Inbound Logistics | January 2023

some shippers are segmenting lanes by quantity of freight. “High-volume, consistent, balanced lanes are best served by a dedicated or private eet,” says Claude Pumilia, president and CEO of DAT, an analytics platform and load board headquartered in Denver. “Medium to high-volume, or one-way lanes, should be incorporated into the annual bid and run through the traditional routing guide.” For low or sporadic volumes, Pumilia recommends tendering loads to a freight broker or third-party logistics rm. A logistics provider can negotiate rates based on economic conditions, to minimize the vagaries of the trucking market. Diversifying the carrier base can prove especially useful if freight networks shift. If an incumbent carrier’s freight portfolio changes, it could make a particular shipper’s loads less attractive—and more expensive. Here’s an example. Say Carrier X has contracted for 10 outbound loads per week from a Minneapolis-based plant. If that carrier also delivers 12 loads into Minneapolis for another shipper, they could price outbound shipments at a relatively low rate. If Carrier X lost their inbound shipper, however, that could force them to run empty equipment into Minneapolis, thus increasing their linehaul rate. One way to combat this is to continually hold procurement events, and invite new carriers to them, recommends Dr. Jason Miller, associate professor of logistics at Michigan State University Eli Broad College of Business. RELATIONSHIPS FIRST A shipper’s relationship to their transportation provider is as important as any nancial calculation. Rising transportation costs can incentivize businesses to improve truck utilization, but in doing so, shippers must be aware of the impact that a new strategy could have on a carrier. Take driver detention. Nearly half of drivers wait at least two hours to get

While consumers struggled to absorb higher gas prices, logistics executives had the additional headache of preventing fuel surcharges from bleeding into the price of other products.

right mode, at the right service, at the right price.” It’s one thing to design a transportation strategy when shipping costs are (relatively) stable. It’s another when a conuence of factors collude to push up logistics prices. GAINING EFFICIENCY In the short term, a company might increase reliance on the spot market to move loads, or pass increases along to their customers. But these choices don’t t for all verticals, and could sour relationships with business partners or the customer base. Instead, there are ways to gain efciency within existing partnerships. One is to consolidate small shipments from less-than-truckload to truckload. “If I deliver along a particular route ve days per week, I could lower the frequency to completely ll a truck,” says Dr. Madhav Durbha, vice president of supply chain strategy at Coupa, a business spend management platform based in San Mateo, California. Digital twin technology can help to preview the impact of different shipping scenarios. By creating a digital model of their supply chain, shippers can see the effect of changing their replenishment schedule. Transportation needs might also differ based on shipment volumes. To rein in trucking procurement costs,

In its survey, The Delivery Economy and the New Customer Experience , project44 found that 94% of people who make purchases on behalf of a company expect the same level of satisfaction as when they make a personal purchase. This includes short lead times, inexpensive shipping, and a transparent delivery process. “Speed is expensive,” says Brown. “Intermodal costs less, but it takes a few more days. Internationally, a boat is 20 times cheaper than a plane. The big question is whether you can still support your customer with a slower mode.” GET STRATEGIC One way to get around the apparent impasse is to implement a robust inventory management strategy. Keeping a reserve of inventory close to its next destination can reduce reliance on expensive transportation modes. For example, holding safety stock near a production facility could help avoid last-minute air shipments, says Erik Wanberg, head of inventory management at Taulia, a supply chain nance software provider headquartered in San Francisco. Reworking inventory management isn’t an overnight solution. “But managing the ow of goods can set you up for exibility to react in the future,” says Brown. “Once your stock is in the right place, you can choose the

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