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Distribution & Fulfillment
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Material Handling Equipment

3 Ways to Cut Transportation Costs as Supply Chains Recover

Posted by Michael McClelland

Transportation is a cornerstone of the supply chain. It is an integral link, connecting inventory with manufacturers, retailers, and directly to the end consumer when purchases are made online. Like many aspects of the supply chain, the transportation market is being impacted by the COVID-19 pandemic, causing volatility in capacity and rates.

 

The following are three ways to ensure shippers continue to move products, operate efficiently, and cut transportation costs as supply chains recover and companies move forward in the industry’s current “new normal.”

Ensure access to market rates and capacity

Finding capacity where and when it is needed, at competitive rates, can be challenging, especially during times of uncertainty. That is why many shippers are forming relationships with third-party logistics (3PL) providers.

3PLs have relationships with tens of thousands of carriers, including regional and niche providers. Shippers can leverage these contacts, knowing that their 3PL partner has vetted the carriers and is monitoring market conditions to secure competitive rates.

For unique situations or ad hoc loads, shippers can turn to 3PLs with freight brokerage services. Providers like Kenco that offer these services are equipped with innovative technology tools that ensure loads are covered quickly and efficiently.

Based on the specific service needs of customers and the products transported, the right 3PL partner can help shippers evaluate whether they should convert some of their freight to company-owned or leased assets. If a company decides to pursue dedicated contract carriage (DCC), 3PLs can manage every aspect of the operation from maintaining equipment to recruiting drivers.

 

Leverage technology to optimize your network

Various technologies are immediately available to 3PL customers to help them reduce transportation costs. For example, transportation management systems (TMS) can be used to reduce extra miles, streamline routes, and identify opportunities for modal shifts to cut costs and drive efficiency.

Predictive analytics is also as a key enabler of many supply chain functions, including transportation management. By leveraging artificial intelligence (AI) and machine learning, shippers can predict and prevent service failures before they happen. One late pickup can have a domino effect across an entire supply chain. Conversely, preventing a service failure can keep dock operations running smoothly, reduce costs for carrier detention, and avoid fines from the customer’s customer.

3PLs also provide access to professional procurement resources with automated tools to facilitate competitive bids and back-end analysis. These not only reduce time-consuming manual tasks, but compress the time between the initial bid to carrier contracting, enabling shippers to realize savings sooner.

While shippers can choose to explore any or all the emerging technologies in this space, many do not have the time or resources. They turn to 3PLs like Kenco for innovation expertise, both in selecting the best technologies to meet a specific business need and ensuring complete integration of all supply chain technologies – from warehouse management systems (WMS) to TMS.

 

Be a shipper of choice, especially in a crisis

As important as statistics and data are to effective transportation and supply chain management, at the end of the day, this is still a business about truck drivers, warehouse workers, and entire teams of front-line associates who are vital to the industry. That is why being a “shipper of choice,” especially in times of uncertainty, is always the right strategy.

A “shipper of choice” is easy to work with, maintains communications with carriers, and treats drivers with consideration. Being easy to work with means helping drivers stay on track by having loads ready when drivers are scheduled to pick them up. Some studies have shown that drivers can be waiting up to five hours for a load to be ready, regardless of having an appointment. This causes congestion on the dock and can significantly impact the driver’s hours of service (HOS) and his/her ability to meet the rest of the day’s assignments.

If a load is not going to be ready – perhaps a pick line has an issue, or another shipment has not arrived – be proactive and contact the carrier. The company can make alternate plans to avoid empty miles and other delays.

If it is 90 degrees in the shade or snowing, offer a driver a place to stay inside while waiting for his/her load. The goodwill created will pay dividends in drivers and carriers who are willing to go above and beyond for a shipper.


 

A good time to make positive changes

Even amidst the COVID-19 pandemic, shippers have an opportunity to make positive changes – like finding new ways to access capacity, using technology to reduce transportation costs, and by building goodwill. These strategies will help you cut costs, recover, and strengthen your company for the future.

 

 

 

Topics: Transportation
Michael McClelland

Written by Michael McClelland

Senior Vice President, Transportation

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