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

The Truth About Multi-stop in Transportation Management

multistop_truckloadIt’s something we’ve wondered about, along with our customers: do carriers reject multi-stop truckloads more than single-stop, or does it only seem that way? We decided to find out about this particular facet of transportation management. We worked with MIT graduate students, asking them to analyze 5 million truckload and multi-stop truckload tender records in our database. What we found provides valuable insights on the effect that additional stops have on price and service.

According to the research, carriers do reject multi-stop truckloads more often than single-stop. But they don’t reject them automatically. In fact, there are steps you can take to make multi-stop more attractive to carriers.

If you rely on multi-stop truckload shipping as part of your transportation management strategy, you owe it to yourself to learn how to work more effectively with your carriers—which can also improve acceptance levels for these loads and help you better control supply chain costs.

In a nutshell, we learned that 3 things increase the cost of multi-stop truckload:

  • More additional stops. You pay the most—an average of $300—for the first extra stop. Carriers seem to view the move from single- to multi-stop as a material change in the destination pattern and consumed time, and charge accordingly. As you add the third and fourth stops, the incremental price increase is not as dramatic. That is because carriers know up front these are multi-stop loads.
  • More out-of-route miles. When comparing single- and multi-stop loads, carriers look at total miles, time, and revenue. The more out-of-route miles there are, the higher the price and the lower the acceptance level. On average, you pay $0.20 for every out-of-route mile, on top of the rate per mile.
  • More market demand for trucks. Multi-stop takes longer than single-stop, and typically contributes less value to the fleet yield. Extra pickups and/or deliveries for multi-stop loads lead to longer transit times and loading or unloading delays. This impacts the driver’s HOS, as well as revenue generating miles overall. Which is why, given the choice, carriers choose single-stop loads over multi-stop.

At the same time, you can do things that can lower the cost of multi-stop loads:

  • Plan ahead. When carriers can plan predictability into their networks, their profit goals can be realized. So when you plan additional stops and bring them up as you negotiate rates with carriers, you can save $30 per load, on average.1
  • Employ continuous moves. Continuous multi-stop moves save carriers money by reducing empty miles; carriers also receive more revenue generating miles. On average, continuous moves are more than $200 cheaper than multi-stop loads that are not continuous.2
  • Cluster your stops. Clustering stops within a 30-square-mile area saves shippers about $80 per drop. Clustering drops also increases acceptance odds by about 30 percent. The key to clustered stops is to make it possible for the driver to pick up and deliver at all of the stops during business hours on a single day.3
  • Pay higher stop-off charges. Paying $100 per stop on multi-stop loads with three or more stops resulted in higher acceptance rates than paying $50 or $75 per stop. In fact, you are better off paying a higher stop-off charge, because doing so decreases the line haul rate—sometimes beyond the cost of the stop-off charge.

There’s no doubt that multi-stop is more challenging for carriers. But when you understand how these issues play in your transportation management strategy, you can work through the issues and come to a solution that will work for you, and for them. This white paper can help you get started.

1Planned loads were defined as loads that occurred at least once every other week and were compared to similar corridor loads that were unplanned.
2 Continuous moves are a single load with multiple legs that was part of the procurement event and awarded to a service provider.  These were compared to three discrete loads in similar corridors.
3 Clustered stop loads were compared to mathematical market loads built from the shipment data to represent inline multi-stop loads based on the same origin and destination markets.

- Director, Solution Design at TMC; Director, Research and Market Intelligence, C.H. Robinson

Comments

There are currently no comments for this post.

Leave a Reply

Your email address will not be published. Required fields are marked *

*