Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Pillars to a Successful Transportation Experience: Carrier Management

transportation_managementAs the market continues to change, what’s your transportation strategy for handling fluctuations? An unclear plan may let you down. Rather than reacting to changes that happen to your supply chain, it’s always better to have a carrier management strategy that allows you to be proactive—no matter what the market has in store.

How to deal with growing supply chain complexity

As the marketplace changes, new demands on supply chains are adding complexity everywhere, especially on a global level. Companies with supply chains that span more than one continent often have shipments, whether inbound or outbound, being transported to various regions of the world to contend with.

Transporting goods such long distances nearly always comes with additional nuances to plan for. Variable volume density and seasonal fluctuations in certain lanes can pose even more challenges.

It’s important to understand your unique business needs in order to align the right transportation service provider to the right opportunity. The right outside expertise can often help make these decisions more clear. For example, regular regional deliveries may work for small carriers, but large carriers may be required for longer distances and steady lanes. Complex routes or freight may require a specialized or dedicated provider.

What is your carrier management strategy related to modes, relationships, and pricing?
Research from the FMCSA shows that of the 206,000 for-hire truckload carriers in the United States, 99% have less than 400 trucks, and 57% have 50 trucks or less. In other words, small carriers own most of the available capacity in North America. Leveraging the capacity of small carriers requires aggregating their service, which can be a challenge without the right logistics provider to help.

And the options aren’t much easier to sort through for ocean and air shipping. There are more than 40 steamship lines* 5,250 NVOCCs**, and 268 airlines*** to choose from. Peak season is generally between August and the end of October, which means securing capacity during that time requires additional planning.

Best in class shippers plan forecasts at least three months in advance and book ocean space between two and three weeks—sometimes more—before they need it. According to Boeing, world air cargo traffic is predicted to more than double from 2015-2035, with an average growth of 4.2% per year. Time truly equals money when it comes to air freight. The more you plan ahead, the more options you have between cargo and commercial planes and can generally find more affordable rates.

And with more than 10 railroads, approximately 150 less than truckload (LTL) carriers, and 5 national parcel providers, no matter which mode you’re shipping, relationships will play a big role in your transportation service provider management strategy. Remember that a quality strategy will rely on an equal balance of service, price, and transit time.

Use your carrier choices to help your bottom line
Whether you realize it or not, transportation service provider management can affect your overall supply chain success. Keeping up to date on the latest regulations impacting carriers, like the upcoming ELD mandate, and making small adjustments to your lead times or dwell times can make a big difference on your carrier relationships and rates.

Ready to improve your carrier management strategy and start building a better transportation experience? We have experienced global supply chain experts who can help you analyze your data and take the first steps to a strong carrier strategy that drives service improvements and cost savings.

Sources:
* IANA. intermodal.org/resourcecenter/statistics.php
** Federal Maritime Commission. www2.fmc.gov/oti/nvocc.aspx
*** IATA. www.iata.org

Editor’s note: This post originally ran on Transportfolio. Since it’s a relevant topic, we wanted to share it with you here on Connect.

- Director, Research and Market Intelligence, C.H. Robinson
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