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

b2ap3_thumbnail_dreamstime_l_100942113_20181113-214228_1.jpg

The subject of rising freight transportation costs has come up on the earnings calls and quarterly reports of almost every publicly traded manufacturer and retailer in 2018. This has been a very challenging year as many transportation expense budgets were shattered by a host of variables including a driver shortage, the ELD mandate and a surging economy.

The financial impact of rapidly rising freight costs caught large numbers of CEOs and CFOs by surprise. Many companies were unprepared for the capacity challenges and financial impacts that took place. Freight transportation expenses are typically in the range of 1 to 5% of sales. This changed in 2018. Suddenly the team that oversees these expenses, and the processes they manage, came under more scrutiny than ever before.

Economists are predicting solid economic growth in 2019 but not quite at the pace of 2018. What can CEOs do to protect their supply chains, the service to their customers, and their profits from further freight cost shock treatments in 2019? Here is a checklist to consider.

1. Eliminate Inefficient and Wasteful Practices

...
Hits: 3477
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_xl_4872424.jpg

Some large LTL carriers have announced rates increases this fall. Old Dominion, XPO Logistics, YRC Freight and UPS Freight have all declared 4.9 percent GRI rate increases on non-contract LTL freight that took effect in September. In survey after survey, shippers have claimed that cross reductions are their number one priority. How can these two conflicting strategies be resolved?

It is important for LTL shippers to realize that LTL carriers are serious about making these increases stick. Despite somewhat muted demand for LTL service, carriers are making a determined effort to secure these increases.

One of the major reasons for the focus and discipline is balanced capacity. Most of the large LTL carriers shrank their networks considerably in the aftermath of the 2008-09 recession. As a result, there’s not a lot, if any, excess LTL capacity. Yield management is the priority this year. With limited capacity, there is little value in triggering a price war. A race to the bottom does little to help carriers raise their margins. LTL carriers are looking at their margins per lane and per account and taking action on contracted and non-contracted freight to improve yields. What can shippers do to mitigate these GRI increases?

For companies that have significant volumes of freight, they can put their business out for bid, leverage their volumes and sign multi-year contracts with minimal rate increases in subsequent years. There are a number of Best Practices that can be employed to make your freight bid a productive process (http://www.dantranscon.com/index.php/blog/entry/freight-bid-tip-1-obtain-buy-in-and-participation-from-the-operating-divisions ). For shippers that routinely do this on an annual or bi-annual basis, there are other avenues to pursue.

...
Hits: 1996
0
Continue reading 0 Comments

 

b2ap3_thumbnail_dreamstime_xl_24936632.jpgOnce you gather the necessary data outlined in the previous blog (http://www.dantranscon.com/index.php/blog?view=entry&id=229 ), it is time to take action. Here is a set of steps to follow to save money on accessorial charges.

Set up a cross-functional team

As you will realize when you review your research notes, it will often take a number of parties (sales, production, and warehouse management) plus the customer in many cases and your carriers to address how to reduce accessorial charges. Once you assemble your cross-functional team, have a meeting to share and discuss your findings and create cost saving targets, action plans, persons accountable and timelines.

Create a report to track success on a monthly basis. Share the report with key stakeholders and follow up with any stakeholder who does not fulfill his/her responsibilities.

...
Hits: 3150
0
Continue reading 0 Comments

b2ap3_thumbnail_dreamstime_xl_44863193.jpg

A couple of weeks ago, I wrote a blog about the new pricing processes that LTL (and small parcel) carriers are employing to improve the profitability of their operations. I noted that freight carriers are emulating some of the activities that have been undertaken by the airlines such as dynamic pricing (i.e. adjusting rates based on time of day and day of the week) to increase yields on their freight activities.

Similar to the airlines, in recent years, LTL carriers have become more focused and aggressive in seeking payment for additional services (that have distinctive cost elements) that have been offered at no charge or at less than full cost recovery in the past. Many carriers have been focusing on inefficient shipper practices or administratively costly tasks that drive up their costs. They have been turning to their customers to compensate them.

In this blog, I will provide a set of questions that shippers should ask themselves and their customers to understand the current shipping processes that are precipitating accessorial charges and the costs that are being incurred. In the next blog, I will provide some general practices that shippers can employ to mitigate these costs.

Why do Accessorial Charges Exist?

...
Hits: 3649
0
Continue reading 0 Comments

Here are few statistics to consider. On June 27, 2014 a barrel of crude oil cost $107.26 U.S. On the same date, a gallon of diesel fuel cost $3.91 in the U.S. or $1.35 per liter in Canada. The cross-border (Canada/U.S.) fuel surcharge was 20.1 percent on LTL, 47 percent on truckload.

Last week, the price per barrel dropped to $50 while the price of diesel fuel fell to $3.13 in the U.S and $1.18 per liter in Canada. The cross-border fuel surcharge fell to 13.4 percent on LTL and 31.6 percent on truckload. This week the cost per barrel is trending below $50. The cost per barrel has dropped by over fifty percent in the past six months. In the same period, fuel surcharges have declined by about a third. Here are few thoughts that shippers need to keep in mind.

1. Shippers will receive a freight cost saving windfall in 2015

An energy expert suggested this week in Forbes magazine that we may see the cost of a barrel of diesel fuel fall to as low as $20 this year. While no one knows what the bottom is or how long energy costs will remain at these levels, the end result will be an unexpected cost saving bonanza for shippers. Enjoy it as long as it lasts.

2. What comes down will go up

...
Hits: 5441
0
Continue reading 0 Comments

Most Recent Posts

Search


Tag Cloud

Stephen Harper Trade Vision peak season KCS drones Climate Change Amazon 360ideaspace Grocery Colilers International FCPC freight bid routing guide Deferred Packaging Leafs NAFTA risk management Business Development rail safety network optimization Finance and Transportation Sales Management Value Proposition JB Hunt intermodal coaching 2014 economic forecast broker security computer security Railway Association of Canada Cleveland Cavaliers Scott Monty marketing Hockey Trucking technology professional drivers freight agreements Load broker Doug Davis Habs Canadian economy Freight Management hiring process freight transportation in 2011 asset management Success Electric Vehicles Blogging RFP natural disasters capacity shortage NCC Freight pipelines 3PL freight broker Consulting Software Advice Tracy Matura US Auto Sales autos bulk shipping US Manufacturing Harper Davos speech shipper-carrier contracts freight payment freight audit 3PLTL China President Obama Freight Recession TransForce Sales Training driver shortages Surety bond LTL Conway Bobby Harris 2014 freight forecast business security Driver Shortage USMCA dynamic pricing TMS 2013 Economic Forecast NMFC transportation audit Sales Strategy Career Advice Canadian Transportation & Logistics Doug Nix Distribution US Election small parcel capacity shortages Werner APL Horizontal Supply Chain Collaboration Tariffs Carriers Keystone Pipeline Blockchain Swift freight transportation freight costs Social Media in Transportation Uber Freight CITA Shipper Pulse Survey Driving for Profit Schneider Logistics shipper-carrier roundtable supply chain management transportation news Rail Search engine optimization Outsourcing Sales TMP Worldwide Map-21 Inbound Transportation dimensional pricing US Housing Market Global Transportation Hub YRCW digital freight matching Social Media freight forwarders consumer centric Facebook Load Boards Canadian truckers Fire Phone CSA scores Dan Goodwill Trump tanker cars IANA computer David Tuttle Education Derek Singleton Canada U.S. trade small business future of freight industry Transportation BNSF buying trucking companies Success failure entrepreneur 2014 freight volumes derailments ShipMax online shopping Spanx broker bonds Truckload Impeachment solutions provider Canadian Protests driver CSX CN Rail Toronto Freight Carriers Association of Canada mentoring business start-up customer engagement CSA Canada cyber security Freight Rates economic forecasts for 2012 Omni Channel Accessorial Charges Microsoft USA Truck Business Transformation Strategy Whole Foods Wal-Mart Digitization trade Reshoring Sales MPG shipping wine Geopolitics Canada's global strategy freight cost savings FMCSA 2012 Transportation Business Strategies. Jugaad robotics Donald Trump Rotman School of Business Coronavirus LCV's freight RFP Transcom Fleet Leasing driverless dark stores truck capacity autonomous vehicles home delibery laptop Infrastructure Business Strategy Ferromex Freight Matching NS Transloading General Motors BlueGrace Logistics Leadership Crisis management ProMiles Muhammad Ali Transportation service Broker CP Rail UP FuelQuest Celadon Justice e-commerce economy LinkedIn University of Tennessee US Economy Entrepreneur recession Adrian Gonzalez Training Transplace Anti-Vax Politics Retail transportation Warehousing Life Lessons carrier conference Montreal Canadiens FCA Job satisfaction driver pay $75000 bond selling trucking companies financial management energy efficiency freight rate increases truck drivers freight transportation conference Online grocery shopping Retail Freight Shuttle System Training New Hires home delivery freight audit Freight Capacity truck driver transportation newspaper CN ELD cars Comey Covid-19 freight payment fuel surcharge shipper-carrier collaboration Rate per Mile Canadian freight market shipping Loblaw CRM last mile delivery Digital Freight Networks Business skills Canada-U.S. trade agreement YRC economic outlook Associates Failure Packaging freight marketplace Transport Capital Partners (TCP) Yield Improvement 2015 Economic Forecast trucking company acquisitions Global experience Crude Oil by Rail Regina Twitter FMS Management EBOR Freight contracts MBA Transportation Buying Trends Survey automation Right Shoring the future of transportation Trucker Protest employee termination cheap oil Otto Masters in Logistics New York Times Toronto Maple Leafs computer protection Shipper Dedicated Contract Carriage Government Hudsons Bay Company Dedicated Trucking Emergent Strategy

Blog Archives

March
February
December
October
September
August
June
May
April
March
January