Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog

b2ap3_thumbnail_dreamstime_xl_25132814.jpg

The Basics

Freight Transportation is typically the single largest cost component of Supply Chain Management. Data from Logistics Management’s Annual Study of Logistics and Transportation Trends highlights that an average transportation spend is in the range of 10 to 11 percent of revenue for companies with less than $250 million in Sales and it is in the range of 2 to 3 percent for companies with revenues in excess of $9 billion. As a result, my colleagues and I are often amazed that freight expenses are undermanaged in so many companies.

Freight Expenses are Controllable, Manageable and Negotiable Costs

Regardless of mode, freight costs are typically comprised of three elements

...
Hits: 327
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_xl_44863193_20170226-192119_1.jpg

Much of the work we do at Dan Goodwill & Associates starts with a phone call or e-mail from a President, CFO or Vice President of Logistics or Transportation. One of the first questions that we are asked is can your firm help us reduce our freight costs.

The answer is usually yes. Unfortunately, we are not able to wave a magic wand. Effective freight cost management comes from taking some concrete steps. Here they are.

Centralized Command and Control

Many of our clients have grown through acquisition and/or organically. They have manufacturing and distribution facilities in multiple locations. These sites are often managed individually by local logistics managers who each use a set of preferred carriers. By not consolidating shipments, by moving LTL freight daily and by using a variety of carriers, they sub-optimize on freight cost management.

...
Hits: 218
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_l_698409_20170128-212723_1.jpg

Last week I wrote about the consolidation that is taking place in the freight transportation industry in Canada. Thank you for the many positive comments and feedback. I hope the blog has stimulated some thought about the level of competition in the industry, in view of its domination by some very large players.

One of my longstanding colleagues in the industry, who runs an independent transportation operation in Canada, reminded me that there are a range of very fine companies that compete with the industry giants. As a follow-up to last week’s blog, I thought I would provide an overview of the competition in each sector.

As a starting point, I went back over the top 100 for hire fleets in 2016 as published in Today’s Trucking. They range from Canada’s largest trucking fleet, TFI (TransForce International) with over 26,000 pieces of equipment and almost 25,000 employees to the 100th largest company, Transport Matte, with 321 pieces of equipment and 135 employees. It should be noted that there is a steep falloff after you go from TFI to even the second-place carrier, Mullen Group, that has 13, 645 pieces of equipment and 4410 employees. Clearly, TFI is in a class by itself with not just the most trucks but with by far the largest number of fleets under one roof.

The other big fleets highlighted in the previous blog (i.e. Manitoulin, Day & Ross, Mullen) have also grown disproportionately large through a combination of organic growth and/or acquisition. A glance through the top 100 list displays a range of companies, large and small. So let’s take a look at the major freight transport sectors in Canada.

...
Hits: 269
0
Continue reading 0 Comments

b2ap3_thumbnail_logistics-experts-business-team-transportation-warehouse-63158319.jpg

On September 23rd, Logistics Management hosted a webinar at which time the co-authors of the annual Masters in Logistics study presented their major findings. For 25 years, this study has been gathering data from a large sample of shippers and carriers across various levels of spend and size. The three presenters, Karl B. Manrodt, Ph. D., Professor, Georgia College, Mary Holcomb, Ph. D., Professor, University of Tennessee and Tommy Barnes, President, Project 44, highlighted some major changes taking place in Freight Transportation.

E-Commerce is changing the Freight Spend Allocation across various Modes

In 2015, 21.9 percent of freight costs were spent on over the road truckload shipping while 21.7 percent were spent on LTL shipping. In 2016, these percentages declined to 17.8 percent for truckload and 15.0 percent LTL freight. Surface Parcel (i.e. FedEx Ground, UPS) increased year/year from 6.1 percent to 11.5 percent. Small parcel freight volumes increased by one percent. In another area of the study, the researchers revealed that 10 percent of freight shipments move from a DC direct to consumer while 21 percent now moves direct from a plant direct to consumer. This further reinforces the impact that E-Commerce and omni-channel marketing are having on freight activity.

Organization Structures are adapting to Market Dynamics

...
Hits: 295
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_xl_27385956.jpg

The first blog in this series looked at the money saving opportunities for organizations that take control of Inbound Transportation. This blog will outline a series of steps that need to be taken to make this happen.

A Commitment to Act

In the last blog, it was highlighted that some vendors place a mark-up on their outbound freight costs (viz. your company’s inbound freight expenses) and pass it on to their customers. It is important for every company that receives inbound freight to understand the following.

A trucking company adds a mark-up to their costs in order to come up with their freight rates. A freight broker and/or logistics service provider will take the carrier’s rate and add another mark-up. In other words, by the time you receive shipments from your vendors, they may have from two to four mark-ups added to the basic cost.

...
Hits: 337
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

driver shortages Transport Capital Partners (TCP) Retail Leadership Twitter routing guide Hudsons Bay Company freight rate increases transportation audit Rail Canada BlueGrace Logistics Transcom Fleet Leasing autonomous vehicles freight agreements Regina 2015 Economic Forecast future of freight industry shipper-carrier collaboration Global experience LCV's CN Amazon Transportation service Harper Davos speech Microsoft Celadon freight transportation conference Software Advice pipelines Crisis management Bobby Harris Emergent Strategy BNSF Horizontal Supply Chain Collaboration 360ideaspace Climate Change USA Truck NS Colilers International Trump energy efficiency shipping network optimization drones Adrian Gonzalez Distribution transportation news MPG dimensional pricing Masters in Logistics UP NCC CRM University of Tennessee MBA 2013 Economic Forecast Railway Association of Canada LinkedIn Consulting Muhammad Ali Right Shoring business start-up Shipper automation Social Media Deferred Packaging NAFTA driverless carrier conference Entrepreneur Reshoring CITA Shipper Pulse Survey Doug Nix Transportation freight audit Map-21 tanker cars Global Transportation Hub Freight Carriers Association of Canada Freight Shuttle System Freight Recession Schneider Logistics financial management economy IANA solutions provider Conway Transportation Buying Trends Survey Education freight broker intermodal KCS Blogging TMP Worldwide consumer centric Success failure entrepreneur 2014 freight forecast Scott Monty fuel surcharge selling trucking companies 3PL US Economy Management Career Advice freight payment US Manufacturing APL CSX US Election Driver Shortage Sales Training truck drivers rail safety Omni Channel Success freight forwarders mentoring marketing Werner 3PLTL Trucking Spanx employee termination capacity shortage US Housing Market driver trucking company acquisitions Transloading freight bid Freight Capacity Yield Improvement e-commerce Failure LTL TransForce Life Lessons Tracy Matura Keystone Pipeline NMFC David Tuttle Canada-U.S. trade agreement YRC Business Strategy peak season freight transportation in 2011 Training New Hires Dedicated Contract Carriage home delibery Carriers Surety bond FuelQuest Fire Phone Truckload Broker Facebook Inbound Transportation transportation newspaper broker security Business Transformation Strategy Toronto shipper-carrier contracts Social Media in Transportation RFP CSA Comey Otto Swift Accessorial Charges Freight Management FMS buying trucking companies professional drivers Infrastructure Packaging Transplace Warehousing Canadian economy Training 2014 freight volumes Load broker CN Rail Wal-Mart small business Canadian Transportation & Logistics broker bonds Canada's global strategy shipper-carrier roundtable JB Hunt Freight Ferromex robotics Canadian freight market Driving for Profit truck driver coaching Retail transportation Derek Singleton the future of transportation derailments TMS US Auto Sales President Obama New York Times Finance and Transportation Doug Davis hiring process Canada U.S. trade FCA Politics customer engagement Stephen Harper Trade Vision capacity shortages shipping wine Sales Management 2014 economic forecast Associates Search engine optimization Dedicated Trucking 2012 Transportation Business Strategies. Jugaad Rotman School of Business CSA scores Freight contracts Dan Goodwill $75000 bond EBOR freight costs freight transportation Donald Trump Loblaw ShipMax bulk shipping Job satisfaction freight payment freight audit CP Rail Canadian truckers Freight Rates Crude Oil by Rail Rate per Mile cheap oil FCPC economic forecasts for 2012 ProMiles Cleveland Cavaliers dynamic pricing FMCSA Business skills freight RFP freight cost savings

Blog Archives