At Freight Motion, we have clients who discuss various transportation issues they had in the past. We would like to share one here to raise awareness of underlying issues, market trends, and possible solutions.
Company Z is a small business. They make mostly wool related products, sleeping bags being their main moneymaker. After months of trying, they finally get a massive Purchase Order from a very large retailer, “Big Box.” This is a huge win.
Big Box has rules and regulations about when shipments must arrive to their distribution centers (“DCs”). They issue a Must Arrive By Date (“MABD”) for all PO’s. This means that Company Z must have their product delivered to Big Box’s distribution center within a 2-4 day window. Sounds reasonable, right?
Excited, Company Z has their sleeping bags ready to ship in plenty of time. They call their Shipping Contact – i.e. Broker or 3PL (“Shipper”) – to schedule pickup and delivery. The Shipper then gets to work coordinating the load.
Unfortunately, the shipment fails to arrive within the MABD. Big Box has fines in place (“chargebacks”) for missing the MABD and does not care who is at fault. Big Box’s contract is with Company Z. Every quarter, the expensive chargebacks add up and it is a drain on Company Z’s cash flow.
Company Z tries to put the chargeback on the Shipper, but ends up stuck with the chargeback.
Let the Blame Game Commence! Who is at fault?
Company Z? They had their product ready and ordered the shipment in plenty of time.
The Shipper? They arranged the shipment with a reliable carrier, knowing the MABD.
The Transportation Company carrying the load? They carried the items to the DC and state in order to get the load there on time, Company Z and the Shipper need to spend more to get a time-critical-guaranteed shipment.
Big Box? They are a multibillion-dollar company; surely, they can absorb the cost and accept the shipment a few days around the MABD.
This is happening every day, all over the country, and it is only going to get worse. In 2018, the 2-4 day window is changing to a 1-2 day window. It is already rolling out, making it harder for small businesses to profit. As it happens, every company will find their own way to handle it.
At Freight Motion, we will take on the responsibility and pay those fines. That is our solution. What is yours?