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management-transportations Pro Tips transportation-solutions

Transportation Management Companies Can Help You Get Ahead

Why do some companies achieve savings and gain a logistics advantage while other companies are left guessing? As a transportation management company, we work with numerous types of small and midsize shippers and distributors. The biggest difference in the amount of benefit we can provide typically hinges on one common factor — transparency.

Companies have two options: they can either create the advantage internally or they can source help to achieve it. Either way, an honest assessment exploring how you currently stand against world class is the best place to start. In order to offer transparency to someone outside their own company, shippers and distributors have to get a little vulnerable — something that may not come easy for most. As we all know, inviting someone into the company to see how the sausage is made can be uncomfortable.

If anyone understands those feelings, it’s that of a business owner that has built their business from scratch. Business owners know that companies are built by those who have cared enough to make it personal. While it may not always be a perfect fit, everyone who puts time into a business adds a bit of themselves to it; the company becomes a reflection of who they are. Whether it’s the owner, executive, or the newest employee, they take ownership in the company, and that’s a good thing! I am not suggesting that you become transparent with just anyone outside your organization; your company and data need to be protected. But if you have decided that you do not have the time or expertise in-house and would like an assessment done, find a transportation management company that you can trust with your data.

While there may be a natural desire to keep the company door closed to others, I find that the most successful business people are strongly motivated by their desire to be the best and, accordingly, prioritize their aspirations over their fears. They want to be the best in every aspect of their business.

Many companies have recently made a tremendous investment in improving their supply chain operations, but others still have not. Without investing in improvement, it will likely be difficult to achieve a competitive advantage with your supply chain. An honest benchmarking assessment arms you with this information. In this world of two day shipping, it doesn’t matter what you’re shipping, customers are expecting (and sometimes requiring) quicker order-to-delivery cycles, lower costs, and more predictable deliveries — all with the convenience of shipment visibility or notifications that can be tracked and documented. Are you currently able to check off all of those boxes?

To some, making the pivot to supply chain excellence seems like something that is too overwhelming or can be put off until another day. Unfortunately, the longer you wait, the gap between what you are able to accomplish and what customers are requiring is only going to widen. The wider the gap, the harder it is going to become to do something about it.

For that reason, some have turned to adaptive transportation management companies to overcome roadblocks that stand in the way of supply chain improvements. Below are some common roadblocks that we have helped our managed transportation customers overcome.

Roadblock 1: Costs
When making any change to your business, the first thing you may ask is “what are the costs?” How can you afford to pay for the effort?

We see successful companies enter into self-funding projects where the return is greater or equal to what it costs to engage in them. For example, it is not unusual for our customers to receive a 50 percent return on their investment. In other words, for every dollar that they spend, they show $1.50 in savings or profitability that otherwise would have not been achievable. Conversely, we often see those who do not invest in supply chain or transportation because of the “cost” of hiring, training, and managing a team. They may then look at that as a “savings.” However, the reality is that just because someone chooses to not hire someone for a role that needs to be performed, you cannot consider that non-paid expense as savings. If a role needs to be filled, but is not, then the actual cost to the organization is greater than the perceived “savings” of not having the role’s functions performed.

Specifically, customers need to ask themselves how they can manage freight costs. There are a few ways to approach this.

Strategy
Our customers work closely with us to develop a strategy to reduce freight costs. Solutions vary depending on the complexity of the supply chain but results often come from implementing strategies in one of these key areas: sourcing, shipment optimization,  equipment optimization, carrier selection, centralization of processes, and controlling cost previously controlled by vendors or customers.

 

Spot Market TL Costs
Our managed transportation customers stopped playing the game. When freight goes to the spot market, the typical response is to use a broker. However, an article from DAT Broker Benchmarking, Q4 2019, shows that the average brokerage margin across the top five brokers has been 17 percent for the last three years. Our managed transportation customers pay based on a prearranged markup of 10 to 12 percent — an instant savings of 5 to 7 percent when compared to spot market freight rates.

This works because the shipper and transportation management company are transparent with each other, creating efficiencies and expediency for both parties. We are able to reduce our rates, in turn reducing the shipper’s rates, by streamlining the communication flow, requirements, and processes. Additionally, our streamlined process ensures that freight is quickly getting into the hands of core carriers and extended networks.

In the truest sense, time in money here. According to Uber freight, the cost from moving from your core carrier to spot market is over 15 percent. In other words, communication is king. The tools and processes that they use enables quick and effective communication, allowing them to quickly reach their core carrier base in a clear and concise manner, saving them money.

When the core carriers are not available, our customers get quick access to a network of assets. They open the doors to competition and use strict onboarding and compliance monitoring standards that are set to their internal requirements. Our customers use vendor management technology and integrations to ensure that all of their carriers are screened and monitored in real time to ensure shipments are moving legally and safely.

LTL Costs

Because we have less overhead and access to some of the most competitive blanket contracts on the market, our customers are saving money. They don’t have to have the largest volume of freight for good LTL rates because they get access from us. More importantly, they get support and guidance when they need it. In this new COVID-19 world that we live in, I often hear that even LTL takes more time to manage then it should. Our managed transportation accounts ask us to take that extra burden off of their plates — something that we are more than happy to do. As a result, they spend less time getting pulled away from their duties and are able to be more effective in their other roles.Leveraged Rates
Some of our managed transportation customers save immediately when they gain access to our extensive network and leveraged rates. For example, our partnership with TForce Worldwide, which has millions of LTL spend, provides instant savings for those customers that do not have enough volume for their own aggressive LTL contracts.

Roadblock 2: Handling Changing Carriers or Forwarders
We have helped many of our customers get increased access to capacity where needed and keep the providers they like. They often ask, what if our current carriers are not sophisticated enough to connect?

It’s not unusual for our customers to have created and cultivated good carrier/forwarder relations that they want to maintain. While we encourage our customers to keep their good vendor relationships, sometimes it is simply not enough. Many of us have found lately that capacity is king. When our customers need more access and capacity, they get it without an extended network of proven forwarders and carriers. But even then, it’s not always easy. These days, someone has to take time to fight for that capacity. We fight for our customers, and because they get capacity faster, our managed customers avoid expensive expedites and costly customer order delays.

When our customers bring on new service providers or evaluates their current providers, there is a good chance that they already have access to their ELD’s for shipment tracking through our systems. A recent study performed with our API integration partner found that over 25 percent of the 2,500-carrier sample we provided are already live with ELD integrations and that 49 percent is live with mobile tracking. Our managed transportation customers plug into this connected extended carrier network (or invite their own carriers) without needed internal IT resources to make that connection. It only takes a request from the users of the system and an acceptance from the carrier to make it happen. Once that is done, we manage the rest and our customers get live tracking from service providers.

Additionally, our customers have near instant access to API connectivity with over 800,000 carrier fleet ELD’s, Ocean lines, Airlines, and Rail and LTL carriers so that they can quickly gain visibility to their shipments, as well as share it with their internal and external customers.

Roadblock 3: Using Your Existing Team to Operate the Solution
As a business owner, the number one thing that I often hear that holds companies back from growing is how to get A-players when and where you need them. Our managed transportation customers chose to not take on the expense and effort of finding, hiring, training, retaining, and paying for A-players. Instead, our managed transportation customers get access to A-players that can act on behalf of their organization with their existing staff. Additionally, they are working with employees that have not only been trained or certified in transportation but in communication as well.

Roadblock 4: Finding the Time, Infrastructure, or IT Budget
It can be overwhelming to think about finding the time, infrastructure, or IT budget to acquire the technology needed to be best in class. Our customers once faced having to find the time to put a team together to select and implement the right technology to provide meaningful shipment visibility. They chose to leverage our experience and knowledge. By starting with a baseline solution built on best class practices and technology, they are able to make the incremental changes that their unique circumstance requires.

Once tracking integration is in place, our customers utilize Shiptransportal’s proactive monitoring systems to manage shipment exceptions (early or late pickups and deliveries). Some of our customers receive tracking information integrated into their enterprise systems via API or EDU communication, pending their preference. While our team is actively pursuing and resolving transportation issues, our customers are able to focus their time on any internal and external customer communications that are necessary to lessen the impact of any unfortunate delays. The extra time that our customers spend in customer account management differentiates their level of service from the competition.

Roadblock 5: Gaining Control of Freight Expense
Due to the pure scale of transportation expense, it is not unusual for finance to be the driver of change to the supply chain. They have to be able to quantify all expenses once incurred. Our managed transportation customers utilize our teams and systems to line-item audit and dispute all of their freight bills. Once too cumbersome an effort, our customers are able to utilize a highly automated solution with the use of AI to have all of their bills audited in detail. This not only enables our customers to ensure that they are only paying what they owe, but also captures their shipment history in a meaningful way. Our customers are armed with new data that helps them prepare for future negotiations and freight savings. Additionally, finance departments no longer have to estimate freight accruals or gather them from multiple sources. Instead, they receive regular scheduled reports by GL code accounting for all accrued freight expenses.

In short, we understand that being transparent is tough when it comes to your company’s performance. We see companies winning and losing everyday based on how they handle transportation management. For those who have found it difficult to create a competitive advantage with their supply chains internally, talk to a few transportation management companies and assess them for capability and fit. We often find that when there is a good fit, working together is easy and reaching your goals becomes achievable. For those who are still unsure, reach out and ask for a free assessment to determine how you may benefit. Or, take our 60 second gap assessment, and we will benchmark you against world class. We will perform a high-level assessment, and you can take the next steps armed with information.

Other news: Shiptransportal Crowned by Crown Royal and Carolina Panthers.

It was an honor for Shiptransportal to receive recognition from the Carolina Panthers and Crown Royal as a winner in their “That Deserves a Crown” program. Certainly special coming from an organization that I have respected for doing a great deal to support the Charlotte community!

 

 

Categories
management-transportations Pro Tips Third Party Logistics transportation-solutions

Is your Transportation Management Strategy Best-in-Class?

What Is It Costing You to Not Execute a Best-In-Class Transportation Management Strategy?

Take our 60 Second Survey to see if the right transportation management strategy can make your company more profitable.

A 2018 benchmark survey, performed by Descartes Systems Group, showed a relationship between the strategic value of transportation and financial performance. The higher the strategic value, the better the financial performance. Specifically, the results illustrated that companies that viewed transportation as a competitive advantage were five times more likely to have industry-leading financial performance. Top performers were 18 percent more focused on customer service and 29 percent more focused on business growth. This report went on to show how top performers approached transportation challenges. 60 percent of top performers were looking at ways to change transportation strategies to prepare for capacity, while only 35 percent were looking at changing service providers to solve the problem. For underperformers, the reverse proved true; 55 percent were more focused on changing providers, while only 27 percent were considering changing strategies.

In other words, a best-in-class transportation management strategy will help you control transportation freight expenses and has a positive impact on key stakeholders touched by transportation. When done right, your company will be more profitable thanks to reduced freight costs and other related expenses. Your transportation management strategy should consider not only the line haul and discount rates but also the cost benefit to sales revenue. Consider how transportation impacts the cost to support customer service, accounting, finance, shipping, receiving, and inventory levels.

Additionally, a good transportation strategy should be sustainable, flexible, and agile — regardless of external factors that may occur outside of your organization. But creating and executing such a strategy can be overwhelming, which is why we recommend creating a plan that can be built and improved upon. Rather than expecting to start with a perfect plan, create the building blocks that will lead you to a best-in-class strategy.

Common Mistakes
The most common mistake in a transportation strategy is treating transportation too narrowly, like it’s an expense that can be controlled if only you can just find the lowest cost provider. This strategy leads many to taking too many chances and, as a result, overpaying to find success. Replacing the transportation provider is just one tool in the toolbox, and a hammer can’t fix every problem.

Without the right strategy in place, changing out service providers is a reaction to a problem, not the problem itself. It’s important to consider the cost to sales revenue and the cost to support those revenues. Otherwise, little is being done to make your company more profitable.

Below are some common transportation strategies that you may be tempted to try. These “strategies” look at transportation too narrowly, often negatively impacting your company’s profitability.

The RFP
Many companies are tempted to hold an RFP each year, and why wouldn’t they be? RFPs are alluring and put you in control of the process. They promise savings nearly every time, and if the RFP doesn’t show any savings on paper, the results don’t have to be implemented.

RFPs are an integral part of any transportation management strategy — but they aren’t a strategy themselves. Here are some questions to ask yourself to see if you’ve fallen victim to an RFP strategy trap:

  • Have you ever held an RFP where savings, despite claiming to save you 10 to 15 percent on your freight, never materialized? What were the reasons it failed? Did they stem from areas under your control?
  • Did all carriers raise rates as a result of market rate increases?
  • Did carriers with the lowest rates result in customer complaints?
  • Did selected carriers not have enough trucks?

All of these things are out of your control, so consider how you reacted to them. Was your response to hold another RFP?

Plug and Play
When it comes to salespeople, there’s no shortage in the transportation industry. They are literally everywhere. Most likely, you’re fielding sales calls that promise to save you 10 percent on freight multiple times a day. With a seemingly bottomless supply of transportation providers that promise to cut your rates, it can be tempting to exchange one service provider for another in the hopes of meeting your objectives.

Both the salespeople and marketing teams of carriers and logistics companies have done a great disservice to their industry by encouraging shippers to swap out carriers and brokers with the promise of freight savings. Changing carriers as quickly as you would change a broken lightbulb leaves little room for real conversation on the shippers’ overall strategy and how the service provider fits into a defined role for the organization. Not every transportation service provider is suited to play the same role — even if their trucks look exactly the same.

Like the RFP approach, this “strategy” is much too narrow in scope to have any real impact.

If It Ain’t Broke…
After churning carriers, brokers, and 3PLs over the years, it’s no wonder that when you find one you like, you want to hold onto it. Chances are, you’ve come to the conclusion that chasing the lowest cost provider can cost you in other ways that may not be reflected in the line haul charge or discounts. Since you likely wear many hats, you have learned that, if you let it, transportation can consume your time and take you away from the other key roles that you perform for your business — something that takes time away from generating revenue growth.

If you operate under “if it ain’t broke, don’t fix it,” you are likely seeing some of the benefits that having a good transportation service provider can have. With a good service provider in place, the notion that you can impact both expenses and top line revenue with good execution (including transportation) has only been reinforced. However, you should always be seeking a way to gain additional advantage over the competition.

Customers are becoming increasingly sophisticated. They are starting to ask for collaboration tools that contribute to a responsive sales force that is able to provide accurate all-in pricing, a customer service team that can immediately identify the location of an existing order with predictive analytics, or online access to shipping documents like Bill of Ladings (BOLs) and Proof of Deliveries (PODs).

You see the same types of requests coming from your purchasing teams for the inbound freight. While some transportation service providers will help pick up your freight and deliver it on time at a competitive rate, you’re now seeing some gaps in your current strategy — and they don’t meet your customers’ newest set of needs.

Since COVID-19 has changed how and where people work, these gaps have become more evident. Now, moving information and physical product has become more challenging than ever. Additional friction in the supply chain has increased delays in communication and product deliveries, putting more pressure on your customer service and sales teams. Your current service provider is good at moving freight, but are they equipped to help you tackle this new opportunity and further separate your company from the competition?

Developing a Complete Strategy
So what do each of the above “strategies” have in common? None of them are strategies; they are the tactical execution of part of a strategy. By themselves, they are largely ineffective in helping you to move the needle on your company’s profit.

In each case, the service provider is treated like an interchangeable part, serving the sole purpose of moving product from Point A to Point B. Operating like this ignores the fact that transportation touches more parts of the operation than Point A and B. Transportation doesn’t only impact the shipping and receiving warehouses, no matter what price you’re paying. And when each of these strategies fails to meet expectations, it is never for a reason you can control.

Each of these so-called strategies focuses on “line haul” or “per pound” freight expense while failing to consider how operating without the right transportation strategy can lead to lost customers, lost account growth opportunities, lost efficiency, lower employee morale, higher employee turnover, lost production time, and often lower profits. By not focusing on a more complete strategy, they are each running the risk of creating a transportation capability gap that will inevitably impact their company’s competitiveness.

Increasing Profitability
When executing the right transportation strategy, your company will be more profitable. Here’s why:

You’ll Stop Repeating Past Mistakes
By implementing a strategy, you can assess what is working and what needs to be fixed. Doing so will allow you to improve upon your strategy and eliminate costly mistakes. This puts you in a direct position of control, rather than leaving you at the mercy of your environment.

Differentiate Yourself From Other Small and Medium Businesses
As a small and medium business, you are likely competing on service. If you see transportation only as a way of moving product from one point to another, you have missed a chance to differentiate yourselves.

Reduce Silos and Improve Workflow
A complete strategy will help you remove silos and improve workflow between departments such as customer service, sales, and supply chain and production. It will help make the user the center of the solution, no matter the department. With the right tools in place, you can put shipment data that will help them to perform roles better right at their fingertips.

Generate Future Revenue
With a complete strategy, you’ll get your time back. By spending less time on “urgent” problems, you’ll be able to spend more time on generating future revenues. How much money did you save last year by managing your freight on your own or by not managing your freight at all compared with having a transportation management professional helping you? How well were you able to execute your transportation strategy? How much more profit could your company have made if you and your team spent that time working with customers, marketing, sales, or production?

Save Money
Putting the right strategy in place includes identifying and implementing cost savings measures. The ability to identify and execute on these opportunities will save your company money.

How complete is your transportation management strategy? If you need help, let us benchmark you against best practices and help you create a roadmap to success. Learn more about our services by giving us a call at (980) 999-8003. We can help make sure you’re on track.

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management-transportations Pro Tips Urgent News - COVID-19 Updates

Is COVID-19 Still Affecting our Supply Chain?

In last month’s newsletter, we resurrected the infamous philosophy of former heavyweight boxer Mike Tyson, as so many of us are feeling how he did in the ring. Since then, we’ve had both a holiday and a DOT week — oh, and two hurricanes. A remote workforce and decreased labor supply continue to compound the most recent disruptions by adding more friction. To continue with last month’s metaphor, we’re only in the middle rounds of this heavyweight fight. Now is the time to encourage everyone in the industry to adapt as necessary and to keep looking for ways to minimize the impact of disruptions. Read more to see our recommendations on navigating these tumultuous times.

Current Transportation Markets

Domestic

TL

Based on recent statistics published by FreightWaves SONAR, it’s safe to assume that you are paying at least $3/mile to move your TL freight. Last month, we reported an unheard of DHL Carrier Power Index of 80. This month? It’s at 85. Everyone is aware that trucks are tight and are likely to remain tight until the end of peak shipping season. The question is, what do you do?

Our Recommendation: Carriers and brokers are in business to service the customer. This month, it’s all about how you can help carriers and brokers do that even better. For shippers that want to save money, we recommend helping the carriers and brokers that you have established relationships with over the years. By giving them advanced shipment notice, more complete shipping details in fewer emails, favorable load and unload times, and more flexibility, you’re giving them the best chance to save you money; notice and flexibility allow them more time to find the right driver for your freight and reduces the number of costly last-minute shipments that other carriers are waiting patiently to exploit.

 

You can also seek ways to provide more visibility to your customers. Most likely, customers are anxiously awaiting your product so that they can get it on their shelves or to their customers. Reduce any anxiety by giving them visibility.

Take this time as an opportunity to make investments into your digitization efforts, or partner with someone that has. At a minimum, they should allow for carrier waterfall tendering for quick and complete communication to your carriers, access to a digital marketplace in order to expand your reach, quick onboarding apps with compliance monitoring that allows you to expand your carrier base, strong API capabilities for real-time tracking, rate and route optimization capabilities for lower freight rates, and a secure customer portal access that increases customer visibility. These tools make it easier and faster to communicate with your carriers, brokers, and customers. Use this opportunity to make your company both more efficient and transparent. Otherwise, you could lose ground to a competitor who capitalized on where you didn’t. See if a transportation portal can help your organization take a step towards digitization.

LTL

Many LTL carriers are experiencing higher than normal volumes, and they’re being crushed by a workforce that has been hit hard by COVID-19. As a result, we’re seeing issues that are unfamiliar to the LTL industry. Our once smooth flow of supply chains and networks are being disrupted with missed LTL pickups, later than usual delivery times, and more damages. Our recommendations are brought to you by our Barak Frydman who works for our key strategic partner, DLS Worldwide.

  • Be Observant: Give the carriers that are doing a great job in your network more freight. If you see another carrier struggle, give them a chance to get out from under their backlog and wait to use them again until some time has passed.
  • Reduce Multiple Carriers For Your Pickups: When possible, reduce the number of LTL carriers coming into your facility. If you ship long-distance, consider using one national or super-regional carrier. If you ship regionally, consider keeping all of your regional freight with one regional carrier; this will decrease the number of times your freight gets handled while making the carriers operate more efficiently. This will help improve your carrier of choice status.
  • Use Direct Carrier Services: Instead of interlining your freight, use direct carrier services in order to reduce the number of times your freight is handled.

If your contact carriers are struggling, don’t be afraid to reach out to a transportation management company that has access to a large number of carriers with competitive rates. They can help by providing you with competitive rates and the knowledge of which carriers are struggling the most.

International

Ocean

Making sense of how we’re dealing with capacity issues in the middle of a pandemic is a little like trying to figure out what happens when an ocean line cancels a blank sailing. Easier to understand is how ocean spot rates continue to rise as carriers blank sailings in order to decrease supply and maximize profits. For once, it seems as if ocean lines are operating intentionally and effectively. As companies and U.S. importers struggle to find equipment, pay premiums in order to prevent getting bumped to the next sailing and for faster routes. Zim posted its strongest quarterly results in a decade; Evergreen, the strongest in three years. According to JOC, Wan Hia’s net profit is up over 139% when compared to the second quarter of last year. Many shippers have verbalized their displeasure as ocean lines schedule GRI’s that are expected to drive rates even further. Their voices have been heard by the FMC, and they have put TranspPac Carriers on notice that they are being monitored for potentially anti-competitive behavior. Whether or not TransPac Carriers are shaking in their boots, it’s at least a start.

Our Recommendation: Route containers with a final destination to the eastern U.S. to an eastern seaport, where delays are less likely. When you consider the unreliable and unpredictable costs of shipping to west coast ports, in addition to chassis shortages, booked dock schedules, overcommitted drayage companies and transload facilities, rail capacity issues, and high truck rates, shipping to east coast ports remains a better option. If purposefully taking on a “longer” transit time to the east coast has you biting your nails, consider splitting your freight between the east and west coast ports until we are through peak shipping season. And if you were wondering — plan on peak season lasting longer than last year.

Additionally, seek assistance in finding the right forwarder. Be adaptable. What worked last year may not work this year. Be sure to consider all the costs associated with getting your freight delivered to its destination, including your time. If managing your freight has become a bigger part of your day than you planned for, consider teaming up with an international freight specialist. Determine what it is costing you to focus on freight instead of other key areas of your business. If you want some relief, reach out to an objective transportation management company that can be your advocate.

Air

Tight container capacities appear to be spilling over into the air freight market as decreased passenger flights are still impacting capacity for airfreight. Freighters are simply maxed out. According to Eric Kullish, Air Cargo Editor, while more charters are being scheduled and more passenger planes are hauling freight as freight-only flights, overall capacity is still 30 to 40 percent below last year. Many are expecting air rates to continue to increase well into December.

It’s clear by now that our supply chains are more fragile than we care to admit. Seeing delays or higher freight costs is enough to make anyone frustrated. While we will see the impact of the past two hurricanes pass, there is more to come. We can be sure the timing will be horrible during the next DOT week. And while we know this peak season won’t last past December, we will have another one next year. A lot of what we are feeling is a result of a “more efficient” supply chain that is serviced by fewer providers. However, the capacity of service providers is so tight that even the smallest bump in the road can feel like a huge pothole. We need to adapt and be able to do more with what we have. We have to be faster and more agile than ever. Taking even a single step towards a digitization effort can make a huge difference. From there, you will gain both the experience and confidence to continue to move forward. Learn more about ShipTransportal’s services by giving us a call at (704) 892-0531. We can help you navigate these murky waters.

Categories
management-transportations Pro Tips

Transportation Management – August Freight Management from Shiptransportal

High Rates and Tight Capacity Land Another Blow to Shippers

Mike Tyson — everyone knows his name. Famous for his boxing record of 37-0, Tyson faced off with Buster Douglas in 1990, a match that would become one of the greatest upsets in sports history. In fact, when Tyson and his corner entered the ring that match, they were so confident in another early round knock out that they didn’t even pack ice or end-swell.  By mid/late rounds the swelling over his eye blocked his vision and Mike was caught with an upper hook that knocked him out for the first time in his career. Meanwhile, Douglas, even after being knocked down, maintained focus on his strategy – to outlast Mike.  By perfectly executing his plan, Buster was, against all odds, able to come out on top.

2020 feels a lot like that match. We entered the ring feeling confident, and halfway through we’re standing here like we took a punch to the face. Many subscribe to the Mike Tyson theory that “everyone has a plan until they get hit in the mouth.” And it makes sense; all 37 boxers that went up against Tyson had a plan and were so stunned after Tyson hit them that they questioned their own strategy. Being stunned led them to lose their focus, lose their follow-through, and left them unable to execute their plan. That’s why it’s not only important to have a plan, it’s important to execute it, and it’s important to persevere.

In the face of continued uncertainty, decreased trucking supply, and increased trucking demand, many shippers are wondering what they should do now. For midsize and small businesses, it all comes down to being a little more like Buster Douglas; it all comes down to being even more committed to impacting the areas that they can control.

Current Transportation Markets

Domestic:

TL
In July, we predicted a continuation of higher rates as a result of tightening capacity and increased demand. At the time, the DHL Carrier Power Index has reached 65; since then, it has only continued its upward trend and now rests at 80. In fact, rates have continued to trend upwards and many are now higher than rates at the same time in 2018. With another week of the same upward movement, many are beginning to believe that this may be a permanent change. Spot rates now exceed contract rates, and contract rates are expected to trend upward as a result.

While all signs point to even higher rates, there’s no reason to give up hope for lower rates. As we get closer to the top of the trend, we will most likely see rates begin to trend down. Take into consideration that carriers cannot stand to leave equipment idle when rates are this high. As more equipment and drivers get back to the streets to participate in these rate levels, peak shipping season will be nearing an end. Between these two changes, a reduction in rates below current levels is imminent.

LTL
LTL carriers remain swamped in areas around the county, with many beginning freight embargos for certain cities until they can get caught up. Some carriers, like YRC freight, are now restructuring single item pieces to be under 12’.

LTL carriers have also started to provide the same rate and tariff to all third parties, meaning that some will see an increase in rates while others will see a decrease. If this trends with other carriers, the entire 3PL LTL market could change.

International

Ocean
Trans-Pacific volumes are continuing to pick up. As more companies shift products and stock up for the retail season, the west coast ports are seeing increased volumes. This is leading to higher ocean rates from Asia, longer unload times, longer wait for port times, longer transload times, as well as increased inland transportation costs.

Longer unload times, longer transload times, and higher truck rates from California ports will likely be a factor in the coming weeks. Consider moving some of your freight operations to east coast ports for delivery in the eastern United States.

Parcel
Keep an eye out for additional fees, such as peak season accessorial charges.

Increasing Profitability
With changing rates, it’s important to have a plan in place to help increase profits. Consider building a loyal carrier following through your 3PL or broker. Even if you don’t have enough volume to impact the overall direction of the market or to contract with asset carriers, you can build a reputation for your shipping location and the capacity that follows. Because of ELD’s and options, your shipping reputation directly impacts which carriers are willing to service your freight. For shippers of choice, carriers will return to haul your freight, in turn increasing the capacity of willing carriers to service your freight.

Aim for Shipper of Choice Status

  1. Load in the afternoon; receive in the morning: Because more trucks are available for loading in the early afternoon, you can increase the capacity able to service your account.
  2. Reduce delaying trucks: Whenever possible, eliminate or reduce delaying trucks. When you cannot, be sure to pay the carrier for any time over two hours spent at your facility.
  3. Provide advanced notice: Provide a forecast of shipments to your provider, even if you cannot tender loads until the pallets are built. There are more trucks available to be booked two or more days in advance of shipping date.
  4. Lower shipping weights: Keep your shipping weights below 42,500. New emissions regulations make it harder for trucks to carry heavy weights.
  5. Reward good service: Everyone likes to be rewarded for doing a good job! Be sure to reward good service, not just the lowest shipping rate.

Work With a Trusted Transportation Management Company
Work with a trusted resource to help you create a transportation management strategy for all modes of freight that can be executed during both flat and volatile environments. Look for a trusted transportation management company that offers:

  • Transparent rates: Look for transparency of the rates being paid to the carrier. You need to know that your money is going to the carriers moving your freight — not to line the broker’s pocket.
  • Transportation management uplift: 3PLs and brokers provided much-needed services. Look for upfront and agreed to transportation management uplift, instead of an unknown 3PL/broker margin. Pre-negotiating this fee ensures that you won’t be paying too much when rates are volatile.
  • Mode agnostic solutions: Find the right solution for you — not one that fits in the box offered by the service provider.
  • Guaranteed results: There are a lot of choices for 3PLs and transportation providers. Why not choose one that guarantees results?
  • Streamlined services: You’re busy and don’t have time to bounce between websites to identify potential delivery delays or pull shipping documents. Look for a management provider that can provide shipment tracking and proactive alerting in one place.
  • Shipment assurance: Provide another layer of protection to your operation by receiving a summary of the shipment plan that creates controls for each shipment.
  • Reduce friction: COVID-19 has seemingly created more friction in getting even the most basic of tasks completed. Utilize tools that reduce friction by streamlining processes.
  • Leveraged freight rates: Contrary to popular belief, more volume does not always translate to the lowest rates for “non-capacity restricted” modes such as LTL, ocean, and air. However, it can help. Partnering with a transportation management company that offers blanket rates can help you if you do not have enough volume to warrant your own contracts. If you move less than 20 shipments a month or have unpredictable destination locations, then leveraged freight platforms can save you both money and time.

We’re only halfway through our boxing match with 2020, and it’s not too late to come out on top. Take a page from Buster Douglas’ book. Commit to a plan, execute your plan, and persevere — even if you get hit in the mouth. To increase your odds of coming out on top, stack your corner with ShipTransportal. At ShipTransportal, we streamline the shipping process by putting all of your contracts, carriers, and shipments into one portal. Learn more about our services by giving us a call at (704) 892-0531.

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management-transportations Pro Tips Urgent News - COVID-19 Updates

Transportation Management – July Freight Management From Shiptransportal

The current pandemic has affected the entire world, including both domestic and international global transportation services. In our July freight management update, we discuss what changes have occurred and where the industry may be heading.

Domestic Freight Management:

TL Freight Management: 
Many shippers are seeing and feeling a tighter domestic carrier market. Currently, carriers are showing a strong pricing position. As of July, the DHL Carrier Power Rating is at 65 — its highest level since its inception 10 months ago. Likewise, the outbound tender volume index is continuing to explode. Currently, the volume index is 20% higher than it was during the infamous summer of 2018. Additionally, carriers are rejecting more tenders than they were at any point since 2018; current numbers are over 16% and only trending upwards.

When put together, these data points prove that the domestic TL market is truly tighter. Using the DHL Carrier Power example, where the pricing power index can range from 0 (shipper) to 100 (carrier), we can truly begin to grasp how much has changed. Before COVID-19, the index was as low as 10; currently, we are at 65.

What Caused the Shift
In January, the index was averaging about 40, and the following month, it dropped to about 25. In March, we began to see the effects of the pandemic. Because of panic buying, the index averaged at 40 but, at points, was as high as 65. While it began to level out again at 10 during April, we have seen a steady increase of about five points per week through the first week of July. The July 4th holiday saw the index hit 55 — a number that has only continued to increase.

What to Expect
Based on conversations with trucking companies, this trend is expected to continue for several more weeks before settling down again. If we continue on this current trend, carrier rates will escalate at a level not yet seen this year. In order to keep rates in check, it is crucial for shippers to continue working on their preferred shipper status with carriers; carriers are currently making pricing decisions based on their past experiences at shipper locations. Other ideas to consider include giving at least one day notice with tenders and shifting your TL to Intermodal.

 

LTL Freight Management:
To put it lightly, LTL carriers are simply swamped. Some, such as UPS, have experienced significant disruption to their normal service times into New York and other locations that have been hit hard by COVID-19.  In fact, many LTL carriers have modified services, such as inside delivery and guaranteed delivery, with an asterisk (*). When using these services before, the carrier would honor them, But with every carrier network being impacted differently, it is important to do what works for you in this current environment, removing any known risks based on prior poor performance. We recommend doubling down on both communication and shipment monitoring.  Schedule your pickups with local terminals as early in the day as possible.   Start confirming their capacity before you finalize your selection and tender to the carrier.

International Freight Management:

Ocean
There is still a high demand for faster transit services, such as 12-day transit, from Shanghai to Long Beach. Ocean carriers continue to do a great job perpetuating higher ocean rates from China with lower volumes.

Air
The air rate from China is currently down 60% from peak for PPP products. With many charters in place, it has become easier to get capacity for even large cargo moves.

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management-transportations

Why do Packages have a greater Damage Ratio in LTL Than in PTL Shipments?

Partial truckload (PTL) shipments are sometimes offered by carriers to clients needing to move anywhere from 12 to 30 lineal feet of goods. PTL is suitable for clients looking to ship more than what less than truckload (LTL) delivery services can accommodate, but less than that required to fill up a full truckload (FTL).

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management-transportations

Are You Connected to the Right People to Make Your International Shipping a Breeze?

The success of international shipping depends on more than just your company and your carrier. Certainly, your practices and your carrier’s performance are important components of the process, but they do not form the entire picture.  Other components include coordinating multiple parties over expansive distances, regulatory restrictions, and customs requirements. Shipping goods from one country to another demands a team of capable players, all with a specific part to play in the procedure. 

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management-transportations

A Six Sigma Approach to Shipping Management

Shipping is considered by some as just another cost of doing; however, it is also deemed a source of differentiation or significant savings by others.  While there seems to be awareness of the opportunity, the potential savings and improvements seem elusive to many – causing them to scale back their pursuit of improvement. And, so long as freight gets from point A to point B, the priority placed on making changes remains low and an opportunity is missed. Shipping, is a facet of business worth ample attention and consideration; behind materials and labor, it ranks as the third highest source of expenditures for most companies.