Leveraging Logistics Blog

The InTek intermodal spot rate index increased 0.4% over prior week. 

CFO's are demanding better performance after watching their freight budgets balloon to all-time highs. The annual freight RFP season is just about upon us and after a difficult year where freight budgets were in the red thought there is no better time to start a discuss how shippers can improve their RFP process to obtain better results and then successfully execute operationally once the awards are sent to the carrier community.   The days of throwing out percentage reductions or using a solve to equation to determine the spend for next year is a time tested process that needs to be challenged.  While freight is thought of as a commodity, there is more to it and the Excel spreadsheet RFP driven down from the top misses the target before the arrow is even pull from the quiver.  Today's dynamic environment requires strategic planning; execution to the strategy; measurements to the goals; analysis against industry benchmarks; and continuous improvement.  

The timing could not be better to take a deeper dive into the 53' capacity market, as shippers across the USA are challenged on finding capacity and at a competitive price.

Lead time is an often overlooked factor in delivering freight on-time and on-budget, yet it can be the difference between a shipper riding on their contracted rates versus the elevated spot market for capacity.   The importance of managing lead times increases exponentially in a capacity constrained market, even if the shipper has a contract with the carrier base it utilizes.  The reason is carriers build their routes based on coverage required for their capacity on committed shippers first, then work on a somewhat first come first serve that optimizes their assets for their rate contracted business ... while serving the greatest numbers of shipper requests.   If spot market opportunities fit the route build for the day, then they will be worked into the plan.  Some carriers will go to a no spot policy in a constrained market. 

The days of freight brokers operating with three phones and their hair on fire desperately looking for a carrier back haul is in the history books.  Technology and capital is the reason for the change ... and might I add a very positive change for shippers in terms of the quality of service; transparency; multitude of logistics options available; competitive pricing; data mining and network analysis; and professionalism.

Study after study has found that companies that execute a one DC distribution model are best suited to position their warehouse in Indianapolis, Indiana for the following reasons:

The FDA published the FSMA Rule on Sanitary Transportation of Human and Animal Food.  The regulation established requirements and liabilities for shippers, loaders, carriers and receivers involved in the transportation of human and animal food. 

Managing day-to-day freight loads is a full time job, but the often overlooked project and / or seasonal freight market requirements can wreak havoc on shippers' resources, performance and reputation with its carrier base.

If you are a shipper not employing a transportation management system (TMS), then you will want to read on.  There is overwhelming evidence (TMS) save companies anywhere between 3-35% of their transportation spend, as compared to manually managing freight. 

No one would consider driving a car with a blindfold, but that is exactly what many companies do today with their inbound supply chain.