Shippers are in the chemical and plastics business, not the transportation business. We don't make money off transportation. Commitment to long-term, preferred-providers of logistics services is the key to success. Phil Rine, Aristech Chemical Corporation.
THE KIND of relationship a chemical shipper maintains with a carrier has always been important. In today's chemical industry, success is determined by how well the two work together to achieve a common purpose.
"Achieving customer satisfaction is the ultimate goal," said Phil Rine, director-corporate logistics at Aristech Chemical Corporation, Pittsburgh, Pennsylvania. Rine discussed carrier-shipper relationships at Chemical Week's 5th annual Chemical Transportation and Distribution Conference January 17-19 in Houston, Texas. Joining him on the panel was Deborah Allen, motor carrier and regulatory compliance manager at PCS Nitrogen Inc, Memphis, Tennessee.
Allen discussed successful partnering with local carriers and listed five key elements: defining a local carrier, and establishing, evolving, evaluating and even ending the partnership.
Rine recommended a long-term, preferred-provider agreement, particularly because it demonstrates the commitment to customers. In addition, when a long-time arrangement is in place, shippers can feel justified in providing in-house services to the carrier that might not otherwise be possible. As an example of some of the services a shipper might provide a carrier, he listed computer programs, specialized equipment, dispatching offices, and vehicle parking.
"Shippers are in the chemical and plastics business, not the transportation business," he said. "We don't make money off transportation. Commitment to long-term, preferred-providers of logistics services is the key to success."
Define Needs Allen said that before a partnership can be established, shippers must define their own transportation needs particularly rates, service, and safety, but not necessarily in that order. "What are you looking for in your carrier," she asked. "When the shipper's needs are addressed, then the carrier that can fill those needs can be sought."
While rates may be a top priority, she pointed out that if the product being hauled is a hazardous material, safety must come first. Meeting customer expectations is always high on the list, as is availability and quality of equipment, and ability to respond in a timely manner.
Allen and Rine agreed that shippers must constantly interact with carriers to guarantee service quality. One way to accomplish this is by measuring customer satisfaction, Allen said.
Rine pointed out that the carrier's cooperation in responding to questions about training and performance can indicate how well the partnership will function. If the carrier balks at providing information, the relationship may suffer as a result. A Chemical Manufacturers Association carrier profile form can be used to help determine a carrier's qualifications for handling hazardous materials. Completed forms can be forwarded to the customer for reinforcement of the shipper/carrier relationship.
"Does the carrier provide mandatory training programs on health, safety, and environmental issues?" asked Rine. "We need to see evidence that is going on."
Community Reputation Another indication of carriers' reliability can be found in the reputation they hold in the communities where they operate. "Is there evidence of carrier improvement in community awareness activities related to transportation of hazardous materials?" he asked.
He advised shippers to identify areas within the company that are affected by transportation services and involve those personnel in carrier selection, implementation, and review processes.
When the carrier is selected, the relationship must be honed. "Establish relationships with carrier personnel who handle sales, dispatch, maintenance, and billing," Rine said. "Encourage carrier participation in meetings with customers."
An ongoing carrier evaluation is essential to insure that the shipper's criteria are being met. "The criteria may be the same or may differ depending on the size of the carrier, the product transported, and the customer's specific transportation needs," she said.
Allen recommended regular focus groups or reviews with carriers to evaluate and discuss performance and the requirements necessary to provide the service expected by customers. Safety issues, production schedules, customer complaints, and carrier recognition also can be on the agenda. "These meetings can generate ideas that result in cost reduction," he said.
Finally, the relationship may end at some point. A carrier's lane patterns or mode of operation may change so that the business is no longer profitable for the carrier. Plant closures and product changes may preclude current transportation opportunities for specific carriers. Carrier performance may not measure up to the expectations and service levels required of the shipper.
"Always try to end on a positive note, if possible, to allow for future business opportunities that might develop, or for which the carrier might be able to serve," Rine said.