As manufacturers, distributors and retailers move into the fall shipping period, the sands are shifting in the freight industry. Motor carriers have made a number of adjustments to their operations that are now being reflected in their operating results. Looking at the second quarter financial results reported by the publicly traded transport companies, many companies, including financially troubled YRC, reported vastly superior financial performance.

With so much economic uncertainty at the present time, many carriers are not making additions to their fleets. They are only replacing equipment that reaches the end of its service life. Rate increases are being sought, even by carriers in the LTL sector, where there is still significant excess capacity.

Carriers are scrutinizing their accounts and evaluating how they can maximize the yields on their fleets. They are looking at their long time customers that conducted multiple bids, that pushed them aside so they could save a few cents a mile, that promised them freight but did not honour their commitments, and/or that have reduced their rates to levels that are so low, the freight is no longer worth having.

Now is the time for shippers to conduct face to face meeting with their core carriers. Are the core carriers providing the required level of service? Are the rates that have been secured sustainable? Are the current carriers financially solid or on life support? What are the carriers’ plans with respect to capacity growth, capacity utilization and capacity allocation?

On the flip side, where does the shipper rank on the core carriers’ list of customers? Is the account profitable to these carriers? To whom will these carriers supply their equipment if there is a surge in demand (in the market as a whole)? What level of rate increases are the core carriers seeking?

Conducting face to face meetings with senior representatives in your core carriers should provide answers to these questions. They should offer shippers a level of assurance that as the economy improves, and it surely will, these companies will honour their commitments. If clear answers are not provided by certain carriers, there is a message that is being communicated. The message is that it is time to be proactive and move more freight to lower ranked (backup) carriers in the routing guide.

For many companies, this is the time that 2011 budgets are being prepared, including transportation expense budgets. The level of accuracy of these projections can only be improved by conducting senior level, focused, frank and honest discussions with some of your most important business partners. A “do nothing” strategy could lead to nasty surprises as carriers come in with what could be very aggressive rate increases or make their precious capacity available to their more high yielding clients. Some carriers may exit the industry as the banks finally foreclose on these weak performers as the market for used trucking equipment shows some signs of life.

For shippers that do not have solid carriers in place, remember that a company’s supply chain is only as strong as its weakest link. Remember that your job may be on the line if your core carriers let your company down. The choice is yours. Now is the time.

In Memorium: Don Bernardo

This week a friend and colleague, Don Bernardo, passed away at age 58. I met Don a few years ago when he was President of Nulogx. I was immediately struck by his charm, likeability and intelligence. Don was a creative and visionary fellow. He and his team were well on their way to creating the next great Canadian 3PL/4PL, Freight Intelligence. I offer my heartfelt condolences to his family and friends. Don was a wonderful fellow who will be greatly missed by those who had the pleasure of knowing him.