Latest blog entries https://www.dantranscon.com/index.php/blog/latest Thu, 21 Sep 2017 04:25:27 +0000 Joomla! - Open Source Content Management en-gb Natural Disasters Highlight Need for Supply Chain Risk Management https://www.dantranscon.com/index.php/blog/entry/natural-disasters-highlight-need-for-supply-chain-risk-management-1 https://www.dantranscon.com/index.php/blog/entry/natural-disasters-highlight-need-for-supply-chain-risk-management-1 b2ap3_thumbnail_dreamstime_xl_99020538.jpg

This has been a challenging month. Hurricane Harvey caused huge damage in southeast Texas and Hurricane Irma is expected to cause major damage to Florida and the east coast of the United States (as it did to several islands in the Caribbean). We should not forget the recent forest fires in British Columbia and California. Tornadoes, earthquakes, and ice storms seem to be occurring with much greater regularity and ferocity. These natural disasters have been very disruptive to the smooth flow of people, goods and services for many companies. They have also made life difficult for supply chain professionals.

Of course, disruptions to supply chains can come from factors other than weather or natural disasters. Quality control problems, piracy, export restrictions, and computer system hacking are just some of the factors that can come into play. To make matters worse, most of these disruptions are unpredictable in timing and scope. Each shipper has to make an assessment of the potential risks to their supply chains and make recovery plans.

According to Patthira Siriwan, senior project manager for supply chain development in North America for Damco, the combined logistics brand for A.P. Moller-Maersk, supply chain risks can be categorized into five groups: operational, social, natural, economy and political/legal. Damco defines supply chain risk management as “attempts to identify risks and quantify their commercial financial exposures as well as mitigate potential disruptions at each node and lane in the supply chain.” Supply chain risk models can vary from the rudimentary to the sophisticated. In the case of the latter, complex “what if” analyses can be performed. This allows the shipper and/or receiver to identify potential trouble spots and map out alternative supply chain strategies.

In an article in the Journal of Commerce, Siriwan indicated that shippers tend to focus on “factors with the biggest impact on their supply chain, such as on-time performance, supplier lead time variability and carriers by origin or trade lane.” Shippers need to perform some sort of probability analysis on the impacts of each potential disruption, with a particular focus on alternative vendors, carriers, origin points and ports and destination ports. Looking ahead to the balance of 2017, there are some major predictable (tropical storm Jose) and unpredictable risks that could drive up supply chain and transportation costs. The latter could include the impact on fuel costs as a result of unrest in Venezuela or war in the Middle East or war with North Korea.

Each company needs to assess the potential risks to their company for each of the five elements outlined above. As a minimum, shippers and receivers should be evaluating:

• alternate modes and carriers to make sure they have a range of quality options in place;

• alternate communication options (i.e. working from home);

• alternate power such as the use of generators;

• alternate facilities if a warehouse or freight terminal is damaged or destroyed;

• protection for homes, buildings, and other assets (i.e. trucks, trailers etc.);

• evacuation processes;

• back-up sources of food, water, lodging, transportation; and

• alternate sources of raw materials and other supplies.

In addition, each of the supply chain options should be tested under “real world” circumstances with actual freight to see if they are viable and dependable in a time of need. The sheer magnitude of the natural disasters we are seeing in 2017 should serve as a wake-up call to companies in all industries. Customers have choices. A failure to create a viable back-up plan in a time of crisis could severely damage your business.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Risk Management Fri, 08 Sep 2017 18:03:46 +0000
Shippers need to become more “Carrier Friendly” to Minimize Freight Rate Increases https://www.dantranscon.com/index.php/blog/entry/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases https://www.dantranscon.com/index.php/blog/entry/shippers-need-to-become-more-carrier-friendly-to-minimize-freight-rate-increases b2ap3_thumbnail_dreamstime_xl_49902079_20170829-134855_1.jpg

As the long, slow recovery from the Great Recession continues, shippers and carriers have become used to modest economic growth. Demand for freight services has been steady but not robust. The muted demand for freight services has not put undo pressure on truck capacity; rate increases have been limited in recent years. This may be about to change.

Regulations have placed constraints on the management of trucking companies, particularly full load carriers. The Hours of Service regulations coupled with the ELD (electronic logging device) mandate are placing limits on the number of hours that a driver can legally operate a truck. These directives limit truck capacity. The difficulties in finding quality drivers and the high turnover ratio among current drivers provides additional challenges for many truck fleets. To address the potential erosion in capacity, truckers are applying a variety of technologies.

Good quality transportation management systems are allowing truckers to better manage their routes and balance their lanes. Dimensional scanners are helping LTL carriers manage the space available on their trailers by matching freight rates to cube utilization. ELD technology provides carriers with information on how long their drivers and equipment are held up at customers’ facilities. The net result of all this is that small parcel, LTL and truckload carriers can be much more accurate in tailoring their freight rates to the “carrier friendliness” of their clients.

How can shippers become more "carrier friendly”?  Here are a few items to consider.

Packaging

This is an often overlooked or undermanaged item. There is a defined amount of cubic space on a trailer or straight truck. Since each company’s product mix changes over time and since many products are condensed in size over time, packaging should be revisited periodically. Part of the process should include a study of pallet and product dimensions, product packaging and loading processes. Since poorly designed pallets create empty space on a trailer, improvements can reduce freight costs.

Production and Administrative Processes

It is maddening to come to a shipper’s dock and find that the bills of lading and/or the freight itself is not available at the time of appointment. This is a reflection of sloppy manufacturing and/or customer order processing and fulfillment processes.

Dock and Yard Management

Trailer detention is a “killer” in the era of ELDs. A lack of dock doors, inefficient yard management processes and some of the issues outlined above can create congestion. This can result in higher rates for those shippers that are consistent offenders in this area.

Loading Processes

This is another critical item. Are trailers dropped in your yard?  Is your freight “live loaded”? Are you using a process that is the most efficient and cost effective for your business? If trailers are dropped, how long do they sit in your yard and why is this happening? These processes should be audited from time to time to make sure that are as productive as possible.

Carrier Communication

Good communication is fundamental to every strong relationship. In this year of technology, it is easy for machines to take the place of human contact. Some people have the habit of hiding behind their communication devices. Voice mail, e-mail and text messaging are all great forms of communication. However, it takes people to set up working communication systems with proactive alerts and emergency response processes. An overdependence on technology can undermine the success of a shipper-carrier relationship.

Moreover, the evolution of eCommerce, particularly the Amazon model, and Walmart’s OTIF ("On-Time, In-Full") program, are placing considerable pressure on carriers to provide speed to market and to meet tight delivery windows. Shippers that impede the smooth operations of carriers will face higher than normal rate increases and in some cases, will find their business de-marketed.

As a first step, shippers should set up face-to-face meetings with their core carriers. They should inquire as to what are the “pain points” in their freight operations. They should then embark on fixing these pain points to become “Carrier Friendly” shippers.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Shipper-Carrier Collaboration Tue, 29 Aug 2017 13:46:19 +0000
Where will the Jobs be in the Future? https://www.dantranscon.com/index.php/blog/entry/where-will-the-jobs-be-in-the-future https://www.dantranscon.com/index.php/blog/entry/where-will-the-jobs-be-in-the-future b2ap3_thumbnail_dreamstime_l_75398427.jpg

We live in a remarkable era. When people look back at this era 15 or 20 years from now, many will say that this was a golden era for jobs. Most people interested in working have jobs. Employment in Canada and the United States is at almost record levels. Looking ahead to the future, this could change dramatically. If you examine many of the core sectors and jobs in our economy, they are being transformed by technology.

Many manufacturing jobs are being replaced by robots, automation and off-shoring to counties with a lower cost structure. Low-skilled, repetitive factory jobs can now be performed by machines. Similarly, as products are being manufactured, robots allow companies to pack more products into their warehouses, and to speed up picking, so that they can put more products into rapid fulfillment. As an example, Amazon expects to hire another 100,000 workers in the next eighteen months, many of them in their fulfillment centers.

Autonomous and semi-autonomous trucks may soon be able to take most of these goods to their destinations. Many of the almost 4 million truck driving jobs in our economy, specifically the long-haul trucking jobs, could become obsolete.

Ecommerce is having a profound impact on both wholesale and retail jobs. Consumers can now place an order online and have the products delivered directly from the manufacturer to their homes, by-passing a warehouse and/or retail store. In a recent blog (http://www.dantranscon.com/index.php/blog?view=entry&id=290 ), I highlighted the number of malls and stores being closed throughout North America. While some retail jobs may be replaced by warehousing positions, many will be lost.

The fast food industry is also a prime candidate for automation. Machines can now assemble and produce pizzas with minimal human intervention.

Automation is expected to have a large impact on professional services. There are numerous jobs in the medical, accounting and legal professions that are already in the process of being automated. Computers can do searches and prepare legal briefs or medical analyses much faster than humans. They can also cleanse, organize, sort, and analyze financial data quickly and accurately. Big data and predictive analytics are fundamentally changing the processes of data analysis.

To find the jobs of the future, one must focus on the needs of the future. These needs appear to be evolving along these lines.

• The need to save time

• The need to remove repetitive work

• The need to reduce cost

• The need to do things faster

• The need to deliver goods to consumers faster

• The need to make things easier to use

• The need to improve safety and reliability

• The need to reduce the impact on the environment

• The need to make things more energy efficient.

Jobs of the Future

Technology is in the process of creating a range of jobs.

The Home of the Future

According to Careerplanner.com, the next phase of automation will not occur in the factory, but in our homes, in our lives, and in the information that we use. The last wave of automation in the home mechanized simple repetitive tasks such as dish washing and clothes washing. The next wave of automation may help in preparing meals, cleaning the house, acquiring groceries, helping children with homework, educating children, ironing clothes and making beds.

Health Care Services

Health care workers appear on may searches of the jobs of the future. Nurses, health care managers, therapists, and dental hygienists all appear to have a solid future for the large, aging population.

Data Research Analysts

Even with big data and predictive analytics, there will be a requirement for people who can structure, lead and manage data analysis projects. Marketing and Operations research jobs are expected to be in high demand.

Last Mile Delivery Jobs

As online retail sales continue to climb, UPS, FEDEX, Purolator, Canada Post and USPS will have to deliver more packages. That is good news for local delivery drivers, pilots, and airplane mechanics. Home delivery has been on the rise and will continue to be driven by the need to save time. If home grocery delivery ever takes off, the demand for last mile delivery drivers and truck mechanics will also increase.

IT Jobs

 IT Jobs have a bright future Whether it is writing code, creating apps or managing IT projects, this will be a hot area for years to come.

Crafting a Plan for the Future

Rather than fight the inevitable, smart business leaders need to think about how to harness new and emerging technologies to provide their businesses and industries with a competitive advantage. Those companies that fight change are likely to leave the market because of their high cost structure and their inability to deliver their goods and services to market in a timely manner.

The best place to start is by creating a profile of the customer of the future and by looking at how technology can be applied to every functional area of the business to meet their needs. Each leader should create a roadmap of how they see their business evolving over the next twenty-five years. They then need to look at the range of skills that will be required to help them transform their businesses.

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Business Transformation Strategy Mon, 21 Aug 2017 19:47:25 +0000
Show some Respect for the Driver Delivering your Freight https://www.dantranscon.com/index.php/blog/entry/show-some-respect-for-the-driver-delivering-your-freight https://www.dantranscon.com/index.php/blog/entry/show-some-respect-for-the-driver-delivering-your-freight b2ap3_thumbnail_dreamstime_xl_72814892.jpg

Driving a transport truck is one of the most prevalent jobs in North America and throughout the world. There are about 3.5 million truck drivers in the United States; the comparable number for Canada would be in the range of 350,000 people. Truck drivers are mostly men who like a life on the open road, crisscrossing the freeways and city streets of America. These are folks who are away from home for long stretches of time, as they go from state to state, province to province, sleeping in cheap motels or in their sleeper cabs, eating unhealthy meals in Truck Stops and spending long, lonely hours driving their rigs.

Young people seeking to enter the profession need to take a set of courses so they learn safe driving techniques and how to manage their rigs. For those individuals who wish to run their own businesses, they can become owner-operators. They can work for themselves or for one of the thousands of trucking companies throughout North America. This can include working for a for-hire fleet or for the private fleet of a manufacturer or retailer.

Despite the relative ease of entry into the profession, there is a shortage of truck drivers in North America. Driving a truck is a tough job. Bad weather, traffic, and road conditions create difficulties on a daily basis. A lack of investment in infrastructure throughout North America creates congestion and impedes productivity. Driving a tractor-trailer unit with a 45,000-pound payload requires full concentration throughout the period they are on the road.

For many people, being away from home for blocks of time is not glamorous or fun. For someone with a young family, missing family occasions and their kids’ baseball or soccer games does not help maintain positive personal relationships.  While much has been done to raise the quality of the profession, truck driving does not command the respect it deserves; it remains a relatively poorly paid job.

A lack of respect from trucking companies and shippers

Drivers face difficulties both from their employers and from the customers for whom they pick up and deliver freight. Drivers are pressured to maximize their productivity while observing speed limits and hitting appointment times. The low pay and abuse they receive helps explain the turnover ratios that average in the range of 100 percent annually. When they arrive to make their pickups and deliveries, they often face a backup of trucks, freight, and paperwork not ready and the indignity of not being able to use the rest room that is onsite. Recently, several changes have been implemented to provide better structure to their lives.

Regulatory Changes

The driver’s Hours of Service regulations were implemented to prevent accidents caused by driver fatigue. This is accomplished by limiting the number of driving hours per day, and the number of driving and working hours per week. Fatigue is also prevented by keeping drivers on a 21- to 24-hour schedule, maintaining a natural sleep/wake cycle. Drivers are required to take a daily minimum period of rest, and are allowed longer "weekend" rest periods to combat cumulative fatigue effects that accrue on a weekly basis. These regulations, that are in place in Canada and the United States, are also designed to protect drivers from abuse from the company’s management. The other side of these regulations is that they put pressure on employers to maximize driver productivity and performance during their allowable work hours.

Similarly, electronic logging devices that are being introduced throughout North America are intended to help create a safer work environment for drivers, and make it easier and faster to accurately track, manage, and share records of duty status (RODS) data. An ELD synchronizes with a vehicle engine to automatically record driving time, for easier, more accurate hours of service (HOS) recording. This technology, while placing more discipline on driver documentation, also places constraints on driver availability. This will also put pressure on driver productivity.

The eCommerce Effect

Another major change over the past decade has been the rapid growth in eCommerce. Anyone with a computer, tablet or smartphone can go online, 24/7 and place an order for almost any product. Of course, someone must deliver the products from manufacturers to distribution centres and/or retailers and/or directly to a house or apartment building. Ecommerce and omni-channel distribution are fundamentally changing the nature of trucking, in terms of types of trucks, drivers, pickup and delivery requirements. In other words, the driver world is becoming much more complex.

What is the Future of Truck Driving?

Rarely a day goes by without a story on electric vehicles and autonomous (driverless) or semi-autonomous trucks. There are host of companies looking at an array of technologies to allow trucks to operate with no or minimal driver involvement. While there are a range of technological, regulatory and safety hurdles to overcome, the technology is there. The question is more an issue of when rather than if this will happen. This begs the question of how many of these 4 million jobs will be required when these new trucks will be “ready for prime time.”

Summary

It is fair to say that while truck drivers will be around for the short term; the medium and long-range future is uncertain at best. The strong economy and prospects for tight capacity and driver shortages are encouraging carriers to seek rate increases. Shippers seeking to maintain the viability of their supply chains are well advised to start thinking more carefully about the trucking companies and the drivers that deliver freight to their companies. Motor carriers throughout North America are taking a close look at the “carrier friendliness” of their clients. Shippers that make life difficult for their drivers by poor freight management and administrative processes will be facing higher than average rate increases.

Similarly, carriers with abusive dispatchers, poor driver management practices and lower than standard driver wages will also pay the price with high turnover, high driver training and high wage costs. Drivers perform a very valuable service that is essential to the smooth functioning of our economy. They deserve our respect, in words and action.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Best Practices in Freight Management Mon, 14 Aug 2017 14:32:33 +0000
Understanding the “Amazon Effect” on your Business https://www.dantranscon.com/index.php/blog/entry/understanding-the-amazon-effect-on-your-business https://www.dantranscon.com/index.php/blog/entry/understanding-the-amazon-effect-on-your-business b2ap3_thumbnail_amazon-logo.png

This is the decade of the “effect.” As  an example, we keep hearing about the “Trump Effect.” While not much of his legislative agenda has been approved to date, president Trump still has almost three and half years remaining on his first term in office. It will be interesting to see how much of his “conservative” agenda is implemented and the impact that it will have. Of particular interest will be the NAFTA negotiations that begin on August 16. Similarly, Climate Change is having profound effects in various parts of the world, whether it is from flooding, forest fires, drought, severe storms, or floating ice bergs.

We are also going through an era of major transformations in energy production/consumption and technology. The new Tesla car that was introduced to great reviews this week may be the catalyst to a shift away from gasoline-powered cars to electric vehicles. The fact that this beautifully designed car, introduced at a market friendly price, can get almost 500 miles on a charge, could be a turning point in the evolution of electric vehicles. India has recently made a major commitment to electric vehicles.  This coupled with driverless or at least semi-autonomous cars and trucks, that are a few years away, could have profound effects on energy consumption and transportation.

Smartphones, tablets, ecommerce, apps and Uber threaten to have an equally dramatic impact in many areas of business. One company that is very well positioned to capitalize on the Technology Effect is Amazon. Here are a few statistics to consider.

While total retail sales in the United States grew by 3.8 percent in 2016, ecommerce sales grew by 15.1 percent during the same period. Most of that growth is being driven by one company. According to Slice Intelligence, Amazon accounted for 53% of all ecommerce growth in 2016. During 2016, Amazon had almost 37% market share in ecommerce sales; Wal-Mart had a 2.6 percent market share and Target had a 2.7 percent share. Keep in mind, these statistics don’t reflect the potential impact of the Whole Foods acquisition.

Amazon has differentiated itself by creating a unique warehouse and distribution model and by providing its customers with high levels (i.e. next day, 2 hour) of service. The company has made the investment in brick and mortar distribution facilities, processes, and delivery capabilities, to meet the unique service expectation/performance levels that it has created. The impacts are being felt throughout North America. The list of store closings and bankruptcies is expanding almost daily as a result of the “Amazon Effect.”

In 2017 Radio Shack is closing 1000 stores (14%), Payless ShoeSource (512), JC Penney 140 stores (14%), Macy’s 100 stores (15%), and Sears is closing 150 stores (15%) in the United States. Additionally, The Limited is closing all its stores and Kohl’s is planning to shrink the size of almost all its stores to reflect lower sales. HMV Canada is closing its 102 Canadian stores while Sears Canada is closing 59 stores in Canada, FedEx Office is closing its 24 Canadian stores and Best Buy Canada/Future Shop is shuttering 14 outlets.

Consumers are also changing their product and pricing preferences. As an example, off-price apparel sales in the United States rose 39 percent between 2011 and 2016. Off-price retailer Saks OFF 5TH plans to operate 25 Canadian stores by next year while Nordstrom Rack will enter Canada next year, with plans to open between 15 and 20 stores.

With Amazon’s vast selection of products and distribution options, consumers are choosing to place their orders from their home or office or mobile phone rather than go to the mall. In 1970 there were only 300 enclosed malls in the U.S.; now there are 1,211 of them. Despite the recent turbulence in the retail industry and the Amazon Effect, the number of malls open has actually increased each year. Between 20% and 25% of American malls will close within five years, according to a report from Credit Suisse. That kind of plunge would be unprecedented in the nation's history. Credit Suisse estimates that a record 8,600 stores will close this year alone. That's far more than the record 6,200 stores that closed in 2008, the first year of the Great Recession. What does this mean to manufacturers, retailers, and transportation companies throughout North America?

For manufacturers of consumer products, it means looking at speed to market and the company's range of available distribution channels. Consumers are being conditioned by Amazon’s supply chain to expect high speed, date, and time definite delivery. Consumer product manufacturers need to ensure that their manufacturing and distribution cycles are in line with these high-speed ecommerce service levels.

Similarly, retailers need to ensure their omni-channel channel distribution strategies can meet the range of consumer requirements. They also need to have their pricing and promotion strategies in place to counter Amazon’s dominant position in online shopping.

Small parcel and LTL carriers need to look at the delivery requirements of their retail and home shopper customers and craft a set of retail delivery and last mile distribution/home delivery strategies to address a much more extensive array of requirements.  This may involve new small parcel/LTL carrier business models and a stronger focus on the service demands of the key ecommerce players.  In other words, it is essential for many companies in these various sectors to think through the “Amazon Effect” on their businesses so they can survive and prosper in the years ahead. 

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Omni-Channel Retailing Sat, 05 Aug 2017 15:21:55 +0000
The Trump Presidency – a 6-month report card https://www.dantranscon.com/index.php/blog/entry/the-trump-presidency-a-6-month-report-card https://www.dantranscon.com/index.php/blog/entry/the-trump-presidency-a-6-month-report-card b2ap3_thumbnail_th5.jpg

This week marks the six-month anniversary of the Donald Trump presidency. Four months ago, I posted a blog (http://www.dantranscon.com/index.php/blog/entry/will-donald-trump-be-a-successful-president ) that looked at the president’s strengths and weaknesses. I thought, at the time, that this might help provide some insights into his potential for success or failure in the job. These are my thoughts at this milestone.

Clearly president Trump has made several key decisions during this period. He terminated America’s interest in the Trans Pacific Partnership (TPP), took America out of the Paris Climate Accord, overturned president Obama’s decision to not permit the Keystone XL pipeline into America, changed the balance of America’s alliances in the Middle East, pushed hard for the repeal and replacement of Obamacare, initiated a review of America’s participation in NAFTA, instituted a ban on citizens from six primarily Muslim countries and oversaw the appointment of a new Supreme Court Judge, justice Neil Gorsuch.

While he has talked a lot about infrastructure spending, reducing taxes, building a wall between Mexico and the United States and tax reform, there have been few legislative achievements. Other than some positive stock market and employment numbers, most Americans are not seeing many tangible results from this president. Donald Trump’s overall approval rating stands at 39 percent, a historical low for a president in office for six months. On the bright side, his approval rating among Republicans stands at 85 percent. Looking back at my March blog, I now realize that my assessment of Donald Trump was largely correct. However, I now see some character traits more clearly and these traits are very problematic for him.

President Trump did have and still does have a vision of America. He frequently talks about “Make America Great Again” and about restoring lost manufacturing jobs to the United States. One of his biggest problems is that he lacks a coherent plan to make his vision a reality. Withdrawing from the Paris accord will not bring back lost coal mining jobs. Job growth in the energy sector will come from investing in the new sources that are growing rapidly. Withdrawing from TPP will hurt America’s trading relationships with countries in the Asia- Pacific region. His Make America a Loner Strategy is hurting the country’s relationships with many of its allies.

Rather than have a well-articulated vision for the future, president Trump seems far more focused on undoing the major initiatives of former president, Obama. While the Republicans hold majorities in three key bodies of the U.S. government, president Trump does not seem to understand the importance of setting priorities and picking the right battles to fight.

The Democrats are interested in Infrastructure. Reaching an agreement on Infrastructure would have been an easier battle to pick than health care, president Obama’s signature domestic policy achievement. By not understanding the true issues that are the essence of the health care debate and by not leading and working with the Republicans and Democrats in Congress, the president has made his presidency much harder that it must be. By not mastering the facts of the debate and creating a clear consistent message, he has undermined his chances of success and those of his party. By switching from repeal and replace Obamacare to repeal only to repeal and replace, he has lost credibility and harmed his reputation.

The self-professed dealmaker has shown an inability to make deals. For someone who has promised that he would lead America in winning, he is suffering a series of losses. For a person who loves the limelight, he tends to go into hiding at key moments when providing knowledge and leadership are essential to success.

The Russia collusion issue is going to come under great scrutiny in the months ahead. Nobody knows how this will evolve but it will certainly impact on his concentration and agenda. To be successful, president Trump will need to learn some lessons from his very challenging first six months and take action to right the ship. If he fails, he runs the risk of losing control of at least one house of Congress in 2018. This would greatly weaken his ability to govern. If he could reach common ground with Democrats on some important issues, even health care reform, this would provide huge benefits to him and his floundering presidency. If his negotiators can turn the changes to NAFTA into a Win/Win/Win exercise, he will certainly gain more support from two of America’s largest trading partners. The whole world will be watching.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) NAFTA Sun, 23 Jul 2017 15:59:43 +0000
Is it time to Outsource your Sales Operation? https://www.dantranscon.com/index.php/blog/entry/is-it-time-to-outsource-your-sales-operation https://www.dantranscon.com/index.php/blog/entry/is-it-time-to-outsource-your-sales-operation  

b2ap3_thumbnail_dreamstime_xl_38758856.jpg

A few years ago, I wrote a blog about some of the major changes that were and still are shaping the world of Sales (http://www.dantranscon.com/index.php/blog/entry/does-your-trucking-company-still-need-an-outside-sales-force ). In that blog, I suggested that economics, technology, and customer requirements were raising questions about the value proposition of an in-house sales team in the freight transportation industry.

A few days ago, I read an article posted by the Business Guru Club (https://businessguruclub.info/outsourced-sales-management-how-does-it-work/ ) that made the argument that Sales is a functional area like Accounting. Companies can benefit by outsourcing their Sales operation as they do their Accounting activities to a for-hire third party.

“For small businesses trying to launch their own sales department can be very difficult, time consuming and above all – risky. If sales don’t start to come in and you have to dismiss staff a lot of time and money has been wasted and this could break the business.”

The article goes on to say that “by outsourcing your sales management you gain a ready-made sales department, with all the equipment and expertise you could possibly want in order to bring the business in. You gain assistance with strategy and basically get a sales manager as well as a sales person from day one. Targets are put in place from month one and a measured return on investment established before any activity is undertaken. You can also turn the service off and on as required or even off altogether if targets are not being met. Costs are controlled and yet no more expensive than in house. . . Let the experts bring the business to you by outsourcing your sales process while you concentrate on delivering a brilliant service to your customers and growing your businesses operations.”

There is no doubt maintaining a sales team is costly, particularly a poor performing team. Paying six-digit compensation packages to weak sales personnel can be a drag on profits. Some companies do not have a core competence in Sales or Sales Management. It is tempting for companies that struggle with the management of Sales to consider outsourcing to an outside sales service. Before jumping on the outsourcing bandwagon, here are a few items to consider.

Sales Personnel Interface with Customers

Revenues, the lifeline of every company, come from customers. In most companies, sales personnel manage the customer interface; they secure and retain these customers. For companies considering outsourcing their sales operation, they need to think long and hard about entrusting this critical relationship to a third party. It is difficult to “turn the service off and on.” For companies that make this decision, it is hard to tell customers that the sales team has been released and that they are being replaced by another sales team. Disrupting the sales rep/customer relationship can lead to revenue erosion.

Managing Customers is very Different from Managing Financial Transactions

Sales success comes from the interplay of several related activities. Revenue retention and growth comes from Marketing, Pricing, Promotion, Sales, and operational performance. In the freight transportation industry, this performance must be sustained over time. This demands that the sales team maintain an ongoing relationship with their customers and not just focus on bringing in new business. These functions must be skillfully calibrated and integrated.

Companies considering outsourcing their sales function need to think about who will control prices, margins, and discounts. Who, how and when will customers be entertained, and with what type of budget approval process? How will the sales reps and managers interact with other management functions? Other than sales personnel, who else will have responsibility for interacting with customers?

Managing Salespeople is a unique Skill

Sales personnel are often different from other employees. They tend to have unique personalities. They are the face of the company to customers. Are you comfortable in having these customer-facing people managed by and working for an outside company? If your sales team works for another organization, how loyal will they be to your company?

On the surface, outsourcing sales looks like an easy way to let someone else manage a troublesome area of the business. Look before you leap.

 

Dan Goodwill & Associates Inc. (www.dantranscon.com) is a consulting practice focused on helping transportation companies improve their sales productivity and profitability.  Contact me at dan@dantranscon.com if you need some assistance.


Read More]]>
dan@dantranscon.com (Dan Goodwill) Transportation Sales Management Mon, 17 Jul 2017 13:34:23 +0000
Will Uber take control of the market for Freight Matching Services? https://www.dantranscon.com/index.php/blog/entry/will-uber-take-control-of-the-market-for-freight-matching-services https://www.dantranscon.com/index.php/blog/entry/will-uber-take-control-of-the-market-for-freight-matching-services b2ap3_thumbnail_dreamstime_xl_91927891.jpg

Freight matching services or “freight exchanges” have become one of the hottest topics in Freight Transportation over the past few years. Venture capital funds, private investors and others have poured at least $200 million — and potentially substantially more — into dozens of on-demand freight start-ups, including Flexport, Transfix, Loadsmart, Convoy, Doft, Cargo Chief, TugForce, HaulHound, Parade, Ship Lync, Load Surfer, FreightCenter, Freight Finder, Freightera, Freightcom, Pickmyload and others. There are new companies entering this space on a nearly daily basis.

Uber, the controversial but successful online taxi app, has recently announced that it is entering the freight matching arena. What is the attraction?

A brief history of freight matching services

DAT (which is an abbreviation for Dial-A-Truck) was the original load board in North America that was created in 1978. TruckersEdge was founded after DAT and was acquired by TransCore in 1992, another internet pioneer in load board services. Truckstop.com and Getloaded.com were launched in the early 2000s. In 2001, DAT was purchased by TransCore. In 2004, TransCore was acquired by Roper Technologies. In 2014, TransCore DAT became DAT Solutions. For four decades, this group of companies has been offering, for a fee, a process for shippers and brokers to post loads that need to be moved and for carriers to highlight available capacity.

In addition to load searching and truck posting, these services may provide broker credit scores and days to pay details, fuel tax reporting, mileage and routing information, alarm match notification, back-haul links, toll information, phone-in posting and searching, rate index and access from virtually any smart phone. When loads and trucks are posted to freight matching boards, these postings are compared to load/shipment and truck availability in that system. If a match is found, one or both parties are notified so they can contact each other to make shipping arrangements. Sometimes notification takes place immediately on the website; other sites provide notification by e-mail, fax, or text message.

The new cloud-based digital freight matching services

The latest freight matching services use cloud-based digital platforms to match a shipper's freight with available carrier capacity. The goal is to better utilize motor carrier capacity by offering a convenient, digital app to connect shippers and carriers. Digital freight matching or DFM apps include some of the functionality popularized by Uber – algorithmic pricing, API map integration, track-and-trace, and mobile transactions – along with features specific to trucking, such as trip planning, digital document storage, and TMS integration. When freight matching meets big data Online retailers are using “big data” to predict consumer product needs and preferences. To an extent, the same could be said for Internet-based freight matching services.

The basics of freight matching have not changed. Carriers still search for loads that meet their specific criteria for origins, destinations and equipment types. But some sites can now suggest loads and routes to users that they may otherwise not have considered to help maximize profits. In a 2013 article, Aaron Huff, Senior Editor of Commercial Carrier Journal outlined the following.

Round-trip pricing

DAT is offering RateView, a new subscription tool for benchmarking spot and contract rates. RateView is designed to give small carriers the same type of complex lane and pricing analysis tools that large carriers use to make routing decisions. With RateView, carriers select lanes to view pricing information on. A chosen lane from Atlanta to Dallas, for instance, would show the contract and spot-market rates as well as recommended backhaul options. Carriers see the two-way pricing they should expect to be able to negotiate to cover their costs for the round trip. RateView has direct integration with DAT’s Power load board so that carriers can contact shippers and brokers that have loads in lanes they have identified using these pricing and route analysis tools. With a mouse click, DAT users can call the contacts directly using Skype integration.

Private optimization

Third party logistics providers often use private load boards to expedite the freight matching process with their pre-qualified carriers. These platforms use a very targeted approach for suggesting loads to carriers to get a quick-response. Transplace, a 3PL used by approximately 60 shippers, awards lanes to carriers through a strategic bid process. With the lane awards Transplace builds routing guides to minimize the rate spread among carriers should instances arise where additional capacity is needed in certain lanes. Transplace uses a private load board, or carrier portal, to present loads that typically have a short lead time. The carriers have the option to automatically accept the load at the contracted lane rate or to respond with a bid increase or decrease. This freight selection process can run as fast as every 15 minutes, though the cycle is typically one hour.

Where to bid?

Logistical Labs has created a new cloud-based pricing platform, Load Dex, for shippers and third party logistics providers. The platform includes an intermodal freight matching service. With more shippers and 3PLs looking to convert over-the-road shipments to rail for the cost savings and environmental benefits, carriers are following suit. Load Dex has three main components. A big data algorithm simplifies lane pricing and analysis for shippers. Then, social collaboration tools help to speed the quote-to-load conversion process by removing unstructured email and verbal communications with carriers–like “what’s your rate from Atlanta to Dallas?” It does this by linking communications to shipment data.

Third, an intermodal exchange helps identify opportunities for road-to-rail conversion. The algorithms used by freight matching services to suggest loads might not be as complex as those used by online retailers to encourage more spending, but at least they can increase profits.

Start-ups aren’t the only ones enticed by the prospect of disrupting the $700 billion U.S. freight industry. Uber Technologies is moving into the business through its Uber Freight division, though the company won’t discuss current operations or plans. Amazon is reportedly working on an on-demand freight service that could launch as soon as this summer as part of a broader strategy to gain more control over its delivery channels.

What impact will Uber have on Freight Matching?

The appeal of the freight transportation sector for Uber is easy to understand. Empty miles estimates range from 10-23% while e-commerce fulfillment costs are increasing. The natural response is to improve inefficiencies in the trucking industry with an Uber-like solution. After all, Uber addresses a similar problem (underutilized capacity in taxis) with a similar solution (a mobile app matching demand and supply). But as Armstrong & Associates points out in a recent report, freight transportation is not as simple as hailing a cab.

One of the key components of Uber's model is the commodity-like nature of the ride-hailing service, it points out. North American freight transportation is not a simple commodity. There are specialized equipment types, shipments transported via multiple modes, currency, customs clearance, and handling service issues such as equipment breakdowns. Shipments are high-value and time sensitive. Placing an Uber-like app atop a complex industry doesn't truly address the problem.

In fact, Armstrong & Associates found that most digital freight matching companies aren't simply mimicking the Uber model. Many even adamantly reject the term "Uber for Trucking." Some see the company’s entrance into the freight business setting off a price war. “Their stated claim that they would be happy with margins at one-third that of competitors is the point of concern,” said John Larkin, a logistics analyst at Stifel Financial Corp. “Those skinny margins would eventually expand due to their potential access to the inexpensive capacity.”

Larkin also questioned how well the Uber model will work for the trucking industry. “We do not think that applying the Uber matching technology, used to displace the taxi industry, works well in the freight world,” he said. “Underutilized capacity isn't just ‘sitting around’ as it is in the automobile world, and each load of freight is a little different than every other load as there are somewhere between 40 and 70 different factors that need to be considered in most truckload brokerage transactions.”

It would be foolish to underestimate the talents of Uber. Nevertheless, their Freight Division will have to “raise its game” considerably to gain a significant foothold in this far more complex market.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Best Practices in Freight Management Sun, 09 Jul 2017 19:20:21 +0000
Mastery of Supply Chain Management will determine if Amazon’s Purchase of Whole Foods will be a Success https://www.dantranscon.com/index.php/blog/entry/mastery-of-supply-chain-management-will-determine-if-amazon-s-purchase-of-whole-foods-will-be-a-success https://www.dantranscon.com/index.php/blog/entry/mastery-of-supply-chain-management-will-determine-if-amazon-s-purchase-of-whole-foods-will-be-a-success  

b2ap3_thumbnail_Amazon-shopping-cart.pngb2ap3_thumbnail_Whole-Foods.jpg

The grocery business is about an $800 billion market in the United States and about $80 billion in Canada. This is one sector of the retail market where Amazon has not achieved a significant beachhead in either country. With the deal to buy Whole Foods, the online retailer will have a small slice of the grocery market (about 1.2% in the United States) in North America, which is dominated by a handful of firms like Walmart (14.2%) and Kroger (7.2%) in the United States and Loblaw Companies, Metro Inc. and Sobeys in Canada.

Last year, the online shopping giant launched Amazon Go, an experimental grocery store with no checkout counter that's currently open to Amazon employees in Seattle. Amazon also opened its first brick-and-mortar book store in Seattle in 2015, and has since expanded to New York City, Chicago, and Los Angeles. The company is said to be evaluating various physical retail experiments that range from futuristic Home-Depot-like stores that incorporate augmented reality to Apple-like electronics boutiques, according to The New York Times. Amazon's acquisition gives the company 431 physical Whole Foods locations to potentially flesh out new concepts.

Amazon’s entry into the grocery market will expose the company to an incredible array of commodities and supply chain variables.

Commodities

In addition to moving a range of packaged food and non-food products (i.e. magazines, utensils, cosmetic and health care items, etc.), Amazon will now be transporting perishables and fresh produce. This is a challenging consumer category for online retailers as they:

• require temperature control (i.e. products can fall into six categories of refrigeration including keep from freezing, keep frozen, store at room temperature etc.),

• have seasonality and time definite shelf life issues,

• need specialized packaging, necessitate accurate and efficient delivery scheduling,

• involve a high number of SKUs, and

• demand rapid order processing, picking, packing, and delivery.

Transportation Modes

Buying Whole Foods supplies Amazon with a grocer that has both a brick-and-mortar network of stores and a large set of transportation suppliers. According to the United States Department of Agriculture, ninety-five percent of perishables move via over the road truckload transport while one percent are transported in intermodal containers and four percent move via boxcar. Unlike many packaged goods loads, perishables are often picked up as “live loads” and have extended pick-up and delivery intervals. Because of the range of products, deliveries can be via truckload, single or multi-stop and via LTL.  The Amazon online distribution network is quite different.

Whole Foods changes the Delivery Dynamic for Amazon’s Core Business

Amazon currently has a very extensive distribution and delivery network to move its core online sales products to markets. The Whole Foods' store infrastructure opens a new array of fresh, organic produce and specialty groceries to the Amazon customer base. A recent Stifel article suggests that the Whole Foods acquisition would provide baseload density upon which Amazon could layer conventional parcels, meaning lower last mile delivery costs. That same brick-and-mortar presence gives Amazon an immediate network of locations for in-store pickup, drop-off locations for consolidating returns, and new locations to install parcel lockers for 24-hour service and/or customers that don't want to wait in line.

Industry experts estimate the company would have to add a dozen or more grocery warehouses, particularly if it wanted to supply Whole Food stores in addition to homes. Amazon would likely continue to rely on United Natural Foods Inc. to continue to supply Whole Foods with hard-to-source products, but would probably aim to cut costs and handle more of the distribution for conventional items. Even using Whole Foods stores to provide food for delivering to nearby urban shoppers would have specific limits, since many outlets lack the floor space to handle thousands of online orders.

Moving Inventory closer to the Consumer to increase Speed to Market

In Amazon's relentless pursuit of customer satisfaction, date/time definite delivery have been instrumental in establishing the expectations bar. After setting the standard with 2-day Prime, its’ competitors have been struggling to play catch up; next-day, same-day, and even 1-hour delivery have become the new standards. But faster delivery is often cost-prohibitive, as existing national and super-regional parcel delivery networks were not set up for same day or even next day speed on a relatively low-cost basis. Surveys have found that consumers are usually unwilling to pay up for the extra service which means that for now, same day remains only a niche offering.

The solution that Amazon has found is to drive inventory (i.e. warehouses) closer to the consumer, thus reducing the length and cost of the last mile component. Whole Foods' existing store infrastructure is potentially the next evolution of that model, allowing Amazon to position not just grocery and fresh foods, but also traditional e-commerce inventory at the neighborhood level. However, facilities for distributing fresh food are far more complicated than ordinary warehouses.

As highlighted above, a single facility may require multiple temperature settings to house products from ice cream to berries. Some require certification from the government bodies, and extra care must be taken to keep shelves clean and prevent pests from contaminating food. Whole Foods has over 1 million square feet of warehouse space for distribution to its markets, and a chunk of its inventory goes straight from suppliers to stores, according to Marc Wulfraat, president of MWPVL. "It's a peanut. It's nothing," he said of Whole Foods' distribution. "If Amazon wants to become a dominant grocery company in a short period of time, then there would be an investment required, and it would be big."

Regulatory Changes are Impacting Retail Distribution

Amazon is making this move at a time when the trucking industry is transitioning to electronic logging devices (ELDs). The widespread application of these devices could alter the current paradigms for miles driven per day and for freight rates. As ELD compliance evolves, the regulatory environment may play a big role in the economics of food distribution.

Market Positioning

Lisa Eadicicco of Time magazine identified that Amazon's Prime Now service promises to deliver certain products — ranging from paper towels to electronics — in an hour or less, which Amazon sources from 70 fulfillment centers in the U.S. With its purchase of Whole Foods and the hundreds of grocery stores it operates — which sell everything from fresh food to beer, bakery items, flowers, and pet supplies — Amazon has an opportunity to expand the products it can deliver under Prime Now.

Amazon is far from the only digital company to show interest in the grocery space with its AmazonFresh service, which is available for Prime members for $14.99 per month. Adding Whole Foods' selection of items to its service could give the online retail giant a competitive edge against Google, whose Express Deliver service now reaches 90 percent of the U.S. Instacart, Peapod, and FreshDirect are also players in this space.

Summary

The “bricks and mortar” grocery store delivery model and the online shopping model are quite different. Whole Foods is still a relatively small player in the overall food distribution market in both Canada and the United States. It has not been performing well over the past several quarters. Moody’s has identified 22 retailers that are significant risk of bankruptcy, including some very well-known companies (i.e. Sears, Neiman Marcus). Analysts are even predicting that one-quarter of America's malls could close within the next five years. To be successful, Amazon will need to fix Whole Foods current business as it seeks to identify the synergies from this acquisition, while capitalizing on and mastering the supply chains from these two related but different businesses.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Retail Industry Transportation Sun, 02 Jul 2017 15:38:44 +0000
Are you Ready to Start Your Own Business? https://www.dantranscon.com/index.php/blog/entry/are-you-ready-to-start-your-own-business https://www.dantranscon.com/index.php/blog/entry/are-you-ready-to-start-your-own-business b2ap3_thumbnail_dreamstime_xl_31528691.jpg

On February 28, 2016, I posted a blog entitled Passion (http://www.dantranscon.com/index.php/blog/entry/passion ). The objective of the article was to share my thoughts on one of the most important elements of career and personal success, the inner drive to achieve fulfillment and self-actualization. In the blog, I highlighted the importance of having a “passion’ for what you do. I was very pleased to receive some positive feedback on this piece and to learn that it inspired people to rethink their current positions and move to more fulfilling work environments.

I was reminded of this blog after reading, I left my corporate job, and these 8 things became clear (http://www.businessinsider.com/i-left-my-corporate-job-and-these-8-things-became-clear-2017-6 ). The decision to leave the corporate world to go in a different direction is not for everyone. I had the desire to move in a new direction several years before I made the decision to become an entrepreneur. Initially, as I started down the path, I was attracted to a new corporate opportunity and pulled back. Finally, I summoned the courage and “passion” to resist the temptation of a corporate job and launch a freight transportation consulting practice.

I am now in the fourteenth year of running my own business. This is what I can tell you about the experience. Every person has his or her own unique financial situation, level of risk tolerance and self-confidence, and set of skills and competencies. Unless one comes from an affluent background, has backers with deep pockets, or has a war chest to fall back on, almost everyone requires some level of consistent cash flow. If one transitions from the corporate world to academia, or to a small business that has an existing revenue and profit stream, this issue is of less concern. If an individual takes the leap into his or her business, or a start-up venture, with others, this issue must be carefully evaluated.

As we all know, there are few guarantees in life. Many new businesses fail. Some combination of poor business planning, weak execution, inadequate finances, and/or insufficient human resources sink many companies. On the other hand, the rewards of becoming a successful entrepreneur are extremely gratifying. The last 14 years have been among the most enjoyable of my career.

One of the most important pieces of advice I received, at the outset, was to not panic on a rainy day. In consulting, like many other businesses, there are peaks and valleys. During the peaks, you can be working seven days a week, to meet the demands of your clients. In the valleys, you must continue to perform your sales and marketing efforts and have faith that they will eventually generate new business. The downtimes require perseverance and determination. This can be difficult for some people. If an individual cannot take the bad with the good, being an entrepreneur may not be for that person.

A key first step in setting up a business is to determine how to differentiate it from the competition. The best advertising you can achieve is word of mouth referrals. Gaining customer endorsements comes from supplying a superior service or product. These endorsements or references supply you with repeat business and generate leads for other potential clients. Each entrepreneur must think about how to deliver a superior product or deliver a product or service that will provide momentum for the business.

It is also important to figure out how to stand out in a crowded field. I learned this lesson back in the 90s when I ran a mid-sized logistics company that had mastered the art of big league marketing. In the 21st century, small businesses, that have compelling websites with search engine optimization, gain a competitive advantage as do companies with superior social media skills. Since it is costly for a small business to hire sales personnel, communicating to target audiences on multiple social platforms, on a consistent basis, can be a powerful sales and marketing tool.

A third very worthwhile lesson I learned, through my own efforts, was the value of networking and partnerships. One of the biggest challenges for any new business is building a client base. We each have our own set of contacts. Being able to tap into other sets of clients and prospects, is extremely valuable. Partnering with quality companies in complimentary businesses, can open the doors to new sets of prospects, clients, and business. Moreover, by forming these partnerships, an individual or small business can raise its level of competence and bring a broader range of services to its clients and theirs, a true win-win. These partnerships allow small businesses to collectively, bring more value than either company can provide on its own.

Of course, in addition to partners, each company needs to hire great people who can provide additional value over what the individual establishing the business can provide on his or her own. This can be a bit of a trial and error process. Some people oversell their capabilities. They may have the work ethic and/or need the financial rewards, but they don’t meet the skill level required. These people need to be removed quickly to not damage the brand and reputation of your business. Over time, the key is to build a team of superior performers and discard people who are not able to deliver at the level required.

Another challenge in running a small business is learning when to say Yes or No to clients. If you do good work for your clients, they will often ask you to do things that either stretch your comfort zone or take you out of it. In some cases, clients will ask you to perform work that is not within your expertise. In these situations, it is very important to refer your clients, politely and appreciatively, to people who can do this work in a professional way. In other cases, your clients may lead you in the direction of offering new services that are an extension of your current portfolio. This can be enormously valuable since it can provide your company with a new stream of revenues and profits. It is important to be open and flexible to new service opportunities.

If you are comfortable doing public speaking, approach organizations whose members meet the profile of your target audience. Volunteer to give speeches and join some organizations that may provide you with networking opportunities. These opportunities can be great stepping stones to meeting new partners, suppliers, and partners. Staying involved with these associations over time strengthens the bonds with other members.

Being an entrepreneur has been a wonderful experience. I have had the privilege of working with clients from Mexico, Europe, the United States, and Canada. I have had the opportunity to visit all regions of Canada and the United States. I have met some remarkable people who have had a big impact on my life. I have learned a lot about various industries and about Best Practices in Freight Transportation, from both a shipper and carrier perspective. It has been a great experience managing my company’s business plan, cash flow and clients. Staring my own business has been one of the best decisions of my life.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Career Advice Mon, 19 Jun 2017 13:03:35 +0000
The 2017 Surface Transportation Summit will focus on Canada's Rapidly Changing Business Environment https://www.dantranscon.com/index.php/blog/entry/the-2017-surface-transportation-summit-will-focus-on-canada-s-rapidly-changing-business-environment https://www.dantranscon.com/index.php/blog/entry/the-2017-surface-transportation-summit-will-focus-on-canada-s-rapidly-changing-business-environment b2ap3_thumbnail_STS-logo-2017-clr.jpg

Donald Trump. Robotics. Omni-Channel Fulfillment. The New NAFTA. Freight Marketplaces. Autonomous Vehicles. The Internet of Things. Andrew Scheer. Brexit. Climate Change. Last-Mile Delivery. Legalized Marijuana. E-commerce. Emmanuel Macron. The Amazon Effect. Drones. Digital Freight Management. Uber. Clean Energy. This is just a partial list of the major forces shaping the world of Freight Transportation in 2017.

This year's Surface Transportation Summit (www.surfacetransportationsummit.com) will focus on the strategies and tactics that shippers and carriers can employ to address these forces. The event will take place at the International Centre in Toronto on October 11. This is a joint venture between Newcom Business Media and Dan Goodwill & Associates with the support of the Freight Management Association of Canada and the Canadian Trucking Alliance. Northbridge Insurance will be the Gold sponsor, with Navistar, Volvo Trucks and Isaac Instruments, the silver sponsors and Trailer Wizards, the bronze sponsor.

In a year when political and economic alliances, new technologies and environmental policies are changing rapidly, the Summit will provide strategies and tactics to address these forces.  Here is an overview of the agenda and speakers.

The first track is entitled, The Donald Trump Effect and The Economy in 2018: What trends will impact your business? Carlos Gomes, Senior Economist with Scotiabank, will share data on the Key Economic Indicators for 2017 and then provide his insights into the economy in the New Year. John Larkin, one of America’s foremost transportation industry analysts, will share his thoughts on the some of the most important developments in the US transportation industry. Walter Spracklin, Equity Transportation Analyst, RBC Capital Markets, will provide his insights on the Canadian transportation industry.  Sylvie Messier, Corporate Transportation & Customs Manager, IPEX and Doug Munro, President and Owner, Maritime-Ontario Freight Lines Limited will share their thoughts on this topic in a panel discussion.

The second track will examine the rapidly evolving technological forces that are shaping the Transportation Industry. E-commerce, the Internet of Things, Big Data and Predictive Analytics, Drones, Autonomous and Self-Driving Vehicles, Robotics and Uber services for freight transportation may have the same impact as personal computers, smart phones and the internet have had over the past quarter century. Paul Kudla Regional Vice President, Volvo Canada, Marco Beghetto, VP of Communications and New Media, Ontario Trucking Association, Justin Baillie, President, Rose Rocket, Rick Geller, Vice President, Marsh Risk Consulting and Ryan Ernst, Leader, Logistics and Distribution Practice, Deloitte will engage in a panel discussion on how these new technologies will gain acceptance.

How can shippers and carriers collaborate in this rapidly changing environment? Mike Ludwick, Chief Administrative Officer, Bison Transport, Rob Nichols, Managing Director, Domestic Intermodal Sales and Marketing, CP Rail, Justin Yang, Manager, HanH Transportation Management, Eric Warren, Vice President, Business Development, Hercules, Tony Kermally, Vice President, Freightcom, Anna Petrova, Senior Supply Chain Leader, Ferrero, and Hugh MacDonald, Director, Logistics and Distribution, Wajax, will engage in a lively exchange on how to work together more effectively in the new environment.

After lunch, there will be two sets of three parallel tracks. Summit attendees will have the option of selecting the tracks of most interest to them. One session, that is a direct response to the Summit survey results, will address Effective Strategies to Improve the Profitability of a Trucking Company. Two industry experts will share their ideas and techniques.

Running in parallel will be a track on Improving the Generational Gap. It is now common for trucking companies to have a range of family members leading their operations. Isabelle Hétu, Program Manager, Trucking HR Canada will share her research on this topic. Joining her will be Wes Armour, Chief Executive Officer, and Victoria Armour, Director of Recruitment, Marketing and Communications, Armour Transportation Systems and another prominent Canadian trucking family.

The third session will allow the Summit attendees to participate in small group roundtable discussions. The topics will include Shipper-Carrier Collaboration, Best Practices in Cross-Border Freight Transportation, Best Practices in Recruiting, Developing and Training Top Talent for your Business, Preparing for Changes to NAFTA and Border Policies and How to successfully Navigate a Rail Claim with the Canadian Transportation Agency. These tracks, which require pre-registration, will be led by a skilled moderator and subject matter expert.

The second set of three parallel sessions will include the following topics. Angela Splinter, CEO, Trucking HR Canada, Tracy Clayson, Managing Partner, In Transit Personnel, and Tim Hindes, CEO, Stay Metrics, will share their findings on Best Practices in Recruiting and Retaining Quality Drivers, another topic that ranked high in the Summit survey.

Three industry leaders, Bob Ballantyne, President, Freight Management Association, Steve Laskowski, President, Canadian Trucking Alliance and Gérald Gauthier, Vice President, Public and Corporate Affairs, Rail Carriers Association of Canada will talk about the major issues facing the Canadian Transportation industry.

In a third parallel track, Kevin Huntsman, Senior Vice President, Mastio & Company, will provide the results of a recent research study entitled, The Canadian LTL Customer Value and Loyalty Report. One of the highlights of this report is an analysis of how shippers rank and select Canadian LTL carriers.

The final track of the day will feature a keynote speaker, David Segal, an entrepreneur and retail thought-leader. David will talk about How to Build a Successful Business and Brand.

Mr. Segal is best known for bringing radical innovation to a 5,000-year-old product category with the launch of DAVIDs TEA, the company he co-founded in 2008. He takes audiences through his journey, highlighting how he combined his entrepreneurial passion and business savvy to take DAVIDSs Tea from a single store on Queen Street West in Toronto to a $200 million retail giant.

Clearly, this is the biggest and most ambitious Summit to date. In addition to the great educational content, there will be ample time during the day to network with other shippers, carriers, logistics service providers, sponsors, industry vendors and consultants. Immediately following the Summit, the Freight Management Association of Canada will host their second annual cocktail reception. All attendees are welcome to enjoy some refreshments and mingle with the other attendees.

The early bird registration fee is still in effect. If you have any questions about the Summit, feel free to contact me (dan@dantranscon.com). Some sponsorship opportunities are still in effect. To keep posted on the latest developments, follow the Summit on Twitter using hashtag#sts17 and join the Surface Transportation Summit group on LinkedIn.  See you on October 11.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Surface Transportation Summit Fri, 09 Jun 2017 15:33:45 +0000
America’s Downward Spiral in 2017 https://www.dantranscon.com/index.php/blog/entry/america-s-downward-spiral-in-2017 https://www.dantranscon.com/index.php/blog/entry/america-s-downward-spiral-in-2017 b2ap3_thumbnail_dreamstime_xl_80054729.jpg

We are now four and a half months into the Trump presidency. While the president has not been able to achieve any significant legislative successes, he has been able to accomplish something much more far-reaching. He has managed to undo decades of American policy and dramatically reduce the country’s stature in the world. How do we make sense of Trump’s strange journey so far? These are my thoughts.

Donald Trump received 62 million votes in last year’s election. These votes did not come from a homogeneous base of voters. Rather, they came from the following groups.

Loyal Republican Voters

There are American citizens who vote for the Republican candidate in every election. While Donald Trump may have not been the preferred candidate for all Republican voters, the people who typically support this party voted predominantly for him. They expect him to uphold traditional Republican party values.

Wealthy Americans

The Republican party is the preferred party for many wealthy Americans. These voters count on the Republican party to support small government and low taxes for them. Certain key, wealthy, donors such as the Koch brothers have a strong hold on the party. They have the financial resources and power to support candidates who reject issues of most interest to them such as the Paris Climate Accord. This certainly explains the strange stance of many republican lawmakers on this topic.

Unemployed and Under-employed Citizens

During the election campaign, Trump promised to create significant numbers of jobs and Make American Great Again. This slogan appealed to many Americans who have suffered from the Great Recession.

The Time for a Change Group

After eight years of one president, some voters were looking for a change. Donald Trump was the change agent, not Hillary Clinton.

Americans without a University Education

Citizens without a college education may have a less worldly view and may be more inclined to believe in simple, non-fact-based solutions to some of America’s challenges.

Americans who do not like Foreigners

This aligns with some of the other segments mentioned here.  Unemployed and under-employed Americans are resentful of foreigners who come to America and whom, they perceive, are taking jobs from them and may be a threat to their security.

Military Personnel and Veterans

Donald Trump targeted this voter group by repeatedly saying that he supported more military spending and better treatment for vets.

A majority of Voters in Key Swing States

Just as there are loyal Democratic and Republican voters, there are “red states” and “blue states.” There are a handful of so-called “swing states” that have a cluster of voters who move from party to party in some elections. This was the key to Trump’s success. By winning the states of Florida, Pennsylvania, Wisconsin, and Ohio, this pushed him over the top in the electoral college. This is where many American elections are decided.

How does this explain Trump’s very bizarre four and a half months in office? Let’s do a quick review of some of Trump’s initiatives.

Trump’s failed travel bans, from a select group of predominantly Muslim countries, were primarily designed to restrict Muslims from entering America. It is noteworthy that countries such as Saudi Arabia, a key oil producing nation, were conveniently left off the list. The travel bans played to his anti-foreigner, anti-terror, give jobs to current American citizens base.

Trump’s Health Care bill, that received House support, drastically reduces health care services to many of America’s most needy citizens; it is really designed to lower the taxes of some of America’s richest citizens, a key Trump demographic. This would allow Trump to spend more money on the military, another Trump voter target.

President Trump has offended the leaders of NATO, some of America’s closest allies, by not confirming his willingness to protect and defend their interests against a common threat. He has threatened to build a wall between Mexico and The United States and told his next-door neighbor that they would have to pay for it. He has applied levies against softwood lumber and dairy imports from Canada and gave Mexico and Canada notice of his intention to re-negotiate the NAFTA agreement. This again plays to his keep jobs in America supporters.

Trump has tabled a budget proposal that would dramatically increase military spending but gut the funding of many of America’s social programs and reduce foreign aid to many of the world’s most needy countries. Most recently, he has pulled the United States out of the Paris climate accord, that was signed by all but two countries, including all of America’s friends and most of its enemies. This accord, based on a wealth of scientific evidence, was intended to reduce carbon emissions, and save the world from the already visible impacts of higher temperatures.The “Paris” decision is puzzling in the sense that the Accord, initially led by the previous administration, allows America to take a leadership position in clean and green energies on a world stage, a huge job growth opportunity.

In other words, in just four and a half months, President Trump has already created a legacy of harmful policies and initiatives that have damaged the international standing of America and opened the door for other world powers (i.e. China, Russia) to fill the leadership vacuum left by America’s withdrawal. However, in each case, they have been consistent with what he stated during the election campaign. Clearly, this myopic, inward looking vision of the future, is all that Trump cares about. President Trump is very sensitive to opinion polls and to voter preferences. He doesn’t care about how he is perceived in other countries, even among America’s longstanding friends and allies.

To understand Trump’s decision-making process, it is important to look beyond his target voters whom he sees as his ticket to re-election. He has built a divided camp of advisors. He has his right wing (i.e. Bannon, Pruitt, Mulvaney) zealots, his moderate voices (i.e. Ivanka Trump, Jared Kushner, Tillerson) and his military cohort (i.e. McMaster). These groups have different views on most issues. Trump usually sides with his voter targets, even if the facts, science and history don’t support the decision.

He has gone out of his way to undo as much as possible of President Obama’s policies, executive orders, and legislation. To an outside observer, this comes across as a very personal vendetta.

Trump has a team of communications advisors who seem “out of the loop” and dysfunctional. He has not hired the support staff necessary to help his leadership team. Moreover, he constantly undermines his team by tweeting, by not communicating and collaborating effectively with them, and by being disingenuous. It has been chaotic to say the least.

Where do we go from here? The testimony of former FBI Director James Comey was fascinating to watch and may take us in a whole new direction. Whatever comes out of that hearing, American citizens must continue to hold their leaders, in both parties, to account. Unless the president is removed from office, American citizens must be vocal and assertive and speak up on the issues of most concern to them.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) NAFTA Mon, 05 Jun 2017 01:03:59 +0000
Should your company Outsource the Management of its Logistics Operations? https://www.dantranscon.com/index.php/blog/entry/should-your-company-outsource-the-management-of-its-logistics-operations-1 https://www.dantranscon.com/index.php/blog/entry/should-your-company-outsource-the-management-of-its-logistics-operations-1 b2ap3_thumbnail_dreamstime_xl_22219186.jpg

As baby boomer logistics leaders move into retirement, their successors are tasked with directing the company’s distribution operations. Informed business leaders realize that we are in a period of profound changes. Companies such as Amazon and Uber are disrupting current business models. Technology and automation are altering manufacturing processes. Ecommerce and omni-channel distribution are upsetting existing retail processes. As my colleagues and I meet with shippers, we find many companies are exploring their options. Should they try to manage these changes in house or should they enlist the support of outside resources?

In-House or Outsource?

It is important to understand that business leaders do not face a binary choice. The field of Logistics is more complex than it has ever been. Senior logistics professionals must possess a variety of business skills and possess a depth of knowledge in a range of areas such as supply chain design and management, warehouse and inventory control, customer service, transportation and information management. These leaders must then be able to adapt and apply their skills and knowledge to specific companies in the manufacturing, distribution and retail sectors, including bricks and mortar and eCommerce organizations. This leads to a fundamental question for every organization. Does the company have a set of leaders who possess this range of skills and knowledge?

While it is unlikely that one senior executive will possess all of these attributes, the broader question is does the company possess these skills across its logistics management team. If not, what skills and knowledge does it need to import from external sources? This article outlines how to create a leadership plan (http://www.supplychainquarterly.com/news/20170428-how-to-plan-for-future-supply-chain-leadership/?utm_medium=email&utm_campaign=Executive%20Insight%20 ).

Should we hire a Consultant or a Logistics Company and/or a Recruiter?

Once a company goes through the exercise of identifying its logistics strengths and weaknesses, in conjunction with its supply chain goals and objectives, it is then in a position to determine which skills, if any, it needs to acquire.

Does the company require a TMS system and the IT expertise, internally, to document its needs, prepare an RFP and recruit vendors that match up best against its business profile? Does the company need to redesign its network operations or craft an effective strategy to structure the optimum mix of distribution channels? Is the requirement more extensive? Does the company have a leader or leaders who can drive the organization’s logistics operations?

Every company has a different set of logistics requirements; every company requires a unique logistics management strategy. For companies that have some major gaps in their logistics organization structure, a top industry recruiter may help fill the gaps. Some companies need to pay for consulting expertise for a specific period. If they need an IT or process resource to perform specific functions, a consultant may meet the need. Once the task is performed, they then need to bring the management of the new process in-house.

For those companies that don’t wish to make the investment in in-house expertise, or hire a consulting company to provide the expertise, they have the option of outsourcing some or all of the management of their supply chain operations to one ore more logistics service providers. Shippers need to be aware that LSPs have a consulting arm.  These are the people who design the logistics solutions for their clients.  

On the other hand, these companies will try to adapt their clients’ requirements to their business model, IT capabilities and carrier network. These so-called “consultants” are working for their LSP. This must be kept in mind by companies that take this route.

Going the 3PL route begs another question. Does the company that is doing the outsourcing have the resources and KPIs necessary to manage the logistics service provider or providers?  While it can be advantageous for some companies to outsource some or all of their logistics operations, these functions need to be scrutinized and evaluated. Otherwise, the shipper loses control and is essentially at the mercy of their LSPs.

We see some smaller organizations that place the logistics function in Finance and deploy a set of mid-level managers to lead these technical departments (i.e. transportation, order processing, inventory management), with varying degrees of success. Smaller companis cannot abdicate their responsibilities to manage their supply chains. While they may not be able to afford or require a high caliber logistics executive, they have an obligation to make sure that the executive, and the team supporting the logistics leader, receive training to perform these functions at a high level.

Larger organizations will often utilize two or three options. This raises another set of issues. Just as some shippers don’t possess all of the requisite expertise, neither do all consultants or LSPs. Some logistics companies specialize in certain industries (i.e. automotive, refrigerated products) and in certain functions (i.e. transportation management, return goods management) but have gaps in other areas (i.e. retail, warehouse design).

In other words, the company seeking external resources must do their due diligence to make sure that the organizations being evaluated and recruited will possess the skills to achieve excellent results. Here are five traits to look for when choosing a logistics consultant) (http://blogs.dcvelocity.com/logistics_problem_solving/2017/05/five-traits-to-look-for-when-choosing-a-logistics-consultant.html ).

A smooth functioning supply chain can be a business differentiator. Take the time to carefully assess the value of each of the three options for your business.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Business Transformation Strategy Fri, 26 May 2017 19:48:15 +0000
Get your “House in Order” Before Conducting a Freight Bid https://www.dantranscon.com/index.php/blog/entry/get-your-house-in-order-before-conducting-a-freight-bid https://www.dantranscon.com/index.php/blog/entry/get-your-house-in-order-before-conducting-a-freight-bid  

b2ap3_thumbnail_dreamstime_xl_49290215.jpg

One of the most frequent complaints I hear from carriers, in person, on social media, or at conferences, is about the number and quality of freight bids that they receive. Carriers complain about the poor quality of the data, the number of carriers in the bid, and about the lack of professionalism in the bid process. They also assert that if the shipper would just meet with them face to face, rather than through a bid process, the result would be more successful for both parties and would take a lot less time, money and effort.

My company has designed and executed many successful bids over the past fourteen years. We have learned that for many shippers, success comes from getting “your house in order” before executing the bid. This is what is involved.

Many shippers have been moving the same freight, to the same consignees, using the same processes, for several years. In their haste to put their freight out for bid, they overlook certain aspects of their business.

A company's product portfolio evolves over time.  New products are introduced as old ones are retired. Miniaturization and packaging changes can have significant impacts on freight densities, and as a by-product, freight rates.  It is essential for shippers to obtain precise calculations of updated product densities before launching a bid exercise.

Businesses change over time. New divisions are added while others may be closed or sold. This may alter freight flows.  Some companies overlook the opportunity to merge their freight with their new sister or acquired divisions to improve their negotiating leverage. In other cases, new pool or consolidation points may evolve.

We sometimes find companies that experience a deterioration in their business volumes. Poor economic or competitive conditions may reduce shipping volumes and leverage. This can necessitate combining volumes with competitive shippers, forming industry associations or taking other creative approaches to make their freight more attractive to carriers.

Shippers should also look at their order fulfillment processes and cycle times. Some consignees may be able to provide more lead time on their orders if you ask them. This can allow for combining daily LTL orders into larger shipment sizes and moving them on designated days.

In other cases, intermodal transportation, in some areas, may be an effective option to over the road service, at a significant savings.  For certain Canadian-based companies, they may be able to arrange direct shipping of their products from their US vendors to their Canadian consignees, by-passing their Canadian warehouses in some instances, and reducing cross-docking, re-handling, and line haul costs.

It is critical to identify and implement these efficiencies before conducting a bid. These operational changes will translate into even bigger savings after the bid has been conducted. If necessary, delay the launch of the bid until these changes are made. Keep in mind that your carriers’ rates are tied to freight volumes on specific corridors. If you make these changes after the bid, you run the risk that the carriers will come back and ask for a renegotiation of the rates.

Shippers also need to get their data in order before conducting bid. It is essential that the carriers in the bid be supplied with accurate data upon which they can base their rates. The data should be cleansed to remove errors in weights; the volumes in certain lanes should be corrected to reflect new customers added during the year and the loss of some old ones.

Two other areas to look at are production and inventory management processes. For some shippers, these may be delicate issues to raise with their supply chain partners. Nevertheless, if there are problems with production processes such that the company is required to make excessive use of expedited services, or if cramped warehouses force the company to move suboptimal shipment sizes, these translate into higher than necessary freight costs. Again, these items should be addressed, if possible, before executing the bid.

By making ongoing changes to a company’s supply chain, this ensures that the business is operating as efficiently as possible. By combining these changes with a well organized FRP process, shippers can maximize their savings. For more information on how to conduct a professional freight bid, check out my series of blogs on this topic (http://www.dantranscon.com/index.php/blog/entry/freight-bid-tip-1-obtain-buy-in-and-participation-from-the-operating-divisions ).

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Freight Bids Fri, 19 May 2017 19:51:41 +0000
A Lesson from the Comey Firing https://www.dantranscon.com/index.php/blog/entry/a-lesson-from-the-comey-firing https://www.dantranscon.com/index.php/blog/entry/a-lesson-from-the-comey-firing b2ap3_thumbnail_632412514_donald-trump-james-comey-zoom-934e13d7-1179-451d-923e-3f86c3f0813b.jpg

The firing of FBI director James Comey by president Trump is the biggest story of the week. Most of the focus has been on the constantly changing rationale for the termination. The television networks have been filling the airwaves with a variety of reasons for the firing. The various spokespeople including the president, VP, and assistant communications director have stumbled badly in telling a coherent, consistent and honest story.

Director Comey has been accused of being a “showboat” and “grandstander,” that “the FBI was in turmoil,” and that he was not doing a good job. Of course, one of the major issues behind this firing was clearly that Mr. Comey was leading the investigation into the possible collusion between the Trump campaign and Russia.

The director was in the third year of a ten-year term. According to the acting FBI director, in his testimony to Congress on Thursday, Mr. McCabe stated that director Comey had been highly respected throughout the agency.

There is no question that director Comey was a controversial figure. The Hillary Clinton e-mail server situation was a huge problem to the Democrats in 2016, possibly shifting the election at the last minute in favor of Mr. Trump. Then Comey mentioned in a public briefing to Congress earlier this year that he was investigating the links between the Trump team and Russia. In other words, he was investigating his new boss. This is not a winning strategy for job security unless the incoming administration has nothing to hide.

Lost in the smokescreen of changing storylines, misstatements and distractions was a key piece of the narrative. Director Comey learned of his firing from a TV monitor that flashed the announcement while he was speaking to a group of FBI employees in California. What a cruel, mean-spirited and humiliating circumstance under which to lose your job! In fact, what could be worse than receiving a public firing in front of people with whom you have worked for decades?

This is not the only firing that has been done without any finesse or sensitivity. I am aware of an executive fired via phone call while on a European family vacation. It is sad to see people treated in such a cowardly and unprofessional manner. 

What makes the Comey firing different from other firings is how it was done and by whom. Director Comey was fired by the most high profile person in the world. Only one other FBI director has ever been fired in U.S. history. There is no evidence that director Comey committed an illegal act or was not competent. Why fire an FBI director in the middle of a major investigation (into the performance of the person and team to whom he reports)? What could be more suspicious than that?

Was it absolutely necessary to terminate director Comey at the very minute he was addressing his staff? Why couldn’t he have been fired upon his return to Washington? The termination delivers a message of a president who had a personal vendetta with director Comey, who acted in an erratic, fearful and thoughtless way. What message does this give to other members of his staff and to employees in other organizations?

The FBI director serves at the discretion of the president. The president has the right to fire this individual as he or she see fit.

Thankfully, as we all know, there are processes and procedures for dealing with poor performance in many professionally run organizations. First, the employees should have attainable goals that are tied to specific metrics. Second, employees are expected to received performance appraisals. Third, if a staff member receives a substandard performance appraisal, the individual is expected to be given mutually agreed upon goals and an opportunity to correct his or her performance. One could argue that senior government posts are different. The individuals given these jobs have extensive track records with many years of leadership experience. There is no time for hand-holding at this level.

One could also argue that many individuals given cabinet level appointments are often political appointees and do not a have record of achievement in a particular area. Look at the postings given to people like Dr. Ben Carson and Betsy Devos. What does Dr. Carson know about the housing sector?

The point is that how leaders hire, manage, and sometimes terminate employees is very important to the organization. These activities have a direct impact on morale and performance. The nasty and slipshod way this firing took place may cause a constitutional crisis in the United States, particularly since president Trump and his team seem incapable of communicating a consistent story.

The key lesson we should take away from this mess is that people in positions of authority should be much more thoughtful, deliberate, fair-minded and knowledgeable as to how to recruit, manage and dismiss their most valuable resources, their people. The Comey firing will leave a stain on the entire Trump presidency. In fact, it may ultimately lead to his departure.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Crisis Management Thu, 11 May 2017 21:15:43 +0000
Building a Leadership Team to Drive your Business https://www.dantranscon.com/index.php/blog/entry/building-a-leadership-team-to-drive-your-business https://www.dantranscon.com/index.php/blog/entry/building-a-leadership-team-to-drive-your-business b2ap3_thumbnail_dreamstime_xl_13826614.jpg

Over the past few years, I have noticed a disturbing trend as I meet with both our shipper and carrier associates. They have changed their leadership team again. The VP of Transportation or Logistics (in manufacturing and retail organizations) or the President or other senior officer (in transportation organizations) has now been replaced multiple times. In fact, in some companies, they change executives like some people do spring cleaning in their homes. “It is out with old and in with the new.”

What is interesting for me is that in some cases, as an outside consultant, I have had the opportunity to work directly with the business leader and the company. I have been able to observe their performance and that of their superiors and subordinates. I have the following observations to share with you.

In some situations, the terminated business leader was doomed to fail. The expectations for the individual may not have been realistic. He or she may not have received the full support of the business owner or senior executive or the collaboration between them wasn't there. The departed person was charged with implementing the failed or poorly conceived vision of the business leader. The terminated executive “took the fall” for the unsuccessful business plan or weak leadership of his or her boss.

In other cases, the individual did not perform at the required level. He or she may have not had the required skills, did not fit with the company culture and/or did not work well with his or her peers. In some cases, there was an overreliance on specific subordinates who were not performing their jobs at an acceptable level. This overreliance and/or a poor hiring process cost the individual his or her job.

I also observe a pattern in some organizations where, on an almost annual basis, they appear to take and implement the good ideas of the new executive. Once that is done, the executive has outlived his or her usefulness. It is time to replace this individual with another leader who can bring fresh ideas and approaches to the business.

Other companies seem to take a “toe in the water” approach with their new hires. They create a new position and hire a new executive. At the first sign of an economic downturn, the position is closed and the executive is terminated.

Some companies take a somewhat risky approach to replacing their key leaders. They will recruit an individual from outside the industry to fill a position. Years ago I came into the freight transportation industry from the telecommunications business. I didn’t know a fifth wheel from a forklift. But I learned the basics.

There is value in bringing a fresh approach to a long-established business. When I look at the freight brokerage industry, as an example, I see many people with strong backgrounds in areas (i.e. IT, Finance) other than freight operations who are revitalizing this segment of the business.

However, I have also observed some people who have not been able to come up the learning curve and adjust to the industry. They don’t take the time and apply the energy to learn the nuances of the freight business. They try to change the business and customers to fit their paradigms rather than adapt to the new business.

Taking on too many leaders without relevant industry experience, and without them receiving good training, can lead to problems. The business leader who brings outsiders aboard must commit to supply them with a basic grounding in the business, either directly or through trusted advisors and subordinates.

Building a Strong Leadership Team

These are my take-aways.

1. Start with a solid plan that reflects a blend between bottom-up improvements and the top-down vision.

The business leader, the leadership team and the new executive must be on the same page with respect goals, metrics, support staff, timelines and results. For an executive contemplating making a switch to a new organization, this individual should engage in a dialogue with his or her future superior to make sure there is alignment on all of these items. If the connection isn’t there from the beginning, this should raise a red flag as to whether it is wise to change jobs.

2. If your company is changing executives every year, the business leader should reflect on whether this approach is working.

Is your company able to perform at a high level with the constant changes in the leadership team? Would your company produce better results with a more stable team? Is the constant turnover by design or a reflection of poor hiring and business practices?  The leader should ask, "What am I doing to create this situation?"

I was struck this week by a Stifel report I read about CH Robinson. It contained the following quote about this company.

“Consistency of management. John Wiehoff has been CEO for 15 years. Many of his direct reports have been with the company for 20 to 25 years. One cannot underestimate the value of the company's lower turnover rate when it comes to developing sticky relationships with shippers, deeply penetrating accounts to capture wallet share, and building relationships with the company’s carrier base.”

My sense is that many companies, in their zeal to embrace the latest idea or trend, they miss the value that continuity of management brings to their organization.

3. As an employer and employee, think carefully about the mission, values and culture of the company.

Creating a weak management team can cost the leader his or her job as well. As a prospective executive with a new organization, do you see alignment with the core principles of the company? Are you comfortable with how they embrace change and how they solve problems?

Ask the leader about the last crisis that the company faced and how they dealt with it. Is the leader aware of what is going on in the industry? How is the company dealing with multi-channel distribution, automation and/or driver recruitment? Do their plans make sense to you? Are they working? Can you help make them work better or are you going to be stifled in this effort?

4. Is this a newly created position or has this post been in place for many years?

This is an important question to ask before you join an organization. The newly created position is often the first job to be purged during an economic downturn. The senior leader second guesses the earlier decision and reverts back to the previous organization structure. You may wish to join another organization rather than find yourself in a job search 9 or 12 months later.

5. Is it time to bring in some people from outside the industry?

Does the company have a plan to facilitate the learning curve for a new executive from another industry? Have they done this before successfully? Or are they just repeating a failed process? What is the company’s annual employee turnover rate and their annual executive turnover rate?  How long did the previous executive hold the position you are applying for?

What are they doing to enable a knowledge transfer from the boomers to the other age groups in the company? Are you comfortable that as the boomers move out, there is a leadership team and "bench strength" in place to carry the company forward successfully? As a new hire, will you be “part of the solution” or “part of the problem?”

Building a talent pool is one of the most important jobs of business leaders. As an outside consultant, we are in a unique position to see which of our associates are doing this well and which ones are not. There is nothing more important than building a stable, productive, and winning leadership team. Both the employer and employee should do their due diligence before shaking hands.

 

If you would like an independent assessment of your organization and leadership structure, feel free to contact me at dan@dantranscon.com. To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Career Advice Fri, 05 May 2017 15:50:23 +0000
The Basics of Freight Transportation Financial Management https://www.dantranscon.com/index.php/blog/entry/the-basics-of-freight-transportation-financial-management https://www.dantranscon.com/index.php/blog/entry/the-basics-of-freight-transportation-financial-management b2ap3_thumbnail_dreamstime_xl_25132814.jpg

The Basics

Freight Transportation is typically the single largest cost component of Supply Chain Management. Data from Logistics Management’s Annual Study of Logistics and Transportation Trends highlights that an average transportation spend is in the range of 10 to 11 percent of revenue for companies with less than $250 million in Sales and it is in the range of 2 to 3 percent for companies with revenues in excess of $9 billion. As a result, my colleagues and I are often amazed that freight expenses are undermanaged in so many companies.

Freight Expenses are Controllable, Manageable and Negotiable Costs

Regardless of mode, freight costs are typically comprised of three elements

- Line haul costs

- Fuel costs

- Accessorial costs

The actual freight cost includes components for pick-up, cross-docking (if small parcel or LTL freight), linehaul (point to point) transportation and delivery to the customer and is the largest component of shipping costs. Embedded in this expense are all the costs associated with administration (i.e. data entry, PODs, billing etc.). For small parcel and less than truckload shipments, the freight cost is directly related to the space occupied on the linehaul unit and the weight of the shipment.

Fuel cost, which is usually the second largest component, may appear as a surcharge on the carrier invoice or it may be directly embedded in the line hail rate. The surcharge formulas and discounts vary from carrier to carrier and are typically tied to the cost of diesel fuel.

“Energy is among the biggest cost areas for companies – along with people, product costs, facilities, and equipment – but it’s the only one that is not monitored and managed carefully. Indeed, it’s often the largest inadequately monitored part of a company’s cost structure.” (Harvard Business Review, January-February 2017 Energy Strategy For The C-Suite By Andrew Winston, George Favaloro and Tim Healy). Shippers must be vigilant to ensure they are paying surcharges that are in line with their volume of freight.

Accessorial charges may be applied for any service that is not included in the line haul rate or fuel surcharge. This can include deliveries to job sites or apartment buildings, redelivery to a different location, driver waiting time, trailer detention and a host of others. Over the past few years, carriers have become more focused and aggressive in capturing revenue for these services.

Many of these charges can be related directly to poor practices by shippers. This can range from not providing appointment times for carriers to not effectively managing carrier assets. These services cost the carriers money and they frequently change for this work. All of these elements of freight transportation need to be managed, controlled and negotiated on an ongoing basis.

Telltale Signs of Overspending

Here is a partial list of items that we find in our work that signal that a shipper is spending more on freight than they should.

- No granular freight transportation budget

- High claims expenses and/or high cubing charges that may reflect poor packaging or loading processes

- A knowledgeable person is not managing freight transportation expenses

- Shipper does not know the density of its freight

- Company has no method of managing fuel surcharges

- No RFP conducted in the last 3 years

- Too many carriers being used which results in poor leveraging and high costs

- Freight management is fragmented and managed by each individual branch without strong head office oversight and control

- Poor modal management (i.e. truck used when rail service would be more cost effective)

- Extensive use of expedited freight carriers (signaling poor production processes)

- Overflow or late shipments are given to an incorrect mode or carrier service provider (i.e. small parcel shipments given to LTL carriers)

- No shipment consolidation (i.e. multiple individual shipments going from the same origin to the same destination on the same or consecutive days)

- No transportation management (TMS) software to manage the business

- No ongoing compliance tracking

- No scorecard or KPIs to measure actuals against standards or objectives

- No granular shipment activity data base (Unfortunately, the data remains in files as paper invoices that are not entered into a data base so they can be scrutinized and actively managed.) It is important to remember that many companies have shipping data; the problem is the data is not of good quality, is not in standardized formats, and does not have all the necessary elements.

Poor Management of a Large Hidden Expense – Inbound Freight Transportation

Inbound freight costs are often embedded in the landed costs of goods. In other words, these costs may have no visibility since a different department often manages them; there is more focus is on outbound versus inbound freight management. The procurement specialist may be reluctant to request this information from the vendor. In some cases, the shipper is not able to pass these expenses on to their customers and therefore treats them as “free freight.”

Payment of Carrier Invoices

The payment of freight invoices is another area that must be scrutinized on an ongoing basis. Freight carriers make intentional and unintentional errors in the preparation of their invoices. This can lead to overpayment of freight costs which typically average in the range one to two percent or more. Freight bills must be audited by a TMS system or by a skilled person who understands the types of products being shipped, the density of the products, the carriers approved to handle the company’s freight and the rates being charged. If no such expertise exists in-house, this work may have to be outsourced to a professional freight audit service provider.

Cash Flow

Like other elements of freight expenses, payment terms are negotiable. Some carriers will offer incentives for prompt payment. Each shipper must make an assessment as to whether the financial benefits of prompt payment offset the impact on their cash flows. Some carriers will accept longer term (i.e. 30, 45 or even 60 days) payment intervals.

Summary

Freight expenses represent a significant component of supply chain costs for many manufacturers, distributors, and retailers. Companies that are successful in this area focus on these key elements.

• They have the appropriate Organization Structure staffed with knowledgeable resources.

• They have SOPs and solid Processes in place to manage this important activity.

• They employ the necessary Technology and Systems (i.e. TMS, dock scheduling, shipment routing etc.) to manage their freight.

• They possess good quality Data which is the underpinning to the successful financial management of freight transportation.

 

If you would like an independent evaluation of how your freight transportation operations are being managed, and a roadmap to reducing costs, please contact me at dan@dantranscon.com. To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Best Practices in Freight Management Sun, 30 Apr 2017 14:16:04 +0000
Technology is Driving the Freight Brokerage Industry in 2017 https://www.dantranscon.com/index.php/blog/entry/technology-is-driving-the-freight-brokerage-industry-in-2017 https://www.dantranscon.com/index.php/blog/entry/technology-is-driving-the-freight-brokerage-industry-in-2017 b2ap3_thumbnail_dreamstime_xl_58250255.jpg

The freight brokerage industry has been near and dear to my heart for many years. Earlier in my career, I had the privilege of running one of Canada’s largest 3PL operations. My current company has had the distinct pleasure of consulting with some of North America’s finest freight brokers. Periodically I like to look at the changes that are taking place in this industry. In previous years, I have published blogs (http://www.dantranscon.com/index.php/blog/entry/technology-comes-to-the-freight-brokerage-industry-in-2016 ) on the impact on technology in the freight brokerage industry. Times have changed.

Technology is no longer a driving force in this industry. It is THE DRIVING FORCE. This year we are witnessing the application of technology to every facet of the business. This industry has been discovered by venture capitalists, entrepreneurs, truckers, software, and hardware providers. Software innovations are entering the industry at a very rapid pace. This blog will feature a range of companies that are at the forefront of transforming the industry.

Find an App

Posting a shipment has never been easier. Friendshippr.com (http://friendshippr.com/) turns your Facebook friends into a shipping network. The Friendshippr app, available on Google Play, or from Apple store, is a simple tool to move goods between your Facebook friends.

Pick up, Package and Label Products

Shyp.com (https://www.shyp.com/) will pick up, package, label and deliver your freight.

Deliver Goods on Day of Pickup

If you want to send a package across town or have it picked up, Deliv (https://www.deliv.co/) can do it. They currently service 17 markets. Prices start at $12.50 for our 3-hour same day delivery service.

Find a Driver

Roadie’s business model (https://www.roadie.com/) works with “gigs” which are deliveries or shipments. Shippers are asked to post a “gig” online or on a phone, and Roadie will match it with a driver who’s going that way. Once Senders post details and pictures of the item they want to send, drivers make offers based on location, price, and availability. Once Drivers offer to deliver the Gig, Senders can review ratings and experience before choosing their Driver.

Find a Carrier

Here are two interesting services for brokers seeking to find carriers. Carrierprocuremate.com (http://carrierprocuremate.com/) is a free service for companies looking for Canadian carriers. To make the job easy, the carriers are sorted by province. One of the challenges in launching a freight brokerage operation is to find quality carriers that serve specific geographic areas and particular corridors. CarrierLists.com (http://carrierlists.com/ ) makes the job easy by interviewing all of their carriers via telephone in order to obtain the following information:

• Full contact info: city, state, phone, email, & website

• Trailer Modes – van, reefer, flatbed, intermodal, tanker etc.

• Trailer Fleet size - 10 to 500 trailers

• Operating Lanes/Regions - Regional, National, International, etc.

• Specializations – Teams, Heavy/Oversize, etc.

• Color commentary – hidden margin making gems uncovered during interviews

Dispatch a Truck

NCX or National Carrier Exchange (https://www.nationalcarrierexchange.com/) has a unique business model. NCX offers a FREE Fleet Management, Dispatch, Tracking and Operations platform aimed at helping Carriers and Dispatchers manage their fleets. There is no additional equipment to buy, no software to download or install. All you need is a computer with an internet connection for your dispatchers and smart phones for your drivers. NCX provides numerous functions to help increase efficiency, like scheduling and assigning loads electronically to drivers, sending exact pick up details right to their phone. Dispatchers can use its load calendar and live map for continuous tracking of all of its trucks.

For less than $10 US per month TruckTrack (http://trucktrack.co/) lets you manage up to ten trucks, by performing the dispatching, safety and driver payroll functions.

Manage the Business

There are a host of companies that provide software-based operating systems to run every facet of the business. Many of our small to medium-size customers use MercuryGate International’s (http://mercurygate.com/) TMS system. Their system is designed to:

• Rapidly onboard new customers and enter loads

• Quickly locate capacity using internal and external sources

• Validate carriers & rates to reduce risk and improve margins

• Track loads door-to-door

• Manage buy and sell rates and margin analysis

• Settle invoices quickly

• Provide optimal customer service There are a range of providers that provide services like MercuryGate.

Set up a Customer Portal

BrokerWare (http://3plsystems.com/) is advertised as a web-based application that will increase the efficiency of your company. The software offers many features that allow a business to run more efficiently and effectively, helping a freight broker to grow and become more profitable. Instead of the broker’s sales team spending time, the broker can set up customer portals, and let its customers get quotes and book shipments themselves. The freight broker can save on the man-hours of inputting that information. The less time a broker’s sales team has to spend taking, inputting, and managing customer orders, the more efficient it can be.

Enter a Freight Marketplace

Freightos (https://www.freightos.com/ allows shippers to easily search across dozens of air, ocean and trucking freight shipping companies for the best quote, with live pricing, transit time and forwarder reviews to help you decide. Their freight rates are all-inclusive, provided by trusted freight companies, whether it’s air, ocean or LTL freight.

Find a Freight Broker

There are freight brokers all over North America using some or all of the software systems outlined above. Some now cater to specific segments of the industry. Freightcom (https://Freightcom.com) specializes in providing efficient, cost-effective LTL shipping solutions for small and midsize businesses. Freighera (https://www.freightera.com/ ) caters to wholesalers, manufacturers and distributors that ship occasionally or regularly in the U.S. & Canada. Transfix (https://transfix.io/) focuses on full truckload freight.

Find your Freight

Weft (http://www.weft.io/ ) builds platforms to ingest supply chain and contextual data, extract actionable insights and export that intelligence for business leaders to make better supply chain decisions. For an additional level of granularity, they also develop asset tracking hardware that tracks and monitors your cargo.

Clearly freight brokerage has migrated a long way from the days when people worked out of their basements with a phone and fax machine. New software applications are being developed every day. The business has made dramatic strides in terms of sophistication. This is an exciting time to be a freight broker.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Freight Broker Fri, 21 Apr 2017 15:52:41 +0000
The Truckload Freight Industry in North America in 2017 https://www.dantranscon.com/index.php/blog/entry/the-truckload-freight-industry-in-north-america-in-2017 https://www.dantranscon.com/index.php/blog/entry/the-truckload-freight-industry-in-north-america-in-2017 b2ap3_thumbnail_Truckload-logos.jpgThe truckload sector of the freight industry is different from the LTL and small parcel segments in one important respect. Unlike the other two segments, anyone who can buy or finance the purchase of a tractor-trailer unit and drive the rig, can enter the industry. Freed from the requirement to build cross-dock facilities and/or buy sorting machines, the barriers to entry are low and there are thousands of truckload carriers throughout North America. Nevertheless, the industry has had its challenges over the last couple of years.

Revenues Dropped in 2015 and 2016

Here are links to the top 100 carriers in the United States (http://resources.inboundlogistics.com/digital/trucking_top100_chart_0916.pdf ) and Canada (http://www.todaystrucking.com/top100 ). The top 50 truckload carriers in the United States are listed in the March 20, 2017 issue of the Journal of Commerce. Altogether, the combined revenue of the Top 25 Truckload Carriers dropped 1 percent last year, to $26.9 billion, after falling 2.3 percent, to $27.1 billion, in 2015.

Swift Transportation, Schneider National, J.B. Hunt Transportation Services, Landstar System and Crete are the five largest US based carriers; TFI (formerly TransForce International), Mullen Group, TransX, Trimac Group and Bison Transport are Canada’s largest truckload carriers. It should be noted that TFI now derives roughly 50% of its revenues from the United States.

Revenue declined last year at 15 of the companies on The Journal of Commerce’s Top 25 US Truckload Carriers rankings, according to SJ Consulting Group, which prepared the data. That’s an improvement compared to 2015, when revenue fell at 19 companies. As an indicator of the weakness in pricing last year, the Cass Truckload Linehaul Index, a measure of truckload pricing excluding fuel surcharges, turned negative in March 2016 and declined for 11 straight months.

One of the bright spots for the industry has been the growth in dedicated trucking. This has become a large segment of the business for many fleets. As an example, dedicated trucking accounted for 23 percent of J.B. Hunt revenue in the fourth quarter, but 30 percent of the company’s operating profit.

In October of 2016, TFI. expanded its reach in the United States as Canada’s largest trucking firm acquired the North American truckload (former Con-way) operations of XPO Logistics for $558-million (U.S.) in cash. Swift Transportation Co. and Knight Transportation Inc. announced on April 10 that they will merge via a stock swap to form a new company, Knight-Swift Transportation; The deal will combine two of the largest players in trucking in a business valued at over US $5 billion. The merger was announced shortly after completion of the Schneider IPO. These three developments will make for some very interesting competition in this industry.

Here are a few thoughts on some of the major segments of the truckload industry. Last week Mark Montague, Senior Industry Analyst, DAT Solutions provided his overview of the three major segments of the truckload sector during a Stifel conference call last week. Some of the analysis below comes from his presentation.

Dry Van Truckload

Dry van truckload contracted rates have been flat in the $1.70 US per mile range for over the past 15 months; spot rates dropped from $1.50 mile in January 2016 and now appear to be moving up from the $1.40 mark. There appear to be more active markets (i.e. South, Pacific Northwest, Northeast) in the United States than there were a year ago. The loads to truck ratio has gone from a low of 1.4 in February 2016 to 3.1 in March 2017., a positive sign.

Refrigerated Truckload

Mr. Montague pointed out in his presentation that the refrigerated segment had a particularly difficult year, due in large part to the drought in California. The rate per mile on reefer freight has dropped from over $1.90 US per mile on contract freight in January 2016 and is just beginning to return to that level. Spot rates dropped from about $1.75 per mile into the low $1.60s which is where they remain today. The load to truck ratio has gone from 3.1 in February 2016 to 6.1 in March 2017. The end of the California drought boosts length of haul and results in tighter capacity, good signs for a more positive pricing environment for the remainder of the year.

Flatbed Truckload

Contract flatbed rates were in the low $2.10 US rate per mile range in January 2015 and then tapered off in 2015 and 2016. This coincided with the decline in the fracking boom. Spot flatbed rates were in the $1.85 US range in January 2015. After two years of decline, they were moving up strongly early this year.

Consolidation is also taking place in this sector. Formed just nine years ago, Daseke, Inc. has grown through the acquisition of nine companies, and accelerated organic growth, to become the second largest operator in the U.S. market for flatbed/open deck/specialized transportation. Daseke expects future growth will be driven by additional acquisitions and the acceleration of organic growth within each of the operating units, through cost savings largely resulting from centralized purchasing, the plentiful availability of growth capital, customer cross selling, and the availability of a common operating platform.

The big wild card for this segment of the freight industry, in the United States, is the prospect of a $1 trillion US infrastructure investment. This would spur truckload movements of lumber, steel, pipe, and other related commodities. Even a smaller investment coupled with a stable or growing energy sector, would stimulate growth in the flatbed market.

In Canada, two major unknowns are the Toronto housing situation and the home construction industry. Toronto and much of southwestern Ontario are experiencing what is being called a “housing bubble.” Home prices in the Toronto area have increased 30% year/year. If there is any type of market correction, this would certainly impact Canada’s flatbed industry but could also have more far-reaching effects on the Canadian economy and total freight volumes.

Canadian Truckload Market

While equivalent data is not publicly available in Canada to the carrier revenue data captured in the SJ Consulting report, 2016 was not a robust year for Canadian truckload carriers. Low oil prices suppressed freight volumes in some western provinces while a weak Canadian dollar did not ignite exports from the major manufacturing provinces, Ontario, and Quebec. In terms of freight rates, the Nulogx Canadian General Freight Index displayed a similar pattern to what took place in the United States.

In terms of M & A activity, “there’s a lot of activity right now, and I’d say there’s more sellers than there are buyers right now,” says Mark Seymour, president and Chief Executive Officer of Ontario-based Kriska Transportation in a recent issue of Today’s Trucking, referring to smaller companies that want to sell before dealing with challenges like a pending U.S. mandate for Electronic Logging Devices, tougher training standards for entry-level drivers, and rising insurance costs.

“I believe the outlook for the economy and the oil and gas industry has changed for the better,” Mullen Group (Canada’s second largest truckload carrier) CEO Murray K. Mullen recently said in a recent call with analysts. We are well positioned to pursue acquisitions and recapture market share from competitors that have mispriced their services and are over-leveraged. The timing of the recovery or acquisitions is somewhat elusive, but I have a high degree of confidence that 2017 will be the beginning of growth for our organization once again.”

The Road Ahead

In the United States, low unemployment coupled with high consumer confidence, bode well for the balance of the year. Consumer purchases are a key ingredient of the economy. Sustained consumer confidence would support a range of purchases and would be very positive for the truckload industry.

Despite the many missteps of the new administration, a significant infrastructure initiative would certainly spur growth in the flatbed sector and the rest of the economy. The question would be how many shovel-ready projects would be ready for implementation in 2017? Rising diesel fuel prices would also be helpful to the energy sector and to the trucking industry. The positive relationships that president Trump appears to have established with the heads of Japan, China and the European Union are also positive for import/export volumes.

The major areas of concern at this point are a lack of a coherent and consistent economic vision for the future from the new administration, the recent bombings (by the US) in the Middle East, the war of words with North Korea and Russia and the upcoming elections in France and Germany. Negative results in one or more of these activities could destabilize the economy of the United States.

In Canada, there is some uncertainty about prospects in the truckload sector. President Trump and speaker Ryan have talked about a border tax and changing existing trade policies. President Trump and Commerce Secretary Mills have made various, sometimes conflicting statements, about NAFTA. These concerns have manifested themselves as an impediment to Canadian business investment, which has already been a weak point in Canada’s economic recovery. Bank of Canada Governor Stephen Poloz recently stated that the US trade outcome, “will certainly be negative” for the Canadian economy, “and could even be a major shock . . . I would say protectionism is absolutely the No. 1 threat.” Changes to trade policies would likely have adverse consequences for trucking fleets involved in cross-border (Canada/US traffic).

To sum up, the truckload sector interfaces with almost all sectors of the economy. While there are some hopeful signs for a solid 2017, there are some worrisome issues that could adversely affect the economies and truckload business in both countries.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) Truckload Transportation Sat, 15 Apr 2017 20:31:27 +0000
Estes Cuts Ties with Long Term Partner to Provide Direct LTL Service to Canada https://www.dantranscon.com/index.php/blog/entry/estes-cuts-ties-with-long-term-partner-to-provide-direct-ltl-service-to-canada https://www.dantranscon.com/index.php/blog/entry/estes-cuts-ties-with-long-term-partner-to-provide-direct-ltl-service-to-canada  

b2ap3_thumbnail_Estes---Saia_20170407-192111_1.jpgThe big news on the LTL scene in Canada over the past few weeks has been the severing of ties between Estes Express, the number 14 ranked carrier (on the Transport Topics list) in the United States and TST Overland Express, a large Ontario-based LTL carrier that is one of the major divisions of TFI International (formerly known as TransForce), Canada’s giant trucking conglomerate. This is a partnership that has endured for many years.

Estes Express Lines will be teaming up with two regional Canadian less-than-truckload carriers to offer LTL freight services to Canada under an Estes freight bill. Estes will be working with Speedy Transport of Brampton, Ontario, and Pacific Coast Express Ltd. (a division of the Landtran Group) of Surrey, British Columbia, to offer Estes Canada service. The new alliance will start May 22, according to Estes.

The company stated that U.S. shippers will work with only one carrier, Estes, from pickup to delivery, and all freight will be delivered on an Estes delivery receipt. In effect, Speedy Transport and Pacific Coast Express will become agents of Estes. When asked what drove the need for Estes to convert its Canadian service to a direct model, Ed Alderman, Vice President, International and Offshore Sales for Estes, said Estes wants customers to have the same quality Estes customer service experience from shipment to delivery as they have come to depend on domestically.

As reported in Transport Topics, Estes said it is forming dedicated account teams in Canada to provide the same service level that U.S. customers receive. Freight will move across the border in Estes pup trailers equipped with captive beams and Estes’ proprietary Webb walls. This direct method of cross-border shipping is meant to reduce handling of freight and decrease risk of damage, the company said.

One must remember that Canada has a large land mass with limited population and freight density. There are only a few Canadian carriers that have extensive coverage of the country. Some markets such as the Atlantic provinces, eastern and northern Quebec and northern Ontario, have very few LTL providers. Most regional LTL carriers in Canada, including Estes’ new agents, cover specific areas within the country. Speedy acknowledges in their website that have they established strategic partnerships with Canada’s best carriers to serve the balance of Canada. As a result, Estes, like most American carriers, will be required to use specific interline carriers or other agent partners to serve the remaining markets on a “direct” basis.

TST Overland Express responded quickly to this change by announcing that it would be partnering with Saia LT Freight. Saia LT Freight will service TST Overland's LTL freight entering/leaving the U.S. and TST Overland will service Saia's LTL freight entering/leaving Canada. The partnership will be effective May 22, 2017, the same date that the Estes move occurs. Cross-border freight will be serviced as usual during the transition period.

It should be noted that these types of changes are a regular occurrence. A few years ago, Speedy Transport served as the Canadian agent for Old Dominion Freight Lines. Holland Motor Express, the YRC regional carrier has had a 20-year relationship with Speedy. R & L Carriers was formerly affiliated with the Kingsway division of TFI.

Old Dominion now works with another Canadian giant, Manitoulin Transport. R & L Carriers now partners with the Day & Ross Group. Kingsway Transport and Canadian Freightways, another TFI division, are part of the Reliance Network that includes Averitt Express, Pitt-Ohio, LME and Peninsula Express.

ABF, FedEx Freight, YRC Freight, XPO Logistics (formerly Con-way) and UPS Freight offer direct cross-border LTL service using their terminal networks. Years ago, YRC purchased Reimer Express that allows them to supply domestic LTL service within Canada. Most US carriers do not provide domestic Canada LTL services.

Other carriers use different approaches to serve the cross-border market. Consolidated FastFrate exchanges cross-border freight with AAA Copper over Chicago. Southeastern Freight Lines offers direct service to Toronto only. Other LTL carriers in Canada have partnerships with other regional American carriers. As an example, Midland Express has regional partnerships with A. Duie Pyle, Roadrunner/Dawes and Wilson Trucking Corporation.

History has shown that, over time, carriers often become disillusioned with the sales and/or service performance of their partners and decide to switch. For some carriers, such as Estes, a decision is made to obtain control of the end-to-end process and provide “direct” service through their own people and facilities or through an agent or agents. The only constant on Canada-US LTL shipping is change.

 

If you need helping in finding partners on either side of the border, please contact me (dan@dantranscon.com). To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).


Read More]]>
dan@dantranscon.com (Dan Goodwill) LTL Freight Fri, 07 Apr 2017 17:43:34 +0000