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Frightening Freight

Industry pinched by truck driver shortage

America’s 3.5 million truck drivers move 10.5 billion tons of freight every year, a full 71 percent of everything shipped from one place to another within the United States. Even still, America’s businesses are reeling from a massive trucker shortage.

According to The Washington Post,  50,000 new drivers would be needed to satisfy the current shipping demands of the country’s businesses. Desperate trucking companies are offering steep pay raises and lucrative signing bonuses but still are failing to attract anywhere near enough prospects to the lonesome, demanding and generally unhealthy line of work.

The result is the hot tub industry is dealing with delayed deliveries and higher costs.

Delayed Shipments, Higher Costs
The driver shortage has not been lost on Jim Van Fleet, president of Mainely Tubs in Scarborough, Maine.

Van Fleet says intermodal rail containers are “averaging 14 days this year, whereas historically we could count on eight to 10.”

On the other side of the country, Jeremy Peash of Spa Warehouse in Seattle is feeling similar pain. Peash says when Spa Warehouse first became a full-blown retailer about five years ago, he would see deliveries on the doorstep in approximately three to four weeks. “Last year we were closer to four to five weeks,” he says. “Now, this year, with this fight for trucking against other industries, we are more likely to be six to eight weeks out on getting the spas.”

Delays, of course, translate into higher costs.

“It’s forced us to increase our hot tub pricing by roughly $100 to $200 per model,” Van Fleet says.

Creative Pricing & Other Coping Mechanisms
Peash says prices have risen for him as well, “although not as much as you might think.”

He’s used the new reality as an opportunity to get creative with his sales techniques.

“We always present the customer with a ‘get it sooner’ price versus the ‘we can wait awhile’ price,” he says, “wherein we group the orders together to keep the costs lower.”

This kind of imaginative salsesmanship is especially helpful now that the trucker shortage has taken away the leverage a business owner traditionally holds over any vendor — the option of going with a competitor.

The shortage is so severe that Van Fleet hasn’t been able to find a company any more competitive than the one the Watkins logistics team has found for him, and while Peash is optimistic, he’s guarded.

“We are always on the lookout for other shipper opportunities and providers,” Peash says. “However, with a situation like what we have currently, it affects everyone in the retail industry. So it’s important to take some time, make a few phone calls and make sure you aren’t turning a blind eye and staying on the competitive side of this conundrum.”

Much of what it takes to weather the storm, however, simply comes down to common sense business practices and smart adaptations.

“We are increasing inventory levels on our best-selling models and color combinations to keep up with customer demand,” Van Fleet says.

Manufacturers Might Hold the Trump Card
Pete Westfall, vice president of sales and marketing at Nordic Hot Tubs in Grand Rapids, Michigan, says his company has achieved a degree of insulation from the trucker shortage by handling most deliveries in-house.

Westfall says that it’s not taking any longer for Nordic to get hot tub orders out to dealers compared to a year, two years or five years ago. “We have our own truck fleet, which makes a large percentage of our U.S. deliveries,” he says. “Logistically, we can’t make every delivery with our fleet, so to reduce any impact to our dealer partners, we do a lot of work on the front end with planning and scheduling.”

Like so many dealers, manufacturers have also had to get creative amidst the trucker shortage. Westfall says he offers dealers flat-rate shipping to give them predictability in pricing. If there are added costs or overruns, Nordic absorbs them.

“Offering our dealers a flat shipping rate assures their costs won’t fluctuate throughout the year,” Westfall says. “This allows dealers to set their prices and not worry about any cost variance.”

Van Fleet has seen his manufacturers step up as well. “They are putting out RFPs to obtain the best rates and are waiving additional charges for coordinating our own carriers,” he says.

For Peash, it’s all about appreciating the manufacturers’ efforts while remaining empathetic to the fact that the trucking crisis is squeezing manufacturers as hard or harder than it’s squeezing spa dealers.

“The manufacturer does everything it can to be accommodating,” he says. “Though, at the end of the day, it’s up to that particular truck driver whether they show up or not. If anything, this whole issue causes more strain on the manufacturer than us since they are working with precise processes and time slots. Having a large order in will-call and then having a driver not show up to the staging area causes all sorts of backups in their process.”

Weathering the Storm by Leveraging Relationships
For both manufacturers and dealers, those faring best have strong relationships to lean on.

“We try to make as many deliveries as possible with our drivers and private fleet, giving our dealers a white-glove delivery,” Westfall says. “However, if the shipment must go common carrier, our dealers can rest assured we have good partnerships with very reputable preferred carriers.”

Nordic has added some new freight providers as the manufacturer felt the squeeze from the shortage, but the goal is long-term relationships, not short-term stopgap measures.

“We ask our dealers and vendors to see who they use and with which carriers they have the best experience,” Westfall says. “We also work with a number of local carriers. We find meeting face-to-face with the carrier representatives creates good working relationships and ultimately fosters long-term partnerships. We take pride in creating great partnerships with all our vendors, including transportation companies. Partnerships can’t be one-way streets. Both sides have to be willing to work with each other. My advice would be to create a solid foundation for those long-term partnerships with carriers and communication is the cornerstone of that, or any, foundation.”

The most important relationship, however, is with the end user.

“To be frank, the No. 1 thing I can say is to be upfront with your customers,” Peash says. “Keep them updated as much as you can, even if it’s just to let them know you are on top of it and have not forgotten about them. People, for the most part, are understanding on this issue. It’s when you start to over promise and under deliver that you can really disparage your own name and that of your company. The old adage ‘honesty is the best policy,’ though always applicable, is even more important in a situation with such limited variables as shipping.”

The trucker shortage is real, vast and it touches virtually every industry. As with any crisis, those with adaptable business models, strong relationships and solid work ethics will likely persevere.“It’s a lot of hard work,” Westfall says. “As a manufacturer, we can only create so many efficiencies and absorb so many additional costs until, at some point, pricing is affected. The driver shortage is something we all have to learn to work with and around. It impacts us and manufacturers on all fronts, inbound and outbound. Consumers will see, and are already seeing, the increased transportation costs reflected in all products from hot tubs to grocery items, at the gas pump and in their local shopping malls. The resolution to this issue won’t be a short-term answer. It requires personnel, training and experience, and that takes time.”

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