Can You Afford to be a Tactical Shipper?
Feb 10, 2021
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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Over the years I have heard and given several presentations that address the differences between tactical and strategic shippers. I bring this up because of some recent On the Record Interviews that I have had with Chris Caplice, from MIT and DAT, and Peter Tirschwell, from the Journal of Commerce and IHS Markit.
While Chris spoke about conducting sourcing events, and Peter shared what is happening in the ocean markets, they both made an interesting and similar observation. To wit, whatever area of transportation and logistics you want to talk about, strategic shippers will always do better than tactical shippers in the long run.
It is not just Chris and Peter who have addressed the tactical versus strategic issue. Several of the resources on our CSCMP/ NASSTRAC Code Red Webcasts also highlighted the fact that tactical shippers will ultimately always pay more for their transportation and freight needs than strategic shippers. And that is why we have consistently encouraged shippers to take advantage of various resources such as our Rapid Assessment process to help them understand where they are at on the tactical versus strategic spectrum.
Why do strategic shippers get better results than tactical shippers? And what are some of the key differences between these types of shippers?
Strategic shippers are proactive. They’ve reached out to and built relationships with their transportation providers because they place a premium on being able to source capacity on a constant and consistent basis. And since they have also done some scenario planning to anticipate the types of conditions we’re experiencing today, they have a strategy and a process that allows them to get through conditions like these.
On the other hand, a common attribute amongst tactical shippers is that more often than not, they operate in firefighting mode. Perhaps it is because of the companies they work for, but they tend to place a premium on rates instead of relationships. In their quest to get their freight moved at the lowest possible cost, they will view things transactionally instead of holistically. This is why one carrier CEO told me that “tactical shippers routinely step over dollars to pick up pennies.”
In today’s Code Red environment, transactional shippers are seeing their freight costs go through the roof. Perhaps they are, or will be having conversations with C-Level executives to address the “What are we going to do about this?” question. Their response should be: “We need to start thinking strategically about our freight issues!”
Now for some good news. As Peter pointed out in his interview, tactical shippers can become strategic shippers. So if you’d like to move up the spectrum from being a tactical to strategic shipper, we have a few resources that can help get you started on this journey.
First, listen to our new interview with Peter Tirschwell and his insights about what’s going on in the ocean market and how the alliances of ocean carriers are affecting the cost to move containers. Personally, I was intrigued by Peter’s comments about how shippers should view and think about the ocean markets and how the alliances will continue to impact capacity and costs.
Next, if you haven't already, listen to our interview with Chris Caplice, Executive Director at MIT, and his advice for sourcing truckload freight. Once again, Chris highlights the importance of assessing your strategy about carrier relationships before you conduct your truckload and LTL sourcing events.
After this, we encourage you to talk to us about our Rapid Assessment process. There are some very valuable and important benefits that can be realized when we get people together from procurement, operations and sales to look at how their decisions impact your company’s freight costs. We’ll help you find things you can do on both an immediate and long term basis.