ILMA Compoundings July 2018 - 26

As capacity for containers (COFC) is also somewhat of
a challenge, trucklines have been shifting road trailers to
COFC mode, thus addressing driver availability issues and
leveraging their trailer pools.

Tips for Success Across Modes and
Market Conditions
No matter what state the transportation market is in, there
are always steps that can be taken to improve your success
in it. Often, these strategies offer long-term results and,
ultimately, can have an impact on costs, efficiency and even
your relationships with carriers.

Diversify your truckload carriers
Approximately 97 percent of the truckload carriers in the
U.S. are small carriers, operating 20 or fewer trucks. And
because 89 percent of carriers operate with five or fewer
trucks, offering approximately 29 percent of the market's
for-hire truckload capacity, they bring meaningful and
capable capacity to supply chains.
But managing a high number of small-carrier relationships to cover your freight volumes might not seem practical
based on your resources. If you're like many businesses, you
likely have roughly 80 percent of load volume in 20 percent
of lanes, and likewise 20 percent of loads in 80 percent of
lanes. That can quickly add up to needing a lot of carriers to
cover everything. Using a business that provides third-party
logistics, or a 3PL, has proven to be a cost-effective and
high-performance solution for a meaningful percentage of
many shippers' freight portfolios.
To access capacity and minimize price volatility, think
small. Making use of smaller providers enables shippers of
any size to introduce elasticity to their shipping and increase
their access to available equipment - whether those small
providers are accessed directly or through a 3PL is up to you.

Manage inventory effectively
When it comes to a choice between consistent deliveries of
products or speed of delivery, we're seeing more shippers
look for consistent and reliable deliveries. Intermodal offers
a great opportunity for this, but the added time in transit
tends to require tighter control over inventory to offset
shipping times. Railroads, for example, continue to invest
in double tracking and terminal capacity to help bring
increased consistency to service that the shipping community relies on for planning.

Plan differently for 400- to 700-mile routes
As flexibility diminishes from ELDs, you need to plan
differently for "tweener" shipments - loads between 400
and 700 miles. While drivers are on the clock for 10 hours,

JULY 2018

| COMPOUNDINGS | ILMA.ORG

we're learning that congestion and wait times mean that
only seven to eight hours are actually spent driving. This
might mean that a shipment - in any mode - that was
previously a one-day transit time becomes two, and rates
may need to shift accordingly so that carriers can earn the
revenue per day needed to be at healthy financial levels.
Flexibility in scheduling - at both the origin and destination - might be one way to combat this.
The trends we're seeing in each mode are having similar
effects across all services - namely higher rates and tighter
capacity. That's why it's more important than ever to align
your company's goals with your transportation provider's
goals. Being a favored shipper will continue to pay off.
The following are a few areas to consider focusing on to
help you succeed in these new market conditions.

The age of your rates
Research shows that rates that are less than 12 months
old and renewed on an annual cadence perform best.
Because both your business and your carriers' businesses are
dynamic, lane volumes are constantly changing. You might
gain or lose customers, volumes, etc., while your carriers
might add or lose clients.
These constant tugs and shifts within a network influence
both your ability to provide freight volumes as initially
agreed upon as well as a carrier's ability to support the
conditions laid out in the original contract.
Regular procurement events (typically annually) not
only have the ability to lower your costs, but they can also
promote strategic relationships with your service providers.

Shorten dwell times and increase lead times
We've learned that dwell time is one of the leading variables
that can affect transportation prices and that short lead
times can result in higher rejections. Adjusting either, or
ideally both, can make your freight more attractive and
influence both the prices you're paying and the acceptance
rates of your freight.

Effectively Adapting to Change
As stated earlier, the market trends that influence supply and
demand tend to cause two things: higher rates and tighter
capacity, neither of which is healthy for your budget. That's
why it's more important than ever to align your goals with the
goals of your key transportation providers. Employing strategies that help position you as a favored shipper will continue
to pay off as the surface transportation market evolves.
Raetz is director of Research and Market Intelligence at C.H. Robinson.

http://www.ILMA.ORG

ILMA Compoundings July 2018

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