By Ed Hildebrandt, Senior Vice President of Business Development
Carrier capacity constraints ebb and flow with economic conditions. Right now, as capacity tightens in most markets, many shippers are being caught by lessening capacity without the resources to maintain their existing carriers and/or identify new transportation sources without paying more for shipments. Several factors are limiting truck driver and asset availability while increasing costs:
• Truck drivers and assets have not rebounded to meet increased demand
• New hours of service for truckers limit the amount of time that can be spent on the road, restricting driver availability
• As truckers retire (average truck driver age is 50s), not enough younger drivers are available to fill vacant spots
• Fuel surcharges don’t fully compensate drivers for higher fuel costs
• Roller coaster effect of demand at fracking sites in central and southern Louisiana, Mississippi, Ohio, Wyoming, Texas, Pennsylvania, and North Dakota are taking Over The Road (OTR) drivers from the system
As shippers compete with other shippers – as well as third-party logistics providers – for available capacity, logistic departments must have the right tools to pick up new capacity and avoid losing existing carriers to competitors. For example, companies with transportation management systems (TMS) can electronically broadcast logistics requirements to market, identify available trucking assets in the network and quickly match capacity to their needs. In recent years, shippers had to engage as many as 15-20 additional carriers just to satisfy daily freight requirements.
Using TMS technology, shippers can also access granular information about transportation expenditures to pinpoint mode shifts, identify accessorial costs in real time and effect changes before costs escalate out of control. A TMS can gather freight accrual information on a per shipment basis in real time instead of waiting several weeks after the shipment when carriers send invoices for payment. Today, most financial executives are very concerned about timely posting of freight costs and their ability to calculate profitability down to the SKU level for each client.
Small and mid-sized companies without the resources or budget to acquire and maintain in-house TMS can contract the services of third-party consultants (3PLs) that offer the technology, knowledge and networks to support chemical companies in meeting specific supply chain requirements.
In an oversold market, shippers needing to add volume may find it difficult to attract and find it without increasing costs. Maintaining data on different freight markets and carriers, a 3PL can match your volume to a carrier’s complementary or empty return lanes. A managed services partner can also identify reasons why freight may not be attractive to carriers – too many plant delays impacting loading times, too many cancelled or re-booked loads, too many consignees with unloading delays, poor treatment at plants, slow freight payment – and help solve these issues in order to expand existing carrier capacity. A 3PL can also suggest new modes of transportation, such as intermodal, to reduce the need for OTR assets.
If you decide to look for a managed services partner that can support you with the right tools and resources to become more competitive, find a resource that knows your market. While different outsource companies may offer similar capabilities and technology tools, many may not know how they apply to your business. Only third-party consultants experienced within your industry have the knowledge, networks and databases necessary to address your specific issues.
ChemLogix is a leading provider of managed services and technology to the chemical industry. An IBM Advanced Business Partner, we offer IBM’s TMS and network-design solutions along with comprehensive multi-modal transportation management services for all modes, enabling chemical shippers to drive economic value while improving performance. To set up an appointment to discuss your requirements and access your business, please contact us at call 215-461-3805 or email information@chemlogix.com.