Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Subscribe to this list via RSS Blog posts tagged in Dedicated Contract Carriage

As the year 2013 winds down, it is time to reflect on the major transportation trends of the past year.  While I saw and read about a wide range of developments, these are the ones that resonated most with me.

1.Technology Comes to Freight Transportation

Last year I predicted that we would see a flurry of new technologies come to freight transportation.  They did and I wrote about some of these new companies on several occasions during the year.  Technology was successfully applied to the freight brokerage business, freight portals, LTL density calculations and to other segments of the industry.  Buytruckload.com, PostBidShip, Freightopolis, QuoteMyTruckload,  and Freightsnap were featured in various blogs during the year.  They are changing the way business is done in freight transportation.  Watch for more of these companies to surface in 2014.

2013 has been called the Year of the Network by numerous supply chain and transportation industry thought leaders.  Companies that built a successful supply chain trading partner network focused on three elements:

Connectivity— unite disparate systems and trading partners

...
Hits: 11896
0
Continue reading 0 Comments

Last week the Council of Supply Chain Management Professionals released its 24th annual State of Logistics Report. Last year, business logistics costs were once again 8.5 percent of U.S. Gross Domestic Product (GDP), the same level they hit in 2011, the new report says. That means freight logistics was growing at about the same rate as the GDP. Inventory carrying costs and transportation costs rose "quite modestly" in 2012, said the report's author Rosalyn Wilson. Year-over-year, inventory carrying costs (interest, taxes/obsolescence/depreciation/insurance, and warehousing) increased 4% y/y as inventory levels climbed to a new peak. Meanwhile, transportation costs were up 3% y/y predominantly from an increase of 2.9% in overall truck transportation costs.

This "new normal" is characterized by slow growth (GDP growth of 2.5% to 4.0%), higher unemployment, slower job creation (which will primarily be filled by part-time workers due to higher healthcare costs), increased productivity of the current workforce from investment in machinery/technology (and not human capital), and a less reliable or predictable freight service (as volumes rise but capacity does not increase fast enough to meet demand). Wilson noted that slow growth and lackluster job creation has caused the global economy to wallow in mixed levels of recovery. "This month will mark the fourth year of recovery after the Great Recession, and you're probably thinking that here has not been much to celebrate," said Wilson. "Is it time to ask, 'Is this the new normal?'"

For logisticians, the "new normal" means less predictable and less reliable freight services as volumes rise but capacity does not. In areas such as ocean transport, Wilson said, this can mean slower transit times. "I do believe the economy and logistics sector will slowly regain sustainable momentum, but that we'll still experience unevenness in growth rates," Wilson predicted.

For cutting-edge logistics managers, however, the current environment also means great opportunities to secure increasingly tight capacity in an era of shrewd rate bargaining. This is partly because the trucking industry, in particular, is facing a lid on capacity because of higher qualifications for drivers while top carriers are becoming increasingly selective in their choice of customers and in the allocation of their assets.

"Truck capacity is still walking a fine line—few shortages, but industry-high utilization rates," Wilson explained. Truckload capacity continues to remain stagnant (with the majority of new equipment orders for replacement or dedicated fleets and the copious amount of truckload capacity sapping regulations coming down the pipeline) and the assumption that freight demand will continue to modestly increase (as the economy continues to muddle along at low single digit GDP growth in combination with population growth), a less predictable and less reliable freight market is developing (as described in the "new normal").

...
Hits: 14219
0
Continue reading 0 Comments

On several occasions I have commented in this blog about a looming truck capacity shortage.  A soft North American economy coupled with political uncertainty and concerns about Europe and China, are discouraging carriers from making investments in their fleets.  Truckers are seeking to maximize the utilization of their existing assets and improve yields, particularly with rising equipment costs, increasingly burdensome government regulations, and a shrinking pool of qualified drivers. However, the on demand truckload model creates uncertainty as truckers wait for shippers to book a load and/or to balance a lane.   

Shippers are becoming increasingly concerned about finding the capacity they need to move their freight.  They are also concerned that tight capacity will lead to rising freight costs.   Capacity shortages in various North American markets this year have caused shippers to seek out options to current transportation processes.

A “Mutually Beneficial Antidote” to Securing Capacity and Rate Stability

One solution to these problems is dedicated contract carriage—the practice whereby, as the name implies, a trucker dedicates equipment and drivers to serving an individual shipper, allowing that customer to lock in rates and capacity with that carrier for a multi-year period.  John G. Larkin, lead transport analyst for investment firm Stifel, Nicolaus & Co., calls dedicated trucking the "mutually beneficial antidote" for carriers that want to get paid for capacity and shippers that want to know it's available.

"Both shippers and carriers are increasingly realizing that dedicated trucking may be just the solution that meets both their needs," Larkin wrote in early October.  He stated that shippers who own and operate private fleets could "see 10-percent savings right off the bat" from switching to dedicated service. That's because specialized operators can usually manage fuel, insurance, maintenance, equipment utilization, and driver schedules more efficiently than a shipper that operates its own trucks can, Larkin notes.  What's more, companies that outsource their fleet needs can free up their balance sheet capacity and reinvest more of their cash into their core business, which is generally not transportation, Larkin says.

...
Hits: 19571
0
Continue reading 1 Comment

Most Recent Posts

Search


Tag Cloud

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

Blog Archives