Shortly after I retired as transportation chief of a large multi-national retailer, I was often asked a variety of questions. How high will fuel go? Will capacity level out? Will the driver shortage finally play itself out? I assumed my logistics brethren were asking me these questions since they presumed that, after 34 years in the transportation business, I must at least have an opinion on them.

Well, it's been three years now since I hung up my tie and I find that I am no more a “swami” now then I was before. However, I can make this observation: If the evolution of the supply chain has proved anything over the years it's the predictability factor—the index that allowed forecasters and prognosticators the wiggle room to determine the probability of shifting market conditions and therefore pricing.

Both the carriers and shippers employ analysts to determine the timing of upcoming annual business needs such as production planning, finance budgets, and capacity requirements to name a few. Those analysts depend a great deal on the shifting pendulum swings to determine capabilities, commitments, pricing (rates), and partner alignments. For the most part, those pendulum swings, as I wrote in my April 2007 column, spanned a period of up to seven years to complete a full journey over to the carrier's side and then eventually back to the shipper's side.

However, what I am seeing in my crystal ball lately is markedly different than what I experienced when I actually worked for a living. It's no longer a five- to seven-year cycle. It's more like a three- to five-, or even a two- to three-year cycle. That span of time is no longer as predictable as it once was; and the time both carriers and shipper have to digest the gleaned data has been greatly diminished—resulting in reactionary transportation decisions. Those quick, often unfounded decisions often end up straining the carrier/shipper partnerships that have been forged over the many years.

Today, the pendulum doesn't rest; it moves quickly, so quickly that many shippers are only likely to venture a guess as to exactly where it resides at any one point in time. You can't tell merely by rates anymore, since there are many reasons for freight spend to be higher this year vs. last year. All the while, carriers are chasing business with lower base rates, hoping that shippers will pay their full fuel surcharges in an attempt to cover their fixed operating expenses until the tides turn in their favor again.

From what I can see, this increase in swing speed comes from the newly adopted practice of electronic bidding and the subsequent frequency of the bidding process. Long term contracts are fewer and farther between—practices that have benefited many shippers financially. However, that benefit may be questionable when shippers calculate the overall pick-up and delivery performance. When you weigh cost savings next to overall carrier performance it's then possible to know the cost of quality.

Carriers have reacted to this new definition of “partnership” by honing their fleets (supply) to mirror, as closely as they can, their customer tenders (demand). As a result, there are few, if any, national carriers today operating with excess tractors, drivers, and trailers, not to mention the personnel to outfit the maintenance sheds, dispatch operations, etc. They are running lean and remain focused on profitability. Carriers are positioning themselves for the upturn that they hope will right the ship and shift the pendulum closer to the middle—the place where true partnership thrives.

So, here's my question: Is it a slowly swinging pendulum, or is it a time-keeping metronome. Will the increased speed and ensuing lack of predictability of market conditions create a man-made logistics crisis?

If so, will carriers be in a position to ramp up when customer inventory has to be adjusted upwards and the demands of the customer increases? Will they have enough driver applicants in the queue to fill the cabs? The pendulum will swing back to the carrier side, and I, as well as many of my colleagues, are not particularly thrilled about guessing when that may occur, but it will happen. The time to think about the affect it will have on your company is now—sooner rather than later.

There are numerous shippers that sincerely believe in long-term carrier relationships and true partnerships. Then there are others who play the game for today. Which one are you? Remember, shippers are not the only ones who can go out for bid. Carriers can too.