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How to become a 'Shipper of Choice': while the crisis of last year has subsided, the shortages of tractors, trailers, drivers, railcars and barges continue. Though freight costs for metals suppliers will never again be the bargain they once were, service centers can gain a competitive advantage by working more effectively with carriers.

Article Excerpt
Since deregulation of the transportation industry in the 1980s, America has "gotten a hell of a deal," says Steve Williams, chair man and CEO of Maverick Transportation Inc., Little Rock, Ark., and chairman of the American Trucking Associations.

In 1980, he says, transportation costs totaled 16 percent of the United States' gross domestic product, vs. 10 percent of GDP in 2003. "It has fallen dramatically. The rates we charged to haul steel in 2003--before rates started going up, adjusted for inflation--were 50 cents on the dollar from what they were in 1980."

Those days are over, and shippers must do more and pay more to keep their products moving. That's the shorthand advice from logistics experts and cargo handlers to metals shippers and receivers, who find freight rates high and the availability of equipment and personnel low.

Although the demand for freight services from the steel industry has slowed from the chaotic pace of 2004, metals producers and distributors are busy, and they are competing with numerous other industries for carriers' time and attention.

The major problems that came to a head last year--especially the shortage of trucks and drivers--remain omnipresent and are expected to linger indefinitely.

Three or four years ago, one truck company owner says, a person could look on-line at load posting services in just about any major city and see 75 to 100 available trucks within a 50-mile radius. "Today, there might be one or two trucks available within 50 miles."

On the plus side, several industry experts report recent improvements in information sharing, in scheduling, in the treatment of drivers, and in productivity among companies that ship and receive goods.

These same experts offer some forward-thinking advice about the future of transportation and logistics, and about how service centers can become a "shipper of choice," and see opportunity in an area of their business normally viewed as "a necessary evil."

FUEL COSTS

At the top of the list of concerns for lames Burg, president of James Burg Trucking Co., Troy, Mich., is the cost of fuel and the effect that has on the entire economy.

"Wal-Mart came out with a study showing that for every 20-cent increase in the cost of a gallon of gasoline, they lose $10 to $20 per customer per week that would be spent at their stores. Their cost of goods coming in is one thing, but it also impacts their sales on the way out."

Burg has been able to pass along fuel surcharges, but he worries high diesel prices will slow the whole economy.

"Fuel has stepped up to the No. 2 expense behind wages at our company. It used to be fourth behind insurance and depreciation. That's significant. Without applying fuel surcharges, we would have an operating loss," Burg says.

An executive for one nationwide flatbed carrier says his company applies a fuel surcharge ranging from 8 to 17 percent. Thirty years ago, he says, "we were hauling freight to the West Coast for $1.25 per mile." Three years ago, that price remained unchanged. In the past 18 months, due to the imbalance of supply and demand, "we have been able to increase prices, and the shippers had to pay." For shippers that are unwilling to pay a fuel surcharge or won't accept an increase in the freight rate, "it's...

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