Shippers Must Work Harder in 2011 to Mitigate Freight Rate Increases

<p>There are a number of signs that shippers may come under pressure for freight rate increases this year. An economic recovery is under way. Robust retail sales in the latter part of 2010 may result in some inventory restocking in the first quarter of 2011. This may increase the demand side of the curve. If the recovery has legs, there may be higher shipping volumes during the historically stronger second quarter.</p>

<p>A terminal tour has long been a key element in the freight transportation purchasing process, particularly for medium and large size LTL shippers. After the sales, pricing and operations planning work has been done, a tour can be a turning point in either maintaining an existing piece of business or obtaining a new one.</p> <p>In my work, I get to see a good number of terminal tours, hosted by a variety of carriers. I also get to see how shippers respond to these tours. No matter how good a job has done leading up to “the terminal tour”, this particular event can be a “make or break” in securing an account. In the competitive world we live in, a few mistakes can cause a shipper to pursue another option. In many cases, the carrier may not even realize the mistakes they made. Here are few tips.</p>

<p>There have been a lot of words written about “Green” strategies, Lean Manufacturing, Lean Supply Chains and Sustainability over the past decade. It has often appeared that the actions taken by North American based companies have not lived up to the rhetoric. While reducing carbon use and water consumption have been laudable causes, the cost of change has been an impediment to progress.</p>

<p>At this week’s annual SMC 3 winter meeting in Atlanta, David Tuttle, director of digital strategy at TMP Worldwide, a New York-based advertising and communications firm, gave an outstanding and informative presentation on Social Media and Logistics. He was able to “connect the dots” in a way that helped everyone grasp the potential of social media as a tool to build a business. Here are some of the highlights of what he said.</p>

<p>We have all read the horror stories about the trucking company bankruptcies experienced during the recent economic downturn and the high unemployment level in the U.S. that is hovering at almost ten percent. The good news is that many indicators are pointing in the direction of an economic recovery. Retail sales have been edging upwards, the ISM index has been staying in positive (growth) territory for months and there have been several reports highlighting increases in freight volumes, particularly for intermodal transportation.</p>

<p>While social media have been around for several years, 2010 was a landmark period in their evolution. The popularity of the movie “The Social Network” and the designation of Facebook’s founder Mark Zuckerberg as Time magazine’s man of the year propelled this emerging phenomenon to widespread attention. The news this week that Goldman Sachs plans to invest $500 million in Facebook further cements the increasing value being placed on this movement and Facebook in particular.</p>

<p>I would like to thank the readers of this blog for their positive feedback on last week’s posting and for their suggestions on other items to consider in selecting a freight broker. Here are some items that should be added to the list that was included in that blog.</p>

<p>With the soaring cost of fuel, freight transportation costs are increasing at an alarming rate. Shippers are searching for ways to mitigate the high cost of freight. A freight bid is an excellent tool to achieve cost reductions in shipping costs. Over the years I have seen many shippers secure significant cost reductions through the successful execution of a freight bid. However, as I speak with shippers, I find that in some cases their experience with freight FRQ’s has been disappointing. Here are a few questions to ask yourself to ensure your company derives the maximum benefit from a freight bid.</p>

<p>As many of you know, the National Motor Freight Classification has been the foundation of the LTL pricing structure for domestic U.S. and Canada - U.S. LTL shipments for many years. Here is a proposal to create a density/cube based LTL tariff that has been developed by Hank Mullen of Mullen Associates and Peter Moore of Capgemini. Please take a few minutes to read the proposal and offer your comments.</p>