The NASSTRAC View is a monthly NASSTRAC member group discussion where a “hot topic” is discussed and evaluated by members just like you. Held on the first Friday of each month, all discussions will be moderated to ensure everyone has an opportunity to speak and all opinions are heard. This is your opportunity to talk with your fellow members who share your concerns, issues and solutions. Join us on our next NASSTRAC View and discover how fellow members are dealing with issues all of us face in our daily work lives.
The next NASSTRAC View:
Chargebacks: Is It Time For a Change?
Friday, October 7, 2016
12:00 PM - 1:00 PM CDT
You are a vendor or a supplier. You design and manufacture a product. You take great care to ship your product to the retail marketplace, only to find out later that a financial deduction or chargeback was taken against your invoice. On top of that, you are consistently being graded and measured by a scorecard from your customer.
In the current retail supply chain, chargebacks come as no surprise and are even so predictable that many vendors factor a percentage of infractions into their annual logistics budget. But is that the best way to drive behavior?
To flip the issue slightly, consider detention charges. Every minute a truck sits idle at a pickup or delivery location is a minute of lost money for trucking companies — and with the recent Hours of Service (HOS) rules affecting productivity, the situation is even more urgent today. That’s why the most important thing a shipper can do to be a “shipper of choice” for carriers (besides paying them on time) is getting their trucks back on the road as quickly as possible. Shippers and carriers have adopted a punitive approach to discourage delays: if a shipper delays a truck (power unit and/or trailer) beyond a certain time limit, it pays a detention charge.
Is the current penalty chargeback system working? In other words, is it motivating shippers to work harder to get trucks back on the road as quickly as possible and improve shipping performance to their customers?
According to an Accessorial Benchmarking Study conducted by Transplace, the study revealed that 27 percent of the shippers surveyed don’t publish detention charges with power unit, and 56 percent don’t publish detention charges associated with trailers, which suggests that detention charges is not a high-priority metric for them.
Therefore, what are detention charges actually accomplishing in terms of driving continuous improvement? Is the current system motivating shippers and carriers to work more collaboratively together? Maybe it’s time to rethink not only detention charges, but all vendor chargebacks, and instead of making them more punitive, perhaps taking an incentives-based approach would be better.
Join us on Friday, October 7 as the NASSTRAC View tackles this important topic.
The NASSTRAC View is open to all NASSTRAC Regular members only and seating is limited to twelve seats and allocated on a first- come, first- served basis. Submit your new topics and requests for deeper dives to firstname.lastname@example.org.