Transportation Industry Overview

Quick points on the transportation industry

The Transportation Modes

• Over the road (LTL & TL)
• Expedited over the road (LTL & TL)
• Intermodal
• Courier (Surface & Air)
• Ocean (CL & LCL)
• Domestic and international air

Value of Benchmarking

• Reduce rate negotiation conducted by staff exposed only to their own rate levels
• Get comparables to know what your competitor is paying
• Understand carrier capacity requirements
• Understand carrier costs and how to use them to your advantage
• Cover all the bases, contractually

Cost Impact of Density

• Understand the impact of density, the most important and misunderstood aspect of transportation cost
• Understand how cubic displacement rates are converted and charged in dollars per hundredweight
• Know the difference between subject to cube vs. not subject to cube

Cost Impact of Packaging

• Gain Protection against loss or damage
• Avoid claim implications from reused packaging
• Know the impact on product density and cost
• Plan for disposal cost of packaging

Seasonality of Business

• Protection against loss/damage
• Reused packaging and the claim implications
• Impact on product density and cost
• Disposal cost of packaging

Freight Allowances

• Often awarded to retailers who pick up their own shipments
• Percentage of purchase price doesn’t always reflect actual cost
• Benchmark costs against actual costs
• No allowance for density considerations

Fuel Surcharges

• Know how fuel affects your costs
• Understand how carriers calculate fuel surcharges
• Learn the strategies that can be used to control these costs
• Know the best time to address fuel costs

3PL Service Providers

• What is a 3PL service provider?
• What are the benefits?
• When and how a 3PL should be used?
• 3PL / Warehousing optimization

Buying Threshold

• Hard to control but worth an effort
• Smaller minimums equal smaller shipments equal higher costs
• Strategy for mode change based on threshold