hours of Service
Another factor to consider while reviewing your resources is to consider Hours of Service (HoS). One important aspect of HoS is the amount of time that drivers are spending trying to find a parking space. Companies that help their drivers find parking spots can increase working time by an average of one hour per day. Also, proper trailer management can save your drivers an additional 15 minutes per day. Altogether, this extra time means more time spent on the road and more opportunity to earn money.
While hours of service and pay rate work side by side as the main forces behind retaining drivers, another important aspect to consider is driver home times. Like every other working adult, truck drivers have families that are in one location. But due to the long hours that drivers spend on the road, they don’t get to spend as much time with their families. If you are able to increase the time that they can spend at home, then there’s a higher chance that you can retain their services. By reevaluating your network design, you can optimize routing and look for efficiencies that can increase driver home times and boost your driver retention rates.
Secret #2: Managing Your Freight Network
Conducting a data analysis of your network can help you identify shippers and receivers who commonly delay trucks. Reviewing load and unload times that exceed the expected average – usually about 1.5 hours – can help identify potential problem customers. Also, an analysis can help you spot which customers typically aren’t meeting their planned appointment times.
Using Data to Improve Customer Processes
With this information in hand, the trucking company can have an effective conversation with customers that will result in overall process improvement. Such conversations should focus on trying to find a solution to the problem, whether that’s changing the approach, paying a higher rate, or even parting ways with the customer. You have to do what’s best for your company.
“If you know which of your customers are wasting your time, that can strengthen your relationship with the customer because it’s more than just a rate increase conversation,” said Stephanie Williamson, vice president of revenue management, Dart Transit Company.
Williamson said by reconsidering the network design at Dart, the company cut the number of origin-to-destination pairs, which added an extra 300 overall miles per week per total driver while improving the home time promise to drivers from 72 percent to 89 percent. The redesign has improved Dart’s yield by 165 percent and the company was able to increase freight rates by 12 percent in the last eight months.
However, before completely redoing your network, remember to talk with key stakeholders who affect the data to understand what is happening and collaborate on improvements. Feedback, whether it’s positive or constructive criticism, helps build and maintain strong relationships. The two-way communication throughout the change process will keep all stakeholders involved and invested in your business.
The Missing Piece: Business Data
The key to retooling your network design and maximizing driver utilization is data. By effectively capturing business data and analyzing it, you can see where operations aren’t working to their fullest capacities. By having the data to back up changes, you are able to reason with stakeholders about why certain changes need to be made. Ultimately, making smart business choices based off data will help drive your business strategy and improve profitability.