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Report on LTL Trucking Costs reported by JOC

Better Data Drives Down LTL Trucking Costs: SMC³

ATLANTA — Shippers seeking reduced less-than-truckload shipping costs need to start not with lower rates but “cleaner” data. Incomplete, inaccurate data on shipments and distribution operations is a constant roadblock to transportation savings, speakers at a panel on LTL procurement said Monday.

“You want to have a good set of historic data at the shipment level, starting with weight, class and density,” said Art Nourot, vice president of carrier procurement for Unyson Logistics, a unit of Hub Group. “You want to get that data as clean as possible and tell the carrier exactly how your product is shipped.”

The problem is that “many shippers don’t have good processes to capture that detail,” Nourot told shippers, carriers and logistic providersat the SMC³ Jump Start 2013 conference in Atlanta. That makes it harder for carriers and 3PLs to forecast their own costs and price accordingly.

“There’s a disconnect between what shippers think an LTL carrier needs to put together a good response to an RFP and what we do need,” said Paul Dugent, vice president of pricing and traffic at Estes Express. “When we get good information we can put together an aggressive pricing program.”

“Not understanding actual classification characteristics or your business requirements can have disastrous results,” said Joshua Dolan, director of transportation for Dick’s Sporting Goods, a $5.7 billion retail shipper. “It leads to unreasonable expectations” on pricing and costs, he said.

This is the age of data, and shippers, 3PLs and LTL carriers today are swamped with information streaming from an array of sources that increases exponentially each year. But that data often is stored in disparate, disconnected systems where it is not easily accessible or interpretable.

Making sense of that data requires not just improved technology and more collections points at the retail store, warehouse or cross dock, but better underlying processes and management. Understanding data is the key to improved efficiency and lower shipping costs — not necessarily lower rates.

Better processes and data management are also the key to improved carrier profitability — a point that wasn’t lost on the LTL trucking companies and technology providers attending the three-day SMC³ event, which includes panels on technological innovation, e-commerce and mobile apps.

Collaboration may be an over-used word, but collecting, keeping and sharing accurate shipping information with logistics suppliers and carriers is key to lowering overall costs, Dolan said. “We’re sharing information with these guys to make sure they understand our business thoroughly.”

That information starts with shipping characteristics such as density used in freight classification and moves up to include all aspects of distribution and distribution related to transportation planning. “We want to make sure we’re leveraging every piece of information we possibly can,” Dolan said.

In his case, that includes working closely with management at more than 500 Dick’s Sporting Goods retail locations to better understand “the needs of the network” and to focus on cost savings initiatives “beyond service commoditization” — in today’s market, shippers can’t just expect lower rates.

Post-recession LTL rate increases peaked in 2011 and although rates still rose in 2012, they increased at a much slower pace, he pointed out. The average annualized increase in LTL yield among public carriers tracked by The Journal of Commerce dropped to 3.5 percent in the third quarter.

See the Feb. 4 edition of the Journal of Commerce for more coverage of the SMC3 2013 Jump Start conference.

 

 

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