Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog

b2ap3_thumbnail_dreamstime_xl_9421932.jpgManaging Inbound Freight is often overlooked or not optimally managed as an opportunity for cost savings in many companies. This is a conclusion we have come to after working with a range of companies and industries over the past 13 years. When we are invited to meet with a manufacturer or distributor of freight, the priority is usually finding cost savings on outbound freight, not inbound freight. This seems to be the result of several factors.

First, many companies are not able to determine how much they are paying for inbound freight. Freight costs are often embedded in the “landed cost” of the products; the actual freight cost component is not identified. Many companies have poor visibility into their inbound freight activity.

Second, some companies don’t care about their inbound freight costs. They take the landed cost of their inbound shipments and add a markup. They are satisfied with this approach.

Third, some companies are concerned about upsetting their vendors by asking them what they pay for freight. These companies may be very dependent on certain vendors for specific products and have a perception that by engaging in a dialogue on freight costs, an area that the vendor has historically managed on their own, this may encourage the vendor to give priority to other customers. In some situations there is the perception that because the vendor is a large company, they are able to negotiate better rates than the manufacturer receiving the goods.

Fourth, companies often have a Transportation or Logistics Manager who is responsible for outbound freight; inbound freight is managed, unmanaged or mismanaged separately by the purchasing/procurement department. Shippers who take charge of Inbound Freight Transportation can achieve savings in a number of areas.

...
Hits: 2542
0
Continue reading 0 Comments

 

b2ap3_thumbnail_dreamstime_xl_31478542_20160826-151328_1.jpgDuring this period of modest economic growth and ample capacity, freight rates have been in decline. This is confirmed by the various market indices that track freight rates. Lower energy prices that have translated in lower fuel surcharges have also helped keep freight rates in check. The data also indicates that some shippers are switching modes and moving from intermodal back to highway service to obtain faster service at more attractive rates. Looking ahead to the future, 54 percent of the trucking companies responding to a recent Inbound Logistics survey expect static growth in the near term.

Despite the drop in freight rates, 75 percent of shippers surveyed in the same study stated that reducing transportation costs is their top priority while only 38 percent indicating that finding capacity is a challenge. The static economy and low energy prices would appear to be creating a “perfect storm” for shippers seeking to meet their greatest challenge. The danger for shippers is to get greedy as many did during the Great Recession. We remember seeing shippers bid their freight multiple times a year in the hope of continuing to drive lower freight costs. While we are big believers in the value of high quality freight bids, we are also a strong proponent of the old adage, “you get what you pay for.”

We all know that just as there are cycles in the stock market and the housing industry, there are cycles in the freight industry. What goes down will go up again. Shippers that surround themselves with “bottom feeder” carriers at discounted rates will likely have a rude awakening when the market turns. Moreover, with new government regulations coming into play and the volatility of fuel prices, capacity will likely tighten and freight rates may rise sooner than later.

So what should thoughtful shippers do to manage their freight costs as smartly as possible? As stated above, we still believe that conducting a professional freight bid exercise, once a year or every two years is a wise thing to do. For shippers that include a range of quality carriers and logistics service partners in the RFP and conduct multiple round events, this is still a great way to secure savings in freight costs.

...
Hits: 2223
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_xl_9042412.jpg

This blog will focus on road and rail transportation within Canada; the next blog will look at cross-border freight transportation.

Rail Transportation

As outlined in the first blog in this series, Canada is large land mass with limited population. As a result, Canada’s two class 1 railways, along with the country’s short line carriers, play a very important role in meeting the needs of Canada’s freight industry. The networks of Canada’s two major railways, CN and CP, appear below.

CN Rail is a tri-coastal railway. It connects Canada’s major ports in Eastern Canada to the ports of Vancouver and Prince Rupert, BC, and the major cities in between and then goes through Chicago, IL all the way down to New Orleans, LA on the Gulf of Mexico. CN connects to the major American class 1 railways to supply cross-border service for the points that it does not serve on a direct basis.

...
Hits: 5930
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_l_49902348.jpg

Freight costs represent between two and five percent of revenue in many manufacturers and distributors. They are typically the single largest supply chain expense. When transportation costs begin to escalate, the Transportation department and the Transportation leader can become the “whipping boys” for senior management.

Over the years, we have observed that the companies that are most successful in managing freight costs tend to have a collaborative work environment. They understand that successful freight cost management is most effective in companies where all of the key operating departments - - - Sales, Purchasing, Production, Warehouse and Inventory Management, Customer Service, Transportation and the Customer work together. In other words, freight management is a team sport.

When we visit a new shipper client, there are four things that we typically look for at the outset. They are a:

• 12 month Freight Budget

...
Hits: 2726
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_l_19275327.jpgFurther to the last blog, a well written motor carrier agreement can be a powerful tool in promoting partnerships between shippers and freight companies. Listed below are some of the major components of a comprehensive contract.

1. Parties to the Agreement

The document must clearly identify the parties to the agreement, including the use of any third parties or sub-contractors. This is very important since it is critical that all transport companies that perform services for the shipper have the same licenses, insurance and service levels as the primary party to the agreement. In other words, they must be a replica of the primary party or any differences must be so stated. The agreement must also make clear that the parties to the agreement are independent contractors. Neither Shipper nor Carrier shall have the right to enter into contracts or pledge the credit of or incur expenses or liabilities on behalf of the other party.

2. Services

a) Types of services

...
Hits: 3129
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

Leadership economic forecasts for 2012 Packaging recession FCPC Infrastructure Canadian Transportation & Logistics coaching MBA Hockey Conway Canadian freight market Toronto autos KCS broker security LTL Digital Freight Networks Global experience TMS routing guide freight RFP US Auto Sales ProMiles Reshoring Management natural disasters freight audit Outsourcing Sales Success Freight Matching CRM Habs broker bonds Impeachment Driving for Profit FMCSA Donald Trump Shipper small business transportation news TransForce economic outlook e-commerce trade CITA Shipper Pulse Survey Failure Toronto Maple Leafs trucking company acquisitions CSA Montreal Canadiens 2013 Economic Forecast Sales Strategy marketing Derek Singleton NMFC freight costs driverless Business Development freight cost savings Global Transportation Hub economy 3PL Software Advice Broker Business skills Dedicated Contract Carriage dynamic pricing NAFTA Geopolitics ELD TMP Worldwide 2012 Transportation Business Strategies. Jugaad online shopping 2014 freight forecast Canada home delibery freight bid laptop Education Transloading David Tuttle Accessorial Charges Horizontal Supply Chain Collaboration FuelQuest Swift asset management Uber Freight freight payment freight audit digital freight matching freight rate increases FCA Driver Shortage professional drivers truck driver driver pay Emergent Strategy Freight Recession Facebook automation 2014 freight volumes Transportation Buying Trends Survey intermodal freight transportation customer engagement Doug Davis MPG Anti-Vax freight payment freight forwarders technology dimensional pricing employee termination rail safety truck drivers Bobby Harris Social Media in Transportation drones President Obama solutions provider Truckload Dan Goodwill Surety bond Sales Regina EBOR Load Boards Fire Phone ShipMax Training New Hires Consulting cheap oil Colilers International Digitization cars Comey Trucker Protest Business Transformation Strategy Canadian Protests business start-up Retail transportation Doug Nix Tracy Matura Scott Monty Life Lessons home delivery selling trucking companies dark stores Electric Vehicles USMCA Carriers Whole Foods US Manufacturing shipper-carrier contracts fuel surcharge Covid-19 Canadian truckers CSX CN YRCW network optimization Trump cyber security Training University of Tennessee Rail Wal-Mart LinkedIn peak season Otto Transcom Fleet Leasing Freight Harper Davos speech Finance and Transportation Freight Rates Blockchain UP Sales Management Government Warehousing pipelines computer security NCC Career Advice freight agreements Value Proposition Spanx FMS Twitter computer protection Freight Carriers Association of Canada LCV's Transportation BNSF freight transportation in 2011 Politics hiring process 2015 Economic Forecast Justice freight broker Transportation service truck capacity US Housing Market Leafs financial management tanker cars New York Times Schneider Logistics Keystone Pipeline US Election USA Truck freight transportation conference capacity shortages derailments 360ideaspace Success failure entrepreneur Map-21 CSA scores transportation newspaper robotics small parcel Business Strategy Microsoft buying trucking companies Coronavirus driver shortages Job satisfaction Railway Association of Canada consumer centric energy efficiency Masters in Logistics supply chain management autonomous vehicles Climate Change Hudsons Bay Company capacity shortage Search engine optimization Rotman School of Business Deferred Packaging Associates transportation audit Entrepreneur Celadon driver China 2014 economic forecast last mile delivery the future of transportation Sales Training Canadian economy BlueGrace Logistics $75000 bond CP Rail computer Freight Management Right Shoring Amazon Social Media Werner General Motors shipping APL business security future of freight industry Distribution IANA risk management CN Rail Inbound Transportation Omni Channel shipping wine US Economy Muhammad Ali Yield Improvement Freight Shuttle System shipper-carrier collaboration JB Hunt Rate per Mile 3PLTL Crude Oil by Rail freight marketplace Cleveland Cavaliers RFP Online grocery shopping bulk shipping Crisis management Retail Canada U.S. trade Freight Capacity Trucking carrier conference Canada-U.S. trade agreement YRC Load broker NS Adrian Gonzalez Canada's global strategy Transplace Blogging Stephen Harper Trade Vision mentoring Grocery Loblaw shipper-carrier roundtable Dedicated Trucking Ferromex Tariffs Transport Capital Partners (TCP) Freight contracts

Blog Archives

March
February
December
October
September
August
June
May
April
March
January