Transportation Relationship Management

How The Best 3PLs Are Changing Logistics Through Trust And Collaboration

Introduction

How many times have you heard about the importance of trust or relationships in running your logistics business?

I’m sure it’s more than a few times.

In today’s hyper-competitive (and commodity) industry like freight, the success and failure of every enterprise depends on its ability to create, maintain, and grow customer relationships.

At FreightPath, we coined the term Transportation Relationship Management to describe this new way of approaching logistics. No longer can logistics providers work on a transactional basis, competing on price.

The new generation of transportation leaders will be using TRM techniques and technology to provide more personalized, timely service to their clients, while providing better transparency than ever before.

This book will provide you with the techniques, methods, and mindset you need to take your logistics business to the next level through Transportation Relationship Management. It doesn’t take millions of dollars, have been proven to work, and have incredible returns for the time you invest.

Taking your first steps to make these changes, however gradually, will create more consistent loads and build a strong foundation for your team to expand into new and exciting verticals.

How This Book is Laid Out

Obviously, a book on relationships cannot be the same for brokers, carriers, and other LSPs. This does not mean that Transportation Relationship Management is less important for one vs the other though - although the types of relationships carriers and brokers must foster are different, both rely on trust to create and sustain their book of business.

Thus, this book will focus on the broad stroke aspects of both brokers and carriers - asset-based and non-asset based. This includes the techniques and tools to interact with customers, brokers, carriers, independent owner-operators, and company drivers.

We’ll be diving into how trust plays a crucial role in all these discussions, and how technology is enabling modern LSPs to better provide this trust to the customers and partners they work with.

That being said, please feel free to jump to the specific chapters of this book that pertain most to your business - if there’s anything we’ve learned at FreightPath, it’s the grand diversity of services and operations in logistics.

Building Trust With Customers

What’s a business?

At its core, a business is a collection of agreements, written and unwritten, between customers and yourself (the vendor).

Whether you’re selling books, high-tech satellites, or yes, transportation services, business does not exist if you don’t have customer relationships. This might sound like common sense.

The real question is how long and fruitful these relationships are, for both parties.

Consider a transactional relationship.

This is the quickest way for you to get revenue in the door. Someone wants to purchase something from you - say full-truckload transportation between Dallas and Chicago - and that’s it.

They don’t really care who’s selling this, and they don’t really care about what happens after this transaction. It’s a one time sale, convenient in the short term for both parties, and generally inoffensive no matter how you slice it.

This is the type of relationship that’s common if you’re working from load board or direct freight matching services, and is probably something you’ve done before. It’s a fantastic way to do business if you’re looking for a backhaul trip, or maybe make a little extra when your trucks are idle. It’s easy, low effort, and provides immediate short term rewards.

So, what’s the issue?

The problem with transactional relationships is that they’re just that - transactional. After you finish the delivery, you’re left in the exact same place you were before. You still have to hunt for the next load, spend more on customer acquisition - all while still paying for the operating costs of your equipment and staff.

That’s where the value of long-term relationships or strategic partnerships comes in.

The best (and smartest) LSPs in the world are bringing in consistent revenue on the daily, getting new loads without spending more on acquisition, and keeping their customers happier for longer while they’re at it.

What’s their secret?

Reduce Client Risk

The first thing these new-era LSPs are doing is understanding the needs and wants of their customers and prospects (i.e. prospective customers) better than their competition.

The modern shipper thrives on being incredibly efficient in their operations. For LSPs, this means that the tighter they can make their delivery windows, the faster they can improve their load/unload times, and complete the back office paperwork, the better their business runs.

Remember, your business exists to make their business better.

Traditionally, this meant that LSPs would compete to see who could provide the same service for cheaper. This is obviously still part of the success equation - transportation costs make up a significant percentage of total shipper costs, and it’s obvious that lower costs would improve their bottom line.

However, this isn’t the full story.

This simple cost in, cost out mindset belies the reality that things will go wrong. It’d be foolish to assume otherwise - that your operations could be completely free from the whims of weather, traffic, human error, and acts of god.

Thus, the best shippers (indeed, almost all shippers) take a different approach to optimizing operations. Instead of assuming the best case scenario, they find ways to reduce the impact of the worst case scenario.

For example, instead of thinking, “let’s find the cheapest way to move these 10 pallets from Toronto to Montreal”, shippers are considering the litany of possible exceptions that could happen in the middle. They’re thinking, “can my 3PL reduce the risks of my operations?”.

This comes in the form of better transparency.

You have to have the operational excellence to guarantee amazing results, like 95% on-time rates, but what separates you from the pack is the ability to make the remaining 5% equally easy to deal with.

No shipper wants to be left in the dark about an unavoidable delay, but too many LSPs are doing exactly that. A truck breaks down, or there’s a traffic delay, and instead of alerting the shipper instantly and fixing the issue, LSPs are staying silent and leaving the shipper at risk.

This is where a dedicated Transportation Relationship Management platform like FreightPath comes in. Our customers, like Tretan Inc, are de-risking operations for their clients by providing instant, and even advance notice of potential issues and exceptions in the supply chain.

FreightPath, for example, automatically sends status alerts and notifications along with real-time location tracking so that Tretan’s clients know of issues as soon as they happen and can react to them before downstream effects multiply and costs spiral.

The best part is, all this happens automatically as soon as shipments are booked so Tretan’s dispatchers and logistics managers are always on top of their client relationships. Each one receives the personalized and frequent attention they require, while employees aren’t overburdened with additional admin work. That’s logistics enablement!

Embrace Collaboration

Any good marriage counsellor will tell you - a relationship is a two-way street.

While providing your clients with instant status updates and notifications is important, you don’t have a relationship unless you’re able to listen and react to their feedback too.

Traditionally, this has come through the beautiful medium of endless phone calls and email threads. We all know the procedure - you send over a quote or proposal, the client agrees, and everything’s happy… right?

I wish it were that simple!

Usually there’s layers and layers of complexity - client requests, questions, revisions, and each one of your responses tailoring your original quote to match those specifications. Not only is this incredibly tedious for your team, it creates a trail of paperwork that is barely navigable.

The basic solution here is to force your dispatchers and agents to record everything strictly, to keep track of revisions manually and to keep an organized folder of archived paperwork. The problem with this solution probably sounds pretty familiar to you at this point - you’re not paying your agents to organize documents!

Every minute (or hour) spent organizing folders or searching for past revisions in email inboxes is time lost. They could be building rapport with clients, prospecting for new leads, but they can’t because they’re too busy doing admin work.

In the olden days, you’d hire a bunch of administrative assistants to do this job - but that just changes the problem. Now you have double the payroll with the same revenue coming in - there goes that margin!

So, how are the best LSPs managing the paper trail while still remaining collaborative?

The answer is technology.

Like every other element of logistics enablement - the best technology doesn’t create more work for your team, it actually reduces work so they can get back to doing the things you’re paying them to do.

Here’s an example of logistics enablement we helped a customer with at FreightPath. Their process for each shipment was to fill out a rate confirmation PDF template manually, email that to a customer whose information was in an excel sheet, and send revisions back and forth until the customer printed the PDF out, signed it, scanned it, and emailed it back. And then you’ve got to do the same for the bill of lading!

A few members of our product team realized the insanity that the whole rate confirmation process was, and built a feature they called the Digital Rate Con. What it does is nothing short of incredible - in a few clicks an agent is able to create a shipment assisted by predictive technology, and FreightPath automatically sends the customer a link to a portal where they can view details, review shared documents, directly submit revisions, and digitally e-sign. The best part is, everything is synced in real time so there’s no waiting for email replies or faxes to come through.

The FreightPath Digital Rate Con


The results of adopting this new workflow were equally incredible - their small team of dispatchers and agents was all of a sudden able to process 25 shipments a day with full collaboration and visibility, where before 10 shipments was a pain.

That’s a 250% increase in productivity!

And more importantly, the customer experience was better. The team became more responsive, more organized, and no more documents were lost to digital limbo.

Building Trust With Partners

Building trust with customers is just the start of Transportation Relationship Management.

How many LSPs do everything themselves?

The answer is not many. Whether it’s with brokers, carriers, or independent contractors, your ability to provide timely, reliable, and competitive services relies on the network of partners you have at your disposal.

The same idea of a transactional vs strategic relationship we discussed earlier applies here as well - you can very well post your loads and a load board or a direct freight matching service and find someone to move it for a dirt cheap rate.

The problem is again one of trust.

Do you know if they have the proper operating registration? Are they tax compliant? Is their safety record satisfactory? Do they have the right equipment? Is the equipment in good order?

The same situation applies if you’re a carrier considering working with a broker you’ve never heard of. How do you know the broker has the right bond/insurance to cover you if something goes wrong? What happens if there’s cargo theft or otherwise unavoidable damage to cargo?

These are all questions that rely on a baseline of trust between you and your operating partners - broker, carrier, or owner-operator.

The best LSPs are building a network of partners they trust, to create a sustainable competitive advantage centered around supplier negotiating power and relationships.

How do they do this?

Do Your Due Diligence

This first one goes without saying, but it’s also probably the easiest to gloss over. A great supplier or partner relationships must be built on a solid foundation.

In transportation, this foundation has very serious legal and regulatory consequences. All carriers and brokers must be registered with the USDOT (or the local equivalent) and have up-to-date insurance that sufficiently covers the equipment and freight they’re registered to move. Furthermore, safety and inspection information is freely available online (at least with the USDOT).

This means that validating the trustworthiness of your partner network is something that you can do from day one. In fact, it’s something you should be doing from day one, especially as young startups are subject to closer inspection due to their experience (as expected).

In particular, it’s important to take specific note of each partner’s safety inspection record, insurance (and bond if they’re a broker), and tax forms to make sure that you won’t be held liable for situations outside your control.

However, along with the paperwork and legal side of trustworthiness, there’s also a real personal aspect to it. Even if all the paperwork is in order and a carrier/broker/contractor is safe to work with, there’s a level of personal trust that plays an integral role in the end customer experience.

Confused? Let’s go over an example.

Say you’re a broker and you’ve agreed to move 20 pallets with fragile equipment for a long standing customer. Even if an unknown carrier has a perfect safety record and a great outside reputation, you might still go with a carrier you’ve been in business with before.

Why? Because you know from past experience that the carriers in your trusted network will go the extra mile to help satisfy your customers. Especially if you’re non-asset based - remember that your partners are often the first impression customers have of your business. When a disgruntled carrier provides poor customer service to your shippers, they won’t blame it on the carrier, they’ll blame it on you.

Sharing a Carrier Packet in FreightPath


With both methods of verifying trustworthiness - both through paperwork and through relationships, this does create a fair amount of work. Not just in collecting all the right information, but monitoring it and checking before every rate confirmation is sent out that everything is up to par.

This is another situation where Transportation Relationship Management comes into play. With the power of software automation, you can automatically send out carrier packets for partners to fill out as they join your network, cross-reference with USDOT safety records, and keep track of carrier lane history to get insights into real-world past carrier performance.

Provide Full Transparency

As much as you may trust your partners and the other way around, the only way to guarantee this is to be fully transparent with them and vice versa.

This is especially important during the course of operations when paperwork is exchanged, legal tender is created, and exceptions may occur. The foundation of trust between you and your partners is to communicate as fast as possible any changes in situation.

For example, take a situation where you’ve already been dispatched a load by your broker, but the end customer (the shipper) needs to reroute due to an unforeseen cross-docking situation. If you’re not notified and given the option of cancelling as soon as this change occurs, there’s a breach of trust.

Whether or not there are legal consequences, the relationship has already been damaged. This is why it’s absolutely critical that both brokers and carriers provide as much up-to-date information as possible so their partners can avoid adverse situations.

This can be as simple as providing timely email and document updates to your carriers or brokers as soon as changes are made.

At FreightPath, our product team set out to make this process as simple and transparent as possible. What they came up with is a workflow that allows you to easily keep everyone on the same page with changes to shipments and the ability for any stakeholders to cancel.

As soon as the DIgital Rate Con has been signed, your dispatch team is immediately notified and customers are provided a complete one-time portal to track the shipment and manage any documents.

Sharing and Collaborating on Documents in FreightPath


During the process of the shipment, any stakeholder - customer, carrier, broker, driver - is able to send location updates, share documents for review, provide delay notifications, and abort or edit shipments.

The last one is especially important, since we all know that logistics never goes fully according to plan. Customers knew that they wanted to be able to change details if need be, but we also recognized the importance of being an accurate and truthful ledger for accounting.

Our product team took this as a challenge to create a truly collaborative way of dealing with changes and exceptions during in-transit shipments. Now, you’re able to make suggested edits to shipments, send updated documents for stakeholders to review, and keep track of all changes in the cloud.

It’s not just an extra layer of flexibility for your business - it’s an extra layer of accountability that you provide to your clients and partners.

Building Trust With Employees

Maintaining and growing the trust inside of your organization is the cornerstone of your business. Even if you’re building flawless customer and partner relationships, your success still rests on the ability of your team to work together seamlessly.

At the core of that collaboration is again, trust.

Like the relationship between your partners and customers, this goes both ways - not only do you have to hold your employees accountable, you have to provide methods and platforms for them to hold you accountable.

The Transportation Relationship Management mindset is to provide everyone involved with the right information and visibility so that everyone from clerk to CEO can be held accountable to the same standard within the company.

Here’s how the best LSPs are using that mindset to produce real results.

Assign and Delegate Effectively

As companies scale from a startup individual environment to a family or tribe, it becomes increasingly important to assign and delegate tasks and accounts to your employees.

Unfortunately, this gets harder as well.

One of the biggest challenges that we see in scaling companies, both within and outside transportation, is the need to have organized workflows and accountability for delegated tasks.

Where most new freight brokers with 1-2 agents can get by with purely informal knowledge transfer, and carriers with 1-2 drivers can generally get all the dispatching done informally over the phone, LSPs that are beginning to scale begin to encounter new types of issues.

This is where effective management - the assignment and delegation of responsibilities - becomes crucial.

With agents on the brokerage side, assigning the right shipments, customers, and regions prevents confusion, and helps individual agents focus and become experts with their specific accounts. Transportation Relationship Management here empowers your agents to become true account managers.

On the carrier side, the ability to effectively dispatch can become a huge barrier for growth, especially when your drivers are on the road. While email is easier to keep a paper trail for, they’re oftentimes exclusively on their phones, and may be slow to respond to a long email request.

Furthermore, driver dispatching brings up the additional challenge of scheduling. Not do you have to make sure they see the request itself, you have to make sure that they’re free to move the load in the first place.

FreightPath Makes Driver Scheduling Seamless

Transportation Relationship Management provides the visibility and collaboration tools to get these common management tasks done easily.

Instead of managing complex tables in an excel spreadsheet and spending valuable time organizing employees, the best LSPs are automating these tasks with TRM software.

For example, take the process of assigning agents or account managers to specific shipments. Not only is this incredibly impactful on the customer experience, there’s the huge impact of commission reports for agents. Poorly managed assignments can foster unhappiness on your freight sales team, and potentially increase turnover.

This general principle has been long explored in other sales fields, where the growth of customer relationship management has made account management and sales enablement easier than ever in other industries.

However, the processes in freight sales can be highly unique, and dedicated workflows are often required to assign specific customers, lanes, or a combination of these factors to specific account managers. Most CRM software simply isn’t built for transportation.

What we’re able to do in FreightPath is create a TRM experience specifically for freight. This means you’re able to set up your network of customers, drivers, and carriers with complex preferences for shipment assignment, and automatically tag account managers when activities or alerts happen in their accounts.

Not only does this save you and your team valuable time, it elevates your response time with clients and creates a better experience.

On the carrier side, take the process of dispatching a shipment to multiple drivers.

Why would you need to do this?

One example is high-security environments like medicinal marijuana transportation, where carriers legally must have two drivers for all deliveries. Without a dedicated dispatching workflow, this can create confusion.

In high stakes environments like this, it comes with real legal and customer satisfaction consequences. However, with the advent of TRM platforms like FreightPath, carriers are able to seamlessly dispatch shipments to multiple drivers and receive double-acception before anything is cleared for departure and customers are notified.

It’s this level of accountability that helps the best LSPs maintain great employee trust.

Get Payables Done Right

Of course, no amount of responsibility delegation will build trust employees if you fail to pay them the right amount on time.

After all, it’s their most basic request from you as an employer - to pay them fairly and reliably. Or they might as well go start their own business!

This becomes especially troublesome in logistics, where long accounts receivable (AR) and payables (AP) cycles and complex payment terms can leave even the most experienced bookkeepers and accountants confused.

Most POs from shippers require a triple-signed proof of delivery for payment to be released, and that usually has a payable period of at least 14 days. For an already lengthy cycle, administrative delays from missing signatures, lost paper documents, and miscommunication can easily cause payroll delays.

This jeopardizes the trust between you and your drivers or agents, and ultimately harms your ability to hire a great team and provide great service.

What we’ve done at FreightPath is to take the same TRM principles we’ve developed for customers and partners and apply it to that all-important proof of delivery. This document is special, not just because of the impact it has on your business, but also because how many stakeholders are responsible for its completion.

Your agents have to make the sale and complete the PO, your dispatchers have to manage the driver assignment and customer updates, and your drivers (or external carriers) have to get the bill of lading and collect all the required signatures. And this doesn’t even take into account the bookkeepers, accountants, and managers responsible for keeping records of the PoD and collecting payment.

We’ve made the entire process collaborative, so that each one of these stakeholders can send paperwork, get them signed, and shared internally or externally at the touch of a button. This not only makes it easy drivers and agents to get organized, it helps you keep your customers accountable and get you and your team paid on time.

That’s the value of Transportation Relationship Management - using automation and collaboration to make these relationships easier than ever.

Conclusion

Hopefully this book has given you a glimpse into just a few of the ways that Transportation Relationship Management is changing the way that the best logistics service providers are succeeding.

By embracing the ideas of trust and collaboration, these freight brokers, carriers, and dispatchers are creating a transportation industry that is more friendly, fair, and equitable for us all.

By combining the mindset change with truly groundbreaking technology, the sky's the limit for the future of Transportation Relationship Management.

All that’s left is to ask -

Are you in?


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