Solid, long-term shipper-carrier relationships don't just appear out of the blue. They require hard work, careful planning, honesty from both sides of the table, and ongoing discussions concerning what's working and what's not.

In a best-case scenario, the shipper works tirelessly to make sure every piece of freight is simple to handle. In exchange for that operational ease, the carrier can haul more deliveries on time, allowing for a longer-term relationship that's based on everything but rate per mile. In short: Success is grounded in a mutual pursuit of excellence.

Fred Boehler, vice president of logistics for Borders Group—the $4.1 billion parent of Borders and Waldenbooks stores—has taken the elements of a textbook shipper-carrier relationship and has skillfully put them into practice. With the increase of LTL consolidation, Boehler realized that it now makes more sense than ever to carefully choose a handful of outstanding carriers, hone his own operations to align with the needs of those top carriers, and jointly share in operational savings to keep rates reasonable. “A good portion of a carriers cost structure is in labor,” says Boehler. “So we had to find ways to increase productivity and improve efficiencies for our carriers to keep cost structures flat.”

Since he joined Borders in 2000, Boehler has made sure that his company, and his carriers, are reaping the benefits of these improvements. For example, from 2001 through 2006, average LTL rates in the industry have increased by more than 5 percent annually, or more than a 35 percent compound increase. But that hasn't been the bill for Borders under Boehler's watch. Through better collaboration with its carriers (a list he's winnowed to 15 from 200), and since improving operational efficiencies in partnership with its core LTL carrier, FedEx Freight (FEF), Borders' average rate increase has been less than 1 percent a year since 2002, saving millions in total transportation costs.

The key to this savings, contends Boehler, has been the company's evolving collaboration with FEF. By taking the relationship beyond the traditional, transactional basis, Boehler has opened his communication with the carrier's top brass and has made shipping patterns more predictable. In turn, the collaboration has allowed the carrier to achieve nearly 99 percent on-time delivery for the bookseller—deliveries that are now hitting every one of its 499 U.S. stores and more than 550 Waldenbooks mall stores within a two-hour window. “We're retail, we want people selling, not waiting for the truck to come,” Boehler says. “And besides, the more we sell, the more the carrier makes.”

When Boehler first landed at Borders, the Ann Arbor, Mich.-based retailer was utilizing more than 200 carriers—an unmanageable number. It was difficult to track shipments, maintain accurate records, and billing became a nightmare since it was difficult to figure out who exactly was delivering what to whom.

“At the time we were involved in traditional transportation,” says Boehler. Every year the company was sending out hundreds of bids based on pricing and volume lane-by-lane.” At the end of those contracts, he adds, the entire process would start over again, perhaps with different carriers. “It wasn't based on collaborative programs,” he says. So, he went to work assessing the carrier base to see where he could cut bait.

Ongoing consolidation, however, was clouding his decision-making process in the LTL segment. Prior to Boehler's arrival, Borders was using Viking Freight for LTL service in the Western region. Viking was then acquired by FedEx Corp. in 1998. In 2001, FedEx bought American Freightways for coverage east of the Rockies before blending both companies into what today is known as FedEx Freight in 2004. This consolidation—and others moves going on at the time—further convinced Boehler that the playing field in trucking was clearly making it more difficult for shippers to shop for services.

“The opportunity to bid business was not there like it had been in the past,” says Boehler. “You can do that, but you might end up hiring a carrier you fired just a year ago.”

Besides, says Boehler, switching carriers is expensive. “You have to look at total cost equation. Every time you make a switch, there is a learning curve that needs to be developed. By the time they get back up to speed, you've lost opportunity costs,” he says.

The time came to make some decisions. He needed to cut carriers with poor or unreliable service and those financially unstable carriers that might get caught in the next freight downdraft. The more he examined FEF's operations, the history they had with Borders, and the carrier's backing of a $34-billion parent company, the more freight he decided to funnel into its bucket—and the relationship entered a new chapter.

Today, after winnowing Borders' 200 carriers down to 15, Boehler has a much better handle on managing the company's approximately 700 million pounds of freight moved annually. At the heart of this improvement, says Boehler, is the fact that he's taken his core LTL relationship from a traditional, transactional handshake to a level where executives of both companies meet on a regular basis to solve small problems while they're still manageable.

By opening communication with FEF, Boehler says he was able to share his needs and in turn learn what the carrier needed him to do to help speed their operational processes—simple as pie.

Boehler has created three guidelines that are essential for driving costs out for both sides:

1. Make shipping patterns very predictable. Knowing how much volume, how many pickups and deliveries there are on a daily basis helps the carrier align their line-hauls and enables FEF to work more efficiently.
2. Know what's shipping and when. Loads can be grouped together to reduce number of touches through the carrier's network.
3. Load direct whenever possible; in turn, FEF can align outbound shipments with the inbound dock doors at carriers' site to facilitate easy transloading. If the carrier knows a half-full inbound load is going to, say Sacramento, it can direct that inbound trailer to park adjacent to the outbound Sacramento trailer, cutting needless steps out of the dock process.