Trucking is a cyclical business. There are periods of intense growth followed by a lull and then there are periodic seasonalities which may vary from one industry to another. How long each period lasts depends on the internal and external factors that greatly impact the trucking industry.
International trade policies and volume, capacity, manufacturing industry’s performance, local Government policies, fuel prices, and driver availability all impact the trucking industry’s growth
International trade policies and volume, capacity, manufacturing industry’s performance, local Government policies, fuel prices, and driver availability all impact the trucking industry’s growth. For example, all of 2016 was a difficult year for trade which also affected the trucking industry. However, when business picked up at the start of 2017 and soared till September 2018, the trucking industry also benefited. From there onwards, trucking growth has been showing a declining trend, suggesting that another slump is in the offing.
What are the reasons behind this slump? Is it a short term decline or a repeat of the low experienced in 2016?
What are the reasons behind this slump? Is it a short term decline or a repeat of the low experienced in 2016? These are the two questions plaguing the trade and analysts since the start of 2019.
What Factors are Contributing to The Industry’s Concerns?
The trade war with China: The standoff between the US and China is being highlighted as one of the main factors that may impact the trucking industry in the country. There is fear of freight volume reducing due to the tariffs put up by the two countries on each other. However, according to Transport Futures Principal and Economist, Noel Perry who spoke to this article in TTNews.com on the decline in trucking growth, this fear might be unfounded. Noel Perry suggests that this problem may not be as severe as it is currently being made out to be. He feels that due to the prevailing state of the manufacturing industry in China, the Chinese may be amenable to work out a compromise with the US.
Reducing truck orders: A common factor used to judge the health of the trucking industry is the number of orders placed for new trucks. According to industry news sources, the orders for new trucks has fallen considerably in January 2019. However, while sharing the numbers, Truckinginfo.com also puts forth a plausible explanation for the reduction in new orders. According to the news in Truckinginfo.com, orders reduced by 26% in January 2019 as compared to December 2018 and were 68% less than the truck orders placed in January 2018.
Going by this forecast, it is quite possible that the transport sector may also experience a slow year.
Economic growth slowdown: 2019 began with some concerns regarding the growth of the economy. In a Wall Street Journal article published in January, leading financial institutes shared their forecast for the year. Goldman Sachs predicts a growth rate of 2% for the first 6 months of the year and a rate of 1.8% for the rest of the year. Morgan Stanley presented a slightly more pessimistic view with a forecast of 1.7% growth rate for the year which could go down to 1% for the third quarter. The article also shares a quote from Jake McRobie, Economist, Oxford Economics, “We have been looking for a gradual slowdown in manufacturing activity amid headwinds from trade uncertainty, reduced fiscal stimulus and weaker global activity, but the risks of a sharper deceleration have increased”, to provide some explanation for the low growth forecast. Going by this forecast, it is quite possible that the transport sector may also experience a slow year.
Even if one is to consider the lower number, the driver shortage is a critical issue.
Driver shortage:According to this piece in JOC.com, the American Trucking Association found a gap of 50,000 drivers and the FTR Transport Intelligence has reported a shortage of 300,000 drivers. Even if one is to consider the lower number, the driver shortage is a critical issue. The article further highlights that hiring companies are finding it difficult to get drivers onboard even after offering a pay increase. This is one aspect that can hamper the supply chain even when all other factors seem to be positive.
The Silver Lining
Even the worst of situations tend to have a silver lining, so does the trucking slowdown. While the cost of operating and maintaining trucks is not likely to come down, the slump in business and the extra capacity built over the last two years may provide the shippers with a little leverage when negotiating freight rates.
Apart from the driver shortage, all other reasons leading to fear of a trucking slump are a part and parcel of the dynamic global business environment. As FTR Vice President of Commercial Vehicles, Don Ake suggests the lull in business is felt because the industry is comparing the exceptional peak experienced in 2018 to the current scenario.
Hence to get the best results irrespective of the prevailing trade cycle, it makes business sense think strategically, collaborate and maintain relations with well-established business partnerswho can help manage volatility in the current business environment.
That said, the freight market is fickle in nature and can unexpectedly turn into a carrier-led market from a shipper-led market and vice-versa. Hence to get the best results irrespective of the prevailing trade cycle, it makes business sense to think strategically, and collaborate and maintain relations with well-established business partners, like BlueGrace, who can help manage volatility in the current business environment. If you would like to speak to one of our freight experts, call 800.MYSHIPPING or fill out the form below.
Congratulations! You made it this far – you’re a Walmart supplier. To achieve this, you’ve provided all your information, proven that your products are a good fit for Walmart’s customers and demonstrated that you are the sort of business Walmart wants to work with. You’ve filled in the forms, shared your certificates and completed the 11 step onboarding process.
It’s a fantastic achievement. According to Walmart, you’re now one of 100,000 businesses worldwide supplying products to its customers. That number demonstrates just how much Walmart is the “800 lb. gorilla” in the supply chain, and it’s also a mark of how highly regarded you are, as a CPG company, to have it agree to distribute your products.
We know that all your distributors, all the retailers you sell wholesale to, are important to you, but Walmart is possibly just that little bit more special. Whether you’ve just started, or have been supplying it for a few years, it’s a different business to the one we all grew up with. The pressure Walmart faces are the same as the rest of the retail sector. Its size is a double-edged sword – its footprint of stores and operations means there are more places to be affected by market disruptions, yet it has the resources to not only weather the storm, but profit from it too.
Just being big isn’t enough, however. What marks Walmart out is its commitment to innovation. In July 2019 it opens its first high-tech consolidation center — a 340,000-square-foot dock in Colton, California that will use automated technology to receive, sort and ship freight. According to the announcement, this ‘will enable three times more volume to flow throughout the center’.
Walmart innovates to maintain its position. Why does it need to do that?
The Situation Today
Walmart needs to continually innovate because it faces a very real threat.
Amazon has been at the forefront of the consumer shopping experience revolution. One-click payments, same-day delivery in certain geographies, multiple delivery and collection options, dash buttons – all features that are shaping customer expectations. Its dominance of the retail landscape is such that it has gone from driving 15 percent of core US personal consumption expenditure (PCE) growth in 2013 to 69 percent in 2017, according to Morgan Stanley Research.
This has forced many retailers, including Walmart, to revise how they serve customers. For Walmart, that means a switch from building stores to focusing more on e-commerce to drive growth. In September 2016, it acquired e-tailer Jet.com, accelerating its online sales and helping it to outperform the retail sector within a year. It consolidated its e-commerce position with the purchase of Indian online retailer Flipkart in 2018.
In much the same way that Amazon purchased Whole Foods to acquire physical presence, Walmart acquired Jet.com to give it a credible e-commerce function.
That does not mean that Walmart is abandoning its bricks and mortar business. Those stores mean that it is closer to more people in the US than any other retailer, with 90 percent market penetration, versus Amazon/Whole Foods’ combined 74 percent.
So, Walmart is closer to you, but Amazon can offer a great experience. This is where Walmart’s innovation switches from automation technology in vast consolidation centers to delivering efficiencies in its extended supply chain. A customer can find anything in Amazon and get it the next day. With a Walmart down the street, if a product is in stock, that same customer can walk away with it on the day.
It is here that suppliers come in. Products have to be in stock. As Steve Bratspies, the chief merchandising officer for Walmart US, told the Wall Street Journal, “When we receive the product that we ordered, we see better sales.”
In other words, if a customer can not find what they want, they will go somewhere else. Not only does the retailer lose that sale, it also loses the opportunity to sell complementary products, or perhaps something that simply catches the shopper’s eye on the way to checkout. According to Greg Foran, Walmart US CEO, five percent out of stock at Walmart’s scale translates to 5,000 orders.
So, Walmart will do everything to make sure that its shelves stay full, that customers can find what they want, when they want it. If insufficient stock is ordered, that’s a retailer issue. If insufficient stock is delivered at the right time, that’s a supplier issue.
At the same time, as Walmart and other bricks and mortar retailers look to economize, they’re looking at where they hold stock. They want stores to sell, not to act as warehouses – the price of retail square footage simply does not allow that in the current market. That’s why Walmart is introducing these consolidation centers – to collate from hundreds if not thousands of suppliers, before using their own distribution networks to get the stock to stores.
That’s the retail landscape suppliers are entering into when they become part of the Walmart supply chain. Alongside this are rising fuel and transport costs – the US Energy Information Administration (EIA) May 2019 update forecasts that regular gasoline retail prices will average $2.92 per gallon (gal), up from an average of $2.85/gal last summer.
It’s an additional cost that both suppliers delivering to Walmart and the retailer itself, through shifting products from consolidation centers all the way to stores, are going to have to take on board. This ultimately impacts margin across the supply chain.
Ramifications: they say jump, you say how high
An environment of ruthlessly seeking efficiency, with fluctuating transportation costs, dominated by 800 lb gorillas.
What that means for suppliers is that they have to deliver when Walmart wants, not when the suppliers feel like it. It’s where OTIF comes in – on the actual due date, exactly the right amount. There is no grace period, limited leeway. That’s because flexibility eats into the margin.
Struggle to comply and chargebacks kick in – currently three percent on all shipments below the threshold. Amazon, with MABD, may appear slightly more lenient, but it has a similar level of chargeback on both late and early deliveries. On top of that, purchase order (PO) and advanced ship notice (ASN) violations (such as failing to confirm a PO or not sending an ASN in good time) levy a two percent charge
It’s just got stricter, as well. From May 2019, suppliers that ship full trucks must hit a specified window 87 percent of the time, up from the previous 85 percent previous target. For less than truckload (LTL) shippers, the jump is that much higher – up to 70 percent in that window, from 50 percent before.
It gets trickier. Historically, suppliers were judged on how consistent deliveries were on time and how complete they were. Now, those two parts will be evaluated separately. It’s all about having data that can be fed back into a stringent evaluation process to identify further efficiency opportunities.
Then there’s the challenge of Walmart as an international operation. As you grow within Walmart, there may become opportunities to supply its Canadian subsidiaries, or even further overseas. That brings its own challenges as you will need to comply with local regulations and legislation, both in terms of your products and your business practices.
What you need to think about if you are
So far, what we’ve discussed applies to all shippers. Yet every business is different, and there will always be specifics that only certain types of suppliers need to focus on. In this section, we’ll take a brief look at three types in particular: newer CPG companies, LTL shippers and those dealing in perishables (such as fresh food).
…a newer CPG shipper
With the introduction of consolidation centers, and the end of stores holding inventory, the onus of predicting consumer demand is passed on to CPG companies. That means knowing who your end customers are, how they shop and when there might be spikes in demand, even if you do not sell direct. This is a challenge for all CPG shippers, but whereas more established brands may have the resources to store spare stock, for newer businesses that capacity may not be available. This is where really clear insights into customers, coupled with efficient internal processes and a lean supply chain of your own, come into play. Falling foul of chargebacks will quickly eat into profits, making it vital that shippers can accurately predict consumer demand.
If you’re LTL, the positives are savings in not paying for half-empty trucks, but the drawback is less control over how the carrier gets to your distributor than if you were a full-truck shipper. The carrier may pick up your pallets, then go to another shipper for their products. It might head to a regional dock to unload your pallets to go on another truck heading somewhere else, before being cross-shipped on to a third truck with everyone else heading to Walmart. That means you have to build in additional time to your shipment planning to ensure that you comply with OTIF, which will have ramifications for your own production processes and supply chain.
…dealing in perishables
While targets may be tight for long-life or non-perishable goods, for suppliers that deal in products that have a limited shelf life, OTIF goals are even stricter. That two-day window becomes one, which puts the emphasis on the shipper to be absolutely accurate with their deliveries. All retailers that stock food and drink, particular that which needs to be kept in controlled, refrigerated environments, need it to be able to stay on the shelf for as long as possible, in order for it to be as attractive as possible to customers. Get closer to use by or best before dates, and consumers are less likely to buy, leading to last-day discounting and wastage.
It might seem like becoming a Walmart supplier is nothing but hardship and the constant threat of chargebacks. Yet it is challenging because Walmart is such a golden opportunity to get your products into the hands of millions of consumers, both in the US and further afield.
It isn’t all about the sales opportunity, however. With retailers like Walmart looking for efficiencies, it forces their suppliers to either follow suit or fall off. By aligning your own systems and processes with the demands of OTIF, you will end up a leaner, meaner machine. This means less wastage in your operations, resulting in less outgoings and more profit.
At a time when all sectors are undergoing huge disruption, this streamlining sets you up to thrive rather than simply survive. While it is demanding, the practices and processes you onboard will unlock long term gains for your business.
The question is, what do you need to consider when aligning your business with the demands of Walmart?
Top tips on being a star supplier for Walmart
Here’s what we’ve learned turns a good shipper into a great Walmart supplier from working with businesses just like yours:
It’s all about data: Walmart wants its supply chain to be as efficient as possible, so it’s willing to share the data it has to help you shape your operations. If you don’t sell direct, getting tangible customer intelligence can be a challenge, but Walmart will share information, such as on-shelf availability and point of sale insights, more often.
Work from the customer backward: On time doesn’t mean in-time to Walmart. If you don’t want to suffer chargebacks, you need to think about your timings from the customer backward. The customer buys your product after it’s been on the shelf X days, so how long prior to that do you need to be delivering it to the distribution or consolidation center? How long does it take to get from your warehouse to that point?
Chargebacks hurt, so make sure it’s justified: Walmart may be huge, but it isn’t infallible. There’s a lot of automation, which means sometimes chargebacks can be applied due to mistakes in their processes rather than your failed compliance. For instance, a carrier may have delivered your shipment OTIF, but the DC did not unload that day. The only way you can contest, however, is to have full and complete records showing how you delivered OTIF against the buyer requirements. Having a trusted logistics partner that can audit your scorecard and compare it to carrier manifests is critical, and it could be the difference between receiving a chargeback or being able to challenge it successfully.
Load planning: If you supply multiple products to Walmart, think about how they are loaded on the pallet or in the truck. It’s no good having the back half of the truck full of products for distribution centers further down the line, or shorter life products nearer the bottom of the pallet.
Think like a Roman: The Romans crisscrossed their empire with straight lines, because that’s the most efficient way from point A to B. You want to do the same, but build in factors such as weather forecasts, traffic patterns, fuel levels, and load points. You’re looking for the most optimized route because it will save you time, which in turn saves money.
Packaging tips: People need to know what’s in the box. That means distribution center employees, yes, but it also means customers. How will it look on the shelves? At Walmart’s Supplier Summit 2019, Foran said “packaging should be designed for impact and efficiency with large fonts that are easy to read, easy to find and bar codes which also are prominent on the packaging.”
Cut down on travel time: Fuel and transport costs are the great unknown, tied to everything from crude production levels to the political situation in the Middle East and South America. You want to control as much as possible, so limit how far you need to move your inventory by positioning it closer to warehouse locations. If Walmart is selling your product predominantly in California, why not get as close as possible to the new consolidation center? Limit the variables and you have a more efficient machine.
Appointment scheduling: Be aware that your mode of transport will dictate when your products can be delivered. Most LTL carriers will not allow you to pre-schedule appointments, preferring to wait until your freight has arrived at the consolidation terminal. It will then be co-loaded with other Walmart-bound deliveries, with appointments based on the trailer the carrier has allocated for that day. It’s therefore vital that you, or more likely your logistics partner, can work closely with both the carrier and scheduling system to make sure this is being done. By doing so, you will be better placed to identify exceptions, such as where the carrier cannot accommodate the delivery, to adjust OTIF without penalty. Most suppliers don’t realize this and miss the opportunity. It is important to note, however, that this must not be abused and is for exceptions only. Your lead logistics service provider is expected to have the right connections and expertise to manage it professionally.
Speaking of carriers, reliable ones are worth their weight in gold: We hear of horror stories where carriers and shippers fall out because neither can clearly understand what the other is actually trying to achieve. The number one mistake people make is to think that being efficient equals going for the cheapest option, when it’s actually about having every part of your chain operating reliably. There are carriers that will drop prices to get business on board, but if you’re then simply more low-paying cattle, is your OTIF compliance going to be top of the carrier’s agenda? You want a good price, certainly, but you need a partner that’s aligned with your objectives more.
The right foundations: You can’t operate a 21st-century business using 20th-century tools. To compete in today’s market needs having the right technology underpinning your operations, foundations which give you visibility and control and allow you to have sight of, and optimize, every aspect of your business.
Embrace digital: Walmart is investing billions in its technology – that means manual processes and paper documents are disappearing. Digital tools like electronic bills of lading are becoming the norm. Do you really want to be the only shipper the trucker has a paper docket for, with the rest on his mobile device the dock or DC are simply scanning?
Ensure everyone lives by OTIF: It’s all well and good your logistics team being held to OTIF, but when the penalties impact the rest of your business, isn’t it really a matter for everyone? It comes back to working back from the customer – the process doesn’t stop when the product leaves your dock but should carry on through to your production team. If you’ve got a lead time of two weeks to produce new stock, that’s not a just manufacturing factor, it’s a supply chain one too.
Walmart want you to win; let it help you: Walmart run a sophisticated education network designed to support suppliers. It’s in its interests that you are operating to the best of your abilities, so make full use of the classes, academy, and tools it offers to help you do just that.
OTIF is vital, but so is everything else: Walmart is taking huge strides in making its entire operation as sustainable as possible, which includes targets for suppliers. These are only going to get stricter, so it’s a good idea to know what they are and keep yourself aligned. There will come a point where being 100 percent OTIF compliant, with customers buying your products in droves, won’t save you if you have a huge carbon footprint and are unsustainable. That’s a lot to take in, so here’s a one-off tip:
How to write a great OTIF action plan: Walmart lives on data, which means evidence. Write a great OTIF action plan and you will have evidence on how you will improve standards. But how do you do that if you’ve not done one before? Googling isn’t an option here – you need qualified, experienced support. Hiring the right people is one route – but they won’t come cheap, and can you justify having them on staff as a permanent employee. Another option would be to outsource to a competent third party. One which has experience of supporting suppliers to build efficient supply chains, whether they’re supplying to Walmart, Amazon or any other big box retailer. Having a supportive partner that has done this, time and time again, for all sorts of different businesses and sectors, means you get access to the right experience and support, tailored to your unique requirements
Being a Walmart Supplier – a story from the frontline
For one Houston-based health and beauty supplier, working with Walmart was a dream come true, until the tremendous growth it propelled led to distribution challenges.
With vendor scorecards dwindling and chargebacks against purchase orders mounting the need for a better solution was apparent. From numerous carrier meetings to drive on-time compliance to costly upgrades in service levels, the trend continued to show little improvement.
Lead times were not an issue and inventory levels were manageable, yet carriers could not seem to comply with the OTIF date clearly displayed on the BOL. Purchase orders were being shipped with ample lead time and in most cases early with guaranteed service at a premium. However, even with upgraded service, the carriers would typically refuse to refund the charges since they were delivered “on time” per the standard transit.
To tackle this, the supplier analyzed the data and scorecards to determine the root cause and set a baseline for current state performance. Next, an assessment of ERP integration capabilities was performed. By linking this with a transport management system, this supplier was able to apply custom business rules to achieve the missing link of the overall issue.
What this meant was that no matter when the order was received in advance of the OTIF, the supplier could effectively route the “Best Value Carrier” and provide the most optimal ship date, relative to the selected carrier’s standard transit time. Each order, once approved within the ERP, would be rated and routed with a Walmart approved carrier delivering the lowest cost, standard service and shipped on the day that would best fit that carrier’s network, all to allow for the delivery within the specified OTIF window.
The supplier showed a 90 percent reduction in chargebacks within the first 60 days of implementing this program and realized the best scorecard performance in recent history.
Now it’s time to start work
As we said before, the hard work starts now. Remember, you aren’t alone – many CPG companies experience difficulties keeping up – back in August 2017, OTIF compliance stood at 70 percent, and it’s taken a while to get higher. Walmart wants you to do well, so listen, learn and take the opportunity that awaits. Look at your own network, your own suppliers and operations, and see how they can work together to support your business with Walmart or any other big-box retailer. Technology and nuances of logistics and supply chain operations are vital here. Working with partners who have the connections, first-hand experience, and understand both the business and technology can make the difference between success and failure.
BlueGrace is a freight and logistics services provider and one of the top 3PLs (Third-party Logistics Providers) with invaluable experience in managing complex logistics programs of leading CPG companies. The dedicated team has the first-hand experience in planning, building and delivering supply chain solutions for CPG businesses that not only help them meet the requirements of their retail partners but turn their logistics from a cost to value add.
You’ve done great work getting this far. Now it’s time to do even better. Give BlueGrace a call today at 800.MY.SHIPPING or fill out the form below and see how we can help you achieve exactly that.
Communication is a vital aspect of building a successful business. An effective communication process ensures that information flows seamlessly between departments and amongst the various teams on time and in a form which will allow them to achieve individual, departmental, and organizational goals and objectives.
While communication in varied forms and frequency is essential for all departments, it is extremely crucial for the executors of the organization’s plans and strategies – the Logistics Department.
Why is communication important for Logistics
Information interchange plays an important role in creating a cost-effective and agile logistics management process. It ensures that tasks are completed and transferred from one point to the other seamlessly and without delay.
For example, the sales department needs logistics data to analyze orders that have been shipped, customer service needs information to update shipment status, and the accounts section requires the data to cross-check transporter invoices. The procurement team needs information from logistics when new vendors are to be hired or old contracts are due for renewal. The other functions of the supply chain also have to collaborate or communicate with the logistics team to get their work done.
In addition to the internal information requirements, vendors such as carriers, warehouse operators, and 3PLs also need to exchange information with the logistics team on a daily basis to ensure that the company’s products are delivered at the right time to the right place at the right cost.
What are the features of an effective communication process for Logistics?
It should be in writing: Written communication is important as it minimizes the scope to misinterpret or forget the message. Today, written communication is the most common form of business communication. Since emails and all forms of messages across multiple platforms can easily be sent to multiple recipients situated across offices, countries, and continents, it is essential for all professionals to develop effective written communication skills and to encourage the same in all employees.
A clear, concise, and consistent message is the hallmark of effective communication.
It should follow the 3 C’s: A clear, concise, and consistent message is the hallmark of effective communication. A clear message ensures that there is no ambiguity in what needs to be conveyed. Conciseness ensures that the message is brief, but includes all important information. And, consistency in language, format, mode of delivery ensures that the receiver does not waste time in understanding the message.
In logistics, given the fact that a lot of the work is time-bound, marking the right team or person on the email is of utmost importance.
It should be sent to the right recipients: More often than not information is lost in the organizational hierarchy because it is not addressed to the right person. In logistics, given the fact that a lot of the work is time-bound, marking the right team or person on the email is of utmost importance.
It conveys urgency appropriately: Many executives are in the habit of marking all their emails as “urgent” to ensure that it gets immediate attention from the receiver. While this practice is great to ensure that important and critical communication does not get missed, however, if all communication is urgent, it becomes difficult to prioritize tasks. It also dilutes the meaning of the word. In such instances, the receivers take up the tasks in the priority that they think is correct. Hence, it is crucial to mark only communication or tasks that are the top priority as urgent and not all communication.
It should provide clear timelines: The delivery or timeline for getting a response or the task being assigned should be clearly mentioned in the communication. This will help the receiver gather information, plan, and execute the requirements mentioned in the message and avoid unnecessary delays.
It should be transparent and reliable: Interdepartmental conflicts, organizational politics, and cutthroat competition encourage employees to keep information from their counterparts or colleagues. This creates chaos, confusion, and mistrust which in turn affects the execution of tasks. It is thus important that the organizational culture promotes transparent communication and sharing of reliable information.
It should be real-time: Logistics is a fast-paced function and information exchange also needs to be equally quick. Hence, information such as a change in freight rates, loading lists, customer orders, etc. needs to be verified and relayed to the next person as soon as it is received. Apart from these things, queries asked in relation to a task or process should be addressed promptly or the receiver should at least provide a timeline by when the sender may expect an answer.
Technology Integration: In this digital age, just getting the written communication right is not enough to ensure the successful implementation of business plans. Organizations must also integrate the technologies, backend systems and processes that are used by different departments to ensure that information flows seamlessly and without manual intervention from one function to another.
For logistics which is an intensely data-oriented function, this integration is crucial.
For logistics which is an intensely data-oriented function, this integration is crucial. It will help reduce manual data entry, delays due to incorrect system entries, and speed up the process. Digital records of all the transactions or logistical activities will also make it easier to get reports, analyze performance, find outliers, and standardize the process across different geographies and vendors. When designing or buying technology or outsourcing the process to a vendor, it is essential to understand if this technology will be able to integrate with other systems that your organization uses with ease and at least cost.
An organization’s logistical communication process can be complete only when all the above elements are present and interlinked via common technology.
BlueGrace’s proprietary TMS (Transportation Management System) is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® 4.0 offers cutting-edge tools for strong reliability and quick performance. Many of our customers prefer to integrate their systems or ERPs such as SAP or NetSuite directly with our BlueShip platform. Our IT integrations team will work closely with your staff to complete the connection between systems. Not only will this simplify your freight but it will provide mountains of usable data to build measurable KPIs and continuously improve your program. To speak to a BlueGrace expert, contact us at 800.MYSHIPPING or fill out the form below.
What will 2019 bring for the trucking industry? Will there be a capacity crunch, demand – supply imbalance? Will the rates increase or will they remain steady? What would be more cost effective – booking spot rates or negotiating contract rates? How will the changes in the trucking industry impact a shipper’s business?
Knowledge of the existing trends can also provide insight into what one may expect from the trucking industry in the coming year.
As the new year begins, all these questions and many more are on the minds of shippers. While no one can accurately predict the changes in the business environment or how the trucking industry will respond to those changes, deliberation on the current year’s performance can help form a more reasonable line of thinking. Knowledge of the existing trends can also provide insight into what one may expect from the trucking industry in the coming year.
Here’s a look at some of the crucial parameters of the trucking industry that can impact shippers.
Rates: According to an article in Logistics Management, the US trucking industry showed a rate increase at 6.2 percent. Long distance full truckload rates showed a growth rate of 7.8 percent in the first half of the year. Less-than-truckload rates increased at the rate of 7.4 percent. The report forecasts a rate increase of around 3.6 percent in the coming year.
A JOC.com article stated 3 differing opinions of what one can expect from the trucking market in terms of rates. It has a bullish rate increase prediction between 5 to 8 percent, a bearish rate hike forecast between 0 to 3 percent, and a median rate increase prediction in the range of 3 to 5 percent.
While there isn’t a consensus on by how much the rates could increase, given the forecasts, shippers might fare better by building in at least the average rate increase in their trucking budgets for the coming year.
While there isn’t a consensus on by how much the rates could increase, given the forecasts, shippers might fare better by building in at least the average rate increase in their trucking budgets for the coming year. These predictions and forecasts can also help them better negotiate their rate contracts with trucking companies or 3PLs.
Capacity: This is the holy grail of the trucking industry for both the truckers and the shippers. Availability of drivers and vehicles, manufacturing industry’s performance, and legal compliances laid down for the industry all have a bearing on carrying capacity. Capacity, in turn, has a strong impact on the rates. When there’s a capacity crunch, rates increase. When it is in surplus, rates decrease.
This increase in trucking volume may lead to capacity constraints in the coming year.
For 2019, according to this article in Reuters, the American Trucking Association (ATA) predicts a 2.3 percent increase in trucking volume every year from 2019 to 2024. This increase in trucking volume may lead to capacity constraints in the coming year. A contradicting view presented by JOC.com and Freightwaves.com, says that while earlier in the year, trucks utilization was at its full capacity, it has come down to 94 – 95 percent. The trend is expected to continue at the start of 2019.
The Freightwave article also points out that the capacity might also be influenced by the availability of drivers rather than the availability of trucks. So even if the vans are available, a shortage in capacity may be experienced due to the lack of drivers.
Given the unpredictable nature of the industry, for shippers who have regular freight, it would make better business sense to work with 3PLs or professional trucking companies instead of individual truck contractors or vendors with smaller fleets to avoid getting short supplied in the event demand increases.
The Economy: How the economy performs has a huge impact on the transportation industry. According to the GDP forecast shared at the Federal Open Market Committee meeting, as reported by The Balance, the GDP is expected to be 3 percent in 2018. In 2019 and 2020 it is predicted to be slightly lower at 2.3 and 2 percent respectively. The fall is being considered an outcome of the ongoing trade war with China. The trade war has also created some skepticism in the freight market.
However, the release also forecasts a decent growth rate for the U.S manufacturing sector. It pegs production to increase at 2.8 percent in 2018. A slight decrease in momentum in growth is projected in 2019 and 2020 with rates at 2.6 and 2 percent respectively. Even if the manufacturing growth rates slow down slightly, it is not expected to have too much of a negative impact on the local freight market.
The other trend that seems to be picking up and is expected to continue is shorter distance freight movement.
Apart from these factors, the other trend that seems to be picking up and is expected to continue is shorter distance freight movement. According to this article in Freightwaves.com which quotes Bob Costello, Chief Economist, ATA, “the average length-of-haul for dry van truckloads fell to just around 500 miles for the year-to-date period, down from an average of 800 miles in 2005”. The article highlights that this trend is being attributed to shippers basing their fulfillment centers nearer the customers.
Going by the reports and views expressed by industry experts, 2019 seems to look positive for the industry vis-a-vis economic performance and rates. Shippers may fare better by factoring in a freight rate increase. For both the vendors and the shippers, there may however be some ambiguity on capacity as it is to an extent dependent on the trucking industry’s capacity to attract professional drivers to fulfill the current shortage.
For a 3PL perspective on 2018 and what to look for in 2019, join us on February 20th at 2pm for our FREE 20 minute webinar, STATE OF THE (LOGISTICS) UNION . We’ll discuss the major concerns for shippers entering 2019, and what the next frontier in transparency will be. Click HERE to sign up today!
You can also speak to one of our experts and find out more about BlueGrace by filling out the form below or contacting us at 800.MYSHIPPING
On January 10, 2019 Adam Blankenship, the Chief Commercial Officer for BlueGrace Logistics was invited to share his thoughts on logistics, leadership and what make our industry tick with host Ryan Gorman at WFLA 970 in Tampa, Florida. Adam was able to give an overview of what BlueGrace does for our customers everyday and how a 3PL helps shippers decrease their freight costs and streamline their supply chain.
Listen to the podcast below to find out more about BlueGrace, what we do, what we believe in and how we are hiring in 2019.
We are witnessing one of the most interesting times in the development of logistics. Shippers and Carriers alike are working towards creating, innovating, and performing all out (and much needed) overhaul of the way we look at delivering packages.
Online and legacy retailers both are encouraged to work with their logistics partners to not only overcome the upcoming challenges but to find bold new approaches to compete as well as survive.
While every step of the process is certainly important, shippers and carriers have been placing a greater emphasis on the last mile of the delivery. And why not? It’s projected that by 2030 more than 600 million more people will be living in urban environments where standard delivery via truck may not be an option. Couple that with the booming growth of online retail sales (e-commerce) and the last mile not only becomes a crucial element for distribution but it’s also a differentiator from the competition. Online and legacy retailers both are encouraged to work with their logistics partners to not only overcome the upcoming challenges but to find bold new approaches to compete as well as survive.
Deliveries are no longer about a simple A to B route. Urbanization has seen to that. With more people living in much more crowded areas, the complexity of deliveries is growing exponentially.
Freight movement across all modes are projected to grow by approximately 42 percent by 2040.
According to the DoT, “The surge in population and economic growth brings with it escalating freight activity. Freight movement across all modes are projected to grow by approximately 42 percent by 2040. This trend means more “everything”. More pressure on roads and transit lines by commuters, more parcels delivered, particularly with the meteoric rise of e-commerce.”
Growing Trends in Last Mile Deliveries
“Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer” was a white paper compiled by DHL and Euromonitor which has identified four growing trends that are shaping urban last mile transportation.
Flexible Delivery Networks
In addition to highlighting these trends, the paper also explains ways that companies can begin to embrace these new tactics and adapt their supply chain to the changing market while growing their competitive advantage.
There must be more public and private sector coordination in freight planning.
“‘It must be recognized that economic activity in urban areas depends on the movement and delivery of goods through freight carriers. City and traffic planners must be made aware that urban settings can be inhospitable places for freight deliverers. There must be more public and private sector coordination in freight planning. Cities can shape markets to focus private sector attention and invest on the needs of cities and the people who live in them by mobilizing infrastructure, talent, and other assets to support the right kinds of AV-based solutions,” was one of the conclusions in “Taming the Autonomous Vehicle: A Primer for Cities (Bloomberg Philanthropies and the Aspen Institute)
The white paper found that major urban settings can cause a variety of challenges for distribution including cost, decreased quality of service, as well as overall organizational strain.
Seasonal growth is a good example of this. Not only are major holidays a heavy load time for logistics but many stores run various promotions throughout the year which require extra personnel. The only issue being, these short-term surges in volume aren’t nearly as easy to predict.
“Urban customers’ demands for speed and convenience are forcing retailers to overhaul their warehousing networks, replacing centralized networks with local fulfillment and distribution infrastructure, which can require a more accurate balancing of inventory,” says DHL on the matter.
The Growing F.A.D
With the importance of urban and last mile deliveries growing, how can companies best take advantage these growing trends to overcome the impending challenges as well as stand out from the rest of the competition? In order to be more competitive, efficient, and an overall more successful company the DHL study suggests applying the F.A.D strategy which they described as the following:
(F)lexible or more elastic transport networks can include the more efficient use of available transport capacity in a market, to achieve higher load factors, bring down costs, connect more quickly to end customers, and reduce environmental impact, but can also imply the ability to move shipments more easily between different modes of transport such as bicycles and vans to improve connectivity.
(A)utomation can include a higher level of automated processing at fulfillment centers, but also the deployment of autonomous vehicles and robotics to bring down labor costs, increase productivity, and enhance services.
(D)ata management enhancements allow retailers and their logistics operators to better forecast and position inventory to reduce waste within their supply chain and achieve better availability of stock. It also provides greater visibility on inventory and transport flows, allowing logistics operators to more effectively manage routing and exceptions, and providing tracking to enhance the customer experience.
There is some variance as to which sectors you’ll need to place more time and energy into.
Now there is some variance as to which sectors you’ll need to place more time and energy into. “Effectively, not all three elements need to be managed as actively or invested in as equally.
Different markets, commodities, and operating environments, as well as competitive pressures, may require prioritization of one particular focus area over the others, or a more substantial investment in certain focus areas at the expense of others. For example, if courier shortages are the most pressing issue for one company, that company would need to funnel resources into making its networks more flexible and likely consider automating some of its processes as well. However, another company may be facing increasing pressure from its customers to narrow the delivery timetables offered to them, incentivizing management to consider investing in a data system with AI capabilities to help predict the most efficient windows,” says DHL.
Not only urban consumers, but all consumers will continue to demand solutions that make life both easy and convenient.
Not only urban consumers, but all consumers will continue to demand solutions that make life both easy and convenient. When it comes to their expectations cost, convenience, and flexibility will all be important factors to both the relevance and success of e-commerce companies, as well as transportation companies who will continue to haul the growing industry along.
At BlueGrace, our proprietary technology is designed to put the power of easy supply chain management and optimization back in your hands. Many of our customers prefer to integrate their systems or ERPs such as SAP or NetSuite directly with our BlueShip platform. Not only will this simplify your freight but it also provides usable data to build measurable KPIs and continuously improve your program. To speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.
In 2018, the world is more connected than it has ever been before. With the advent and popularization of smartphones, we are able to instantaneously make connections all over the world in ways unimaginable just 20 years ago, before we knew the names Facebook, Twitter, and Amazon.
Today, these platforms not only heighten our social connections, but also our trade connections. With access to a smartphone and Wi-Fi connection, any individual almost any place in the world is able to participate in the international conversations on platforms like Twitter and receive goods purchased on e-commerce sites like Amazon within a matter of a couple days or in some cases hours.
With this increased connectivity, a new demand for trade between merchants and consumers all over the world has spiked
With this increased connectivity, a new demand for trade between merchants and consumers all over the world has spiked. Where such trade used to be dominated largely in a wholesale/business-to-business domain, now thousands of smaller merchants endeavor to connect more directly to their niche markets, utilizing platforms like Alibaba and Amazon.com to do so, increasing demand for companies, like BlueGrace, to handle the logistics.
While the digital age is exciting for many reasons, it also means that there will inevitably be growing challenges, for individuals and companies alike; for companies, as they try to re-work the supply chain to accommodate a change in the trade landscape, and for individuals, as they arm themselves with skills and information to be competitive in a digitally dominated present and future.
with an evolving market, dynamic, data-driven, third-party logistics (3PL) companies like BlueGrace are in increasingly high demand, for their ability to navigate a changing trade landscape and help shippers optimize their operations processes.
Traditional logistics companies that once facilitated movement of commerce through the supply chain with standard practices slowly formed over a long period of time to support traditional commerce, many of which are still relevant to this day. However, with an evolving market, dynamic, data-driven, third-party logistics (3PL) companies like BlueGrace are in increasingly high demand, for their ability to navigate a changing trade landscape and help shippers optimize their operations processes.
As we stand at the precipice of this modern trade revolution, the next generation of the U.S. workforce is being encouraged to be strategic about how they position themselves in order to stay competitive in the digital future
As we stand at the precipice of this modern trade revolution, the next generation of the U.S. workforce is being encouraged to be strategic about how they position themselves in order to stay competitive in the digital future – a future that will look quite different from their parents’ generation’s youth. Technology companies are constantly making advancements in innovations like Artificial Intelligence (A.I.), Internet of Things (IoT), and blockchain, which are all being applied to automate and optimize traditionally manually operated processes, making manual labor jobs, spanning across industries, obsolete. But the result will be more of a shift in demand toward different kind of jobs and skill sets.
The Light at the End of the Tunnel
Before you fall into a depression about the future of jobs for the younger generation, take a look at the data from the “2019 Third Party Logistics Study: the State of Logistics Outsourcing,” which shows that though there is an increasing prevalence of automation, there are is increasing demand for individuals that understand how to strategize by utilizing such technological advancements, especially when it comes to the supply chain management industry.
There is a new market opening up for a more creative labor force that understands data, risk management, and planning – and due to that forthcoming demand, employers are paying competitive wages in order to attract and keep star employees. According to the survey, companies’ top reasons for looking externally for employees are a need for a new employee skill set to accommodate changes in strategy, updates in technology and innovation, and lack of “bench talent” (or internal employees) to move up into larger roles.
Join us in our excitement for the digital age
Employers at logistics companies like 3PLs are at the front of the pack in serving a new generation of clients that aim to be digitally-savvy by utilizing data to optimize their operations.
BlueGrace is hiring motivated people with unique skills, stimulating goals, and bold personalities to contribute to our diverse team of industry leaders. Our truly rare culture is built upon our team members’ individual strengths and talents, which serve as a rock-solid foundation for collaborative success. Visit our career page HERE to learn more on how to join our team!
The e-commerce boom has no doubt stimulated economies internationally, driving demand for consumer goods and creating jobs in its wake. Logistics companies and carriers have celebrated the phenomenon. After all, growth in consumer demand means growth in demand for transportation services and invariably juicier bottom lines. Right?
Actually, the story doesn’t quite follow the Economy 101 text book’s narrative of what happens when an uptick in demand occurs. Real world factors have made the equation more complicated. The trucking sector of the logistics industry experienced this boom firsthand — ground carriers seeing massive growth in demand for the transportation of smaller loads, characteristic of e-commerce cargo. So, what is the downside?
While ground carriers should be reporting their best quarters on record, they are instead coming face to face with a serious problem: meeting the demands of their customers.
The trucking capacity shortage. There is simply not enough capacity to go around. While ground carriers should be reporting their best quarters on record, they are instead coming face to face with a serious problem: meeting the demands of their customers. As a result, shippers are forced to be more competitive about reserving trucking capacity, and the price of that capacity has risen substantially. This economic situation is the reverse of what was happening in recent years when carriers were scaling down their fleets, holding off and making any orders of new trucks in the face of overabundant capacity. Now, carriers are putting in orders all at once due to an uptick in demand experienced in both land and air freight, that commenced during the first half of 2017.
How are shippers being affected?
Shippers are experiencing the shortage of capacity in raised shipping rates. The script has flipped on them; instead of being able to shop around for the best package deal on their ground transportation needs, they are instead experiencing limited options for their needs at higher prices. The Wall Street Journal recently wrote about the effect of the trucking capacity shortage on shippers, referencing that last year, transportation costs rose 7% for U.S. businesses, a substantial increase compared to the 4% average over the last five years ended in 2017. This data was originally reported by the Council of Supply Chain Management Professionals’ annual State of Logistics Report. The rise in costs are not likely to be temporary.This means shippers will have to adjust to new tighter margins, allocating more of their budget to transportation costs. For some, this difference could mean being nudged out of the market, especially considering that the shortage is only forecasted to increase.
What is causing the shortage?
Growth in demand is one half of the coin that is the shortage in truck capacity. The other half is the shortage of truck drivers, which is a multi-faceted issue in itself. Until innovations like drones and autonomous vehicles become real-world technologies, which are still a long ways from hitting the market, there is no getting around the fact that truck drivers are crucial to the supply chain. The driver shortage is not a cyclical issue that will decrease or stabilize anytime soon, according to experts. The U.S. saw a shortage of 51,000 truck drivers at the end of 2017, according to the Washington Post’s sources, up from a shortage of 36,000 the year before, and according to NASDAQ: CNBC, the shortage is actually going to triple in the next decade if nothing changes. The acquisition of a trucking license takes only a few weeks. Even though drivers are now being offered upwards of $80,000 yearly salaries, and some in the six-figure range, low barriers to entry and high salaries are not enough to attract enough drivers for a combination of reasons.So, why can’t ground carriers find enough manpower to keep up with demand?
Electronic logging devices
The electronic logging device (ELD) mandate has caused some controversy in the industry. Truck drivers and CEOs alike have opinions on both side of the fence, as to whether or not the federal requirement of the implementation of ELDs is a good idea.
While it’s true that truck driving deaths have increased over the last decade, the drivers themselves don’t necessarily appreciate the new, digitized version of hour logging.
The mandate was established to hold drivers more accountable for accurately recording their hours in hopes that fewer accidents and fatalities would occur as a result of fatigue from overworking. While it’s true that truck driving deaths have increased over the last decade, the drivers themselves don’t necessarily appreciate the new, digitized version of hour logging. Executives are also apprehensive about the mandate because of the high cost of implementation, the associated learning curve and the hiccups that come along with it.Many believe that the ELD mandate has been a major cause in deterring truck drivers from continuing their careers in the field, due to a perceived distrust or disrespect of privacy.
Public perception & lifestyle
Outside of the ELD mandate, experts also think that a low public perception of truck driving is causing a low rate of entry to the career. As the older generation of drivers begins to retire, they are not being replaced with a younger generation as quickly as demand for capacity needs. The lifestyle associated with being a driver includes sleeping on the road, long hours, and many nights spent away from family.
With the younger generation pursuing higher education at higher rates than ever before and unemployment being at a low right now, the workforce is not gravitating toward trucking, despite the appeal of high pay.
While the wages seem like they should be attractive to younger generations entering the workforce, it seems that lifestyle may be another deterrent. With the younger generation pursuing higher education at higher rates than ever before and unemployment being at a low right now, the workforce is not gravitating toward trucking, despite the appeal of high pay.
What can shippers do to stay competitive?
As industry leaders work to find solutions to attract more truck drivers, many companies are rethinking their supply chains in order to prepare for a continued more expensive freight market. This means optimizing inefficiencies wherever possible in order to compensate for the greater expense by minimizing costs where you can.Shippers can implement strategies like defining business rules around factors like weight, volume, time constraints, and cargo sensitivity of their shipments in order to gain a strong understanding of what their actual costs are and where there is an opportunity to minimize them.
Investing in software that will allow you to purchase capacity and plan your shipments can be the make-or-break factor in a highly competitive environment.
Investing in software that will allow you to purchase capacity and plan your shipments can be the make-or-break factor in a highly competitive environment. BlueGrace’s proprietary technology is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® offers cutting-edge tools for strong reliability and quick performance. To speak to one of our experts and find out more about BlueGrace and how we can help provide you with the solution to your supply chain needs, fill out the form below or contact us at 800.MYSHIPPING.
It’s been a rough ride for over-the-road freight transportation over the past few years. Higher levels of government regulations have created a strain for drivers including the Hours of Service and the Electronic Logging Device mandates. These both came at a time that trucking companies were struggling with the pre-existing issue with a severe shortage of drivers. With the median age of drivers approaching retirement age, the condition will likely get worse before it gets better. Additionally, there have been huge fluctuations in both spot rates and demand over the years which have left carriers in a rather precarious situation.
Despite the difficulties, there is good news on the horizon. Spot market rates, according to DAT and Truckstop.com, have risen upwards of 20 to 35 percent and contract rates have climbed by an average of 8 percent, year-over-year.
This is good news for carriers, but managing the influx of work could require some extra help from intermediaries and 3PLs. Already, the conversations are beginning about solutions for the generational workforce as well as the adaptation to the increasing levels of disruptive technology hitting the markets.
Higher Brokerage Margins
Last year, 3PLs made due with fairly low margins, about 10 to 15 percent for freight transactions. Mostly as a result of vying for the top spot as a low-cost option for shippers who were looking for a truck on the cheap without using a service in the first place.
Now, in 2018, with capacity tightening, shippers are making a return to 3PLs which will cause third party margins to increase to as much as 15 to 20 percent.
Because of the availability of capacity in 2016 and the first half of 2017, most shippers were able to obtain reasonable rates with carriers, which means that 3PLs had to provide an array of other services to set themselves apart from the competition. Now, in 2018, with capacity tightening, shippers are making a return to 3PLs which will cause third party margins to increase to as much as 15 to 20 percent. Carriers are hoping this will result in a sustainable relationship with 3PLs.
A Spike in Demand is on the Horizon
Freight demand was unusually high between January and February, with a slight slow down through March. Given that these volumes are much higher than they were over the same period from last year, it’s another sign pointing towards the growing health of the transportation industry.
If shippers want to keep up with demand, they’re going to have to change the way they do business.
While this is undoubtedly a good start to the year, produce season, April through July, has kicked off, which means an even bigger spike in demand as produce season will give way to other peak consumer seasons including the Holiday season. Considering that all of this is outside the continual rapid growth of eCommerce markets, 2018 is going to be a busy year, to say the least. If shippers want to keep up with demand, they’re going to have to change the way they do business.
Sensing the growing demand, many trucking companies are beginning to double up on their orders for new trucks. “Trucking companies ordered 35,600 trucks in May, more than double the orders from the same month a year ago, according to preliminary figures by ACT Research. That leaves manufacturers with an order backlog of more than 200,000 trucks, or 8.4 months of production,” according to an article from WSJ.
“This is an astonishing rate of order placement,” said Kenny Vieth, president of the Columbus, Ind.-based ACT. “What’s facilitating it is that truckers are absolutely crushing it on freight rates and profitability right now.”
Shippers might Start Looking to 3PLs for Visibility
“Significant advances in visibility technologies have created a wide range of perceptions and expectations among shippers, including some that are inaccurate. 3PLs in this report identified a complicated web of factors that affect those perceptions and expectations, such as the demands of data aggregation, the need for more education, and the accelerated pace of change that affects 3PL and shipper alike,” the report says.
Over the past year, the importance and need for visibility have only increased as suppliers are dealing with ever-increasing customer expectations and delivery standards
The TIA hopes that their report will highlight 3PLs that have a product or service offering that will provide the necessary information to shippers regarding their freight. With each passing year, the number of shippers that use 3PL services to keep them updated on their freight during the transportation cycle is increasing. Over the past year, the importance and need for visibility have only increased as suppliers are dealing with ever-increasing customer expectations and delivery standards. Walmarts OTIF (On Time: In Full) policy is a perfect example of this, which can punish shippers for not adhering to a strict delivery schedule.
Data and Tech will Pave the Way
It’s more than just the growth of demand that is making 3PLs a tempting partner for shippers. With the influx of big data, analytics, blockchain technologies, and so many more innovations, attempting to keep pace can be difficult. As demand grows and capacity tightens, shippers and carriers alike need to be smarter about how they operate if they want to stay competitive in today’s marketplace.
As the industry continues to change, it’s likely that we’ll only see 3PLs continue to grow in popularity.
A Better Way of Doing Business
At BlueGrace, we take your current freight data and get an inside look at what your team may be missing. Our carrier procurement strategists will help you meet tight deadlines, optimize your freight expense, and ultimately, find peace of mind. Fill out the form below to find out more about how partnering with BlueGrace can create more visibility and opportunities to simplify, overall helping you find a better way to do business.
Most shippers don’t spend much time worrying about who is driving the trucks carrying their goods, but choosing a 3PL with the right carrier network makes all the difference when your business is expanding. B2B and B2C networks are increasingly determined by where the customer is, rather than a companies’ geographical location. With more business moving to online, you need to be prepared to meet your customers where they are.
When your customers need change, you want to be able to say “yes.” But logistics is a complicated business and when you are examining your choices, there are some factors to consider.
The first step is to understand your internal requirements – consider what your specific needs are before looking for a 3PL. Questions to ask include, what modes of transportation and what services you will need? What volumes do you plan to ship and where? Do you have specific security or visibility requirements? Are your shipments time-sensitive? The list goes on…Despite their expertise, 3PLs are only as useful as their knowledge of your business and customer requirements.
The right 3PL will also have a network density that connects you with the right carrier, at the right location and with the right capacity and expertise.
Start with Carrier Partnerships
Whether you are shipping intra-warehouse or last-mile, it’s important that your 3PL has the capabilities to make it happen. Two considerations are technology and partnerships.
Shippers should look for a partner that allows them to quote, track and control invoicing for their LTL and FTL shipments, across a nationwide carrier network. Because your shipping partner is responsible for integrating different shipments, they are responsible for implementing technology that provides visibility to your shipment across their network of trucks and more.
The right 3PL will also have a network density that connects you with the right carrier, at the right location and with the right capacity and expertise. With capacity being tight these days, partnering with the right 3PL will increases the chances that your time-critical shipments will be delivered on time and at a competitive price. That means, if you have warehousing and delivery needs in Houston, your 3PL should have vehicles available to accommodate those needs, and quickly.
Door to Door deliveries
Not all trucking companies handle door-to-door deliveries and some don’t have to. What matters is that your 3PL is partnered with carriers that offer fleet capabilities that meet your needs. For your urban customers, the trucking company might need to deploy a fleet of smaller trucks or even vans. If your requirements are FTL B2B shipments, you need a trucking company with that sort of capacity. For many shippers, their requirements fall in-between, or into the ‘all-of-the-above category.’ In those cases, your 3PL needs to have a range of carriers available to facilitate your business.
Shippers should ask themselves if their 3PL understands their business and customer base. For example, a company shipping high-value electronics, will want to check with their 3PL about security protocols. Are trucks secured? Is there a system in place to alert management when drivers divert course? Proactive 3PLs will have systems in place so that your customers can rely on you in turn.
Shipping disruption is an unfortunate reality in the business, ranging from weather disruptions to dock strikes. The right 3PL will have a plan in place to make sure that you are taken care of.
Do the services match the requirements?
Some 3PLs specialize in specific modes of transportation, commodities, dealing with regulations and origin/destinations. Others are generalists. Make sure that you ask potential 3PLs if they have experience handling the cargo that your business will be shipping. The right partner for your business will be able to walk you through the different steps required, allowing all parties to agree on the correct protocols and procedures. Reviewing a 3PLs Case Study library can help you better understand their expertise.
How many modes?
There are four common modes – ocean road, air, and rail. Many 3PLs will offer “intermodal” services, but if they don’t have the size and experience to properly manage that freight in-transit, they are essentially handing off responsibility to another party.
To avoid this uncertainty, make sure your 3PL works with established rail and intermodal carriers. That way, you get the most options. Offering a variety of modes that let shippers choose slower transit times when possible, which lowers costs. On the flip side, if you need something shipped fast, having a 3PL with a dedicated expedite team will help to ensures that your shipment gets where it’s going, in the time it needs to be there.
How’s their customer service?
This might seem too obvious to print, but it’s important to distinguish between friendly phone conversations and 3PLs that can get you the information you need when you need it. If there’s a disruption or other events along the shipment chain, you need a 3PL that can reach out proactively to help you make the necessary adjustments on your end. There will always be disruptions, but that doesn’t mean they need to put you on your back heels.
Customer service is also about finding a 3PL that’s willing to take the time to help you set up the right solution. If your business is experiencing sudden growth, you might not have all the answers.
Is your 3PL BlueGrace?
At BlueGrace, our freight specialists work with you every step of the way to understand your requirements and set up a solution that’s tailored to your needs.BlueGrace provides scalability for growing companies to achieve their goals without labor or technology investments. With a fully built-out national network and global partners, BlueGrace makes it easier than ever to reach your markets in an efficient and cost-effective manner. Our expertise and processes provide clients with the bandwidth to operate efficiently and drive direct cost reduction, backed by procurement and dedicated management. For more information on how we can help you analyze your current freight issues and simplify your supply chain, contact us using the form below:
One of the first rules of running a business is, “focus on your strengths.” It sounds easy in principle, but for medium-sized companies undergoing rapid growth, it’s often hard to discern what those strengths are when every day brings new opportunities and challenges.Logistics is a tricky area. In today’s tech-intensive retail environment, customers expect to get their orders quickly, reliably and transparently. When they don’t, they will walk away and take their business elsewhere.The good news is that the rise of online shopping has pushed a slew of new, tech-savvy logistics companies into the sector while forcing established companies to invest in making their operations more digital and agile.
You’ve Got Choices
Let’s start with scalability because that’s where a lot of businesses run into supply chain problems.There once was a two-person startup that was growing steadily until they were mentioned on The Colbert Report, and nothing could have prepared them for what happened next. In the span of 24 hours, they went from local business to national retailer doing twenty times the sales – and nobody was prepared. The ‘Colbert Bump,’ a term coined to describe a surge of interest or business in the wake of a mention on TV, is an extreme example – but it makes for an interesting case study for scaling.It quickly became clear that they couldn’t handle their own fulfillment anymore. In addition to the complexities of hiring and training more staff, it was a question of simple economics. They needed a national presence and that meant forward shipping their products closer to major markets to deliver ‘on demand.’
If you’re going national, you need a national partner that works with a spectrum of carriers and different modes of transportation, with competitive pricing.
The next couple of months they’d learn that if you’re going national, you need a national partner that works with a spectrum of carriers and different modes of transportation, with competitive pricing. That way, you’re sure that your product is where it’s supposed to be and you can align your inventory with expected sales.
Stay in Control
Outsourcing your logistics shouldn’t mean losing visibility. It should mean the opposite.
Outsourcing your logistics shouldn’t mean losing visibility. It should mean the opposite. The right logistics partner will create transparency in hidden corners of your supply chain that you didn’t even know existed.Whether you like it or not, your in-house distribution is already working with multiple partners – and that’s problematic. You might have a separate partner for pick up, one for distribution, one for packaging and then one for returns. That’s an incredible amount of time spent calling multiple vendors and carriers, especially when there’s uncertainty in whether you’re getting the right services, process transparency, and competitive prices.
A 3PL provider allows your company to integrate all of these costs and pay a single vendor, rather than several for your packaging and shipping needs. In addition to lower costs, one dynamic partner lets you allocate more resources toward growth – and that’s what you’re good at.There’s also an important customer service advantage to partnering with a 3PL. When your customers order from you, their three most important interactions are with your sales platform, customer support team, and the company that delivers their order.The right 3PL partner can use their expertise and infrastructure to exert that kind of control over the delivery process. That way, you can be assured that the deliveries are happening on time and you can pass on that level of visibility to your customers.
Built to Scale
3PLs are built to handle higher volumes of orders with increasing logistics needs. Your company might be able to handle fulfillment today, but as your market expands it will take up more of your time and might exceed your level of expertise. Bringing in a logistics partner leverages economies of scale. With higher volumes of shipments, the rates you’re charged are increasingly important. A single 3PL partner centralizes organization, meaning real-time visibility over your supply chain and more customizable shipping options.
The right 3PL partner will also increase transparency and that’s going to make your customers happy, while cutting costs.
That’s what 3PLs are designed to do.Apart from cutting payroll with a much smaller logistics operations staff, you can opt for a specialized in-house logistics department that interfaces with your 3PL. No matter how good you are, your 3PL is better when it comes to managing inventory and logistical distribution.When choosing a 3PL partner, make sure that they have developed software and tracking systems, which can be used to generate data that will allow you to reach your customers more efficiently. A tech-savvy logistics partner can help your company understand customer behavior and keep you ahead of industry trends. The right 3PL partner will also increase transparency, and that’s going to make your customers happy while simultaneously cutting costs.
Working with a 3PL like BlueGrace
BlueGrace provides scalability for growing companies to achieve their goals without labor or technology investments. With a fully built-out national network and global partners, BlueGrace makes it easier than ever to reach your markets in an efficient and cost-effective manner.Their expertise and processes provide clients with the bandwidth to operate efficiently and drive direct cost reduction, backed by procurement and dedicated management. For more information on how we can help you analyze your current freight issues and simplify your supply chain, feel free to contact us using the form below:
Shippers and third-party logistics providers work hand in hand and they tend to agree on most things when it comes to the freight industry. However, what they agree on can have some degree of variance. While there usually isn’t a drastic swing one way or the other, it would seem that 3PLs have a slightly less optimistic view of the future, according to the Journal of Commerce. “Results from more than 200 shippers and third-party logistics service providers underscored a divide in how shippers and their logistics partners view the transportation landscape. In most cases, shippers took a more conservative view of how 2018 would unfold and that alarmed more than a few 3PLs. The survey reflected a market in rapid transition from a two-year downturn to more dynamic growth and tightening capacity,” The JOC said.
Tightening the Belt on Capacity
Capacity is one of the many differences in opinion that the JOC highlighted. Of course, more available capacity means better rates for shippers. The question is, does the conservative stance of shippers validate, or does it perhaps a make them a little naive?
In terms of statistics, the survey shows that 57 percent of shippers believe that capacity will tighten “considerably” over the course of the year. 3PLs, on the other hand, are at 71 percent. When it comes to the topic of already tightened capacity, the scores are a little closer with 44 percent of shippers and 51 percent of 3PLs believing that capacity is already tight.
Much of the capacity conversation has to do with the fact that the U.S. has suffered through a number of natural disasters over 2017. Back to back hurricanes drove up demand for freight as emergency supplies and construction materials were rushed to the sights where the storms hit the hardest. This is on top of an already nationwide surge in freight demand.
While the hurricanes might be over, that doesn’t mean that nature is done messing with the market.
While the hurricanes might be over, that doesn’t mean that nature is done messing with the market. Winter Storm Grayson helped kick off the new year with some extreme weather conditions. As a result, supply chains needed to respond quickly to deal with the oncoming rush of orders amidst the treacherous transit conditions.
3PL Insight on Rising Rates
The rise in rates is another point of debate between shippers and 3PLs. Logistics providers are more apt to see a rise in rates than shippers. Only 58 percent of the shippers surveyed believe that less-than-truckload rates are going to rise, as opposed to the 75 percent of 3PLs. For full truckload rates, the difference is even more drastic, with 66 percent of shippers and 86 percent of 3PLs believing there will be an increase in future rates.
The question is, are shippers being too conservative, or are 3PLs being paranoid?
Much of the rate increase is due to tightening capacity brought on by the additional need from the storms. The question is, are shippers being too conservative, or are 3PLs being paranoid?
The Effects of the ELD
The Electronic Logging Device mandate is now in effect and there are still a number of shippers who simply aren’t prepared to deal with it. The majority of 3PLs, 82 percent, believe that the ELD will have a negative impact on the industry. A third of that number believe that the impact will be moderate.
As for shippers, only 70 percent believe that the ELD will have a negative effect. Of that 70 percent, only 33 percent of those surveyed believe that the impact will only be a slight one. While optimism is usually a good thing, it can prove to be disastrous if shippers aren’t careful. With the ELD in effect and no chance of repeal on a federal level, the once potential punishments are now a very real risk that shippers will have to be ready to answer for if they’re operating outside the federal mandate.
Shippers who are going into this time of change alone have a lot more risks to face than those working with 3PLs as they could be caught off guard by the shift in the market.
The overall takeaway from the JOC survey is this: growth is more than just imminent, it’s already here. Demand is slowly beginning to climb and with it, the cost of operations. Shippers who are going into this time of change alone have a lot more risks to face than those working with 3PLs, as they could be caught off guard by the shift in the market. Between storms and national demand growth, it’s going to be a busy year for shippers and 3PLs alike.
Working with a 3PL like BlueGrace
With our extensive carrier network, technology, and dedicated teams, we are able to provide solutions for our customers when they need it most. We understand that not every customer has the same needs and that those needs may change over time with the growth of your company. We offer customized services and provide on-demand solutions for your business. From daily shipments to the most difficult situations, BlueGrace is dedicated to being the shipping partner that truly gives your business the 3PLTLC it deserves. For more information on how we can help you analyze your current freight issues and simplify your supply chain, feel free to contact us using the form below:
Running your Supply Chain can be stressful, especially in times where unforeseen circumstances arise. When working with a 3PL such as BlueGrace during a logistics service disaster, we are able to offer solutions that many businesses don’t have access to. During an emergency, having a 3PL who you trust, with the full tool set of carriers, technology, people and solutions is crucial. This special set of tools became very useful for one of our accounts during Hurricane Irma.
Preparing for an impact
The packaging solution company had no time frame of how long they could be down
On September 8th , just two days before Hurricane Irma was forecasted to come right through the Tampa Bay Area, our customer requested a seemingly near impossible move. The packaging solution company had no time frame of how long they could be down, since the impact from the storm lie ahead. Because of this, they needed 50 Less Than Truckload (LTL) pallets moved from their location to a safer location until the storm passed. This was a normal LTL request to move from Tampa to Atlanta, but with Irma bearing down and freight embargoes already begun, the capacity was very low in or out of the state of Florida.
With all LTL carriers shut down in preparation for the storm, it was now up to BlueGrace to find a solution to get the pallets out of their warehouse. Our Customer Support and Transportation team worked closely together with the customer to come up with a plan to move the pallets to an out of state warehouse to ensure they would not be damaged during the storm. From there, BlueGrace would be able to get them all sent out to their final destinations.
With two trucks booked, and all pallets set to move, yet another “Embrace Chaos” moment happened.
With two trucks booked and all pallets set to move, yet another “Embrace Chaos” moment happened. The customer’s pallet count went up, adding another 20 pallets and requiring BlueGrace to find yet another truck in a time where capacity was limited. Together our team had to now exhibit all of BlueGrace’s core values to make this happen and be sure this move was a huge success. Within a short time-frame, we were able to find an additional truck and ensure all were successfully loaded and on their way out of state, putting our customer at ease.
What makes BlueGrace different?
We understand that not every customer has the same needs
With our extensive carrier network, technology and dedicated teams, we were able to provide a solution for our customer when they needed it most. We understand that not every customer has the same needs. We also understand that those needs may change over time and with the growth of your company. We are prepared to offer customized services and provide on-demand solutions for your business. BlueGrace is dedicated to being the shipping partner that truly gives your business the 3PLTLC it deserves, from daily shipments to the most difficult situations.
Over the last nine years, BlueGrace Logistics has been awarded Inc. 500, Best Places to Work, Top Minority Owned Business, Happiest Company Award, Inc. Hire Power Award, and many more. As one of the fastest growing leaders of transportation management services in North America, BlueGrace is now being awarded the Top 100 3PL prize from industry publication, Inbound Logistics.
Inbound Logistics editors selected this year’s class of Top 100 3PLs from a pool of more than 300 companies.
“Today’s leading companies are struggling to balance the need for advance planning against the demands for supply chain agility, low-inventory schemes, and complex omni-channel and e-commerce distribution regimes. BlueGrace Logistics continues to provide solutions to help companies meet those challenges, and that’s why Inbound Logistics editors have recognized BlueGrace Logistics as one of 2017’s Top 100 3PL Providers.” said Felecia Stratton, Editor at Inbound Logistics.
Top 100 Selection Methodology
Inbound Logistics’ Top 100 3PL Provider’s list serves as a qualitative assessment of service providers they feel are best equipped to meet and surpass readers’ evolving outsourcing needs. Distilling the Top 100 is never an easy task, and the process becomes increasingly difficult as more 3PLs enter the market and service providers from other functional areas develop value-added logistics capabilities.
Distilling the Top 100 is never an easy task
Each year, Inbound Logistics editors select the best logistics solutions providers by carefully evaluating submitted information, conducting personal interviews and online research, and comparing that data to our readers’ burgeoning global supply chain and logistics challenges.
“The service providers we selected are companies that, in the opinion of Inbound Logistics editors, offer the diverse operational capabilities and experience to meet readers’ unique supply chain and logistics needs.” said Stratton.
A Look Ahead
BlueGrace Logistics will continue its quest to be the best 3PL, by offering its freight customers the ability to ‘Simplify their Freight’ by providing customized transportation management through their proprietary technology, BlueShip™. By developing tighter integrations with BlueShip™ and major ERPs such as SAP and NetSuite, the transportation management team can offer more tools to help consolidate, streamline and predict future freight issues and opportunities. The BlueGrace team of transportation management experts have already helped many companies reduce their over freight spend through a tight combination of data engineering, carrier relationships and excellent customer support.
The transportation management team can offer more tools to help consolidate, streamline and predict future freight issues and opportunities
About Inbound Logistics
Inbound Logistics is the leading trade publication targeted toward business logistics and supply chain managers. Inbound Logistics’ mission is to help companies of all sizes better manage corporate resources by speeding and reducing inventory and supporting infrastructure, and better matching demand signals to supply lines. More information is available at www.inboundlogistics.com.
While the shipping industry is still suffering through a glut of overcapacity, things are finally starting to look up. The 3PL Value Creation Summit of 2016 yielded some pretty interesting results. Namely that the value added by 3PLs is only expected to keep going up through 2017 and beyond, a welcome boon for the weary shipper. This growth is expected to continue well through the following year and only continue beyond that.
“The global third party logistics (3PL) market is expected to be worth $925.31 billion by 2020 and will be partially driven by the outsourcing of secondary business activities,” according to a study released by Orbis.
A Combined Front of Transportation
While just about all modes of transportation are experiencing an issue, oceanic freight is dealing with a gross overcapacity and weak demand, truckers are faced with growing legislation and on the road concerns, to name a few issues, it will be the combined effort of all these various modes of transportation that will create the greatest value for shippers. A service, of course, that is rendered by eager 3PLs.
“Although carrier overcapacity on the still continues, Evan Armstrong, the president of Armstrong & Associates, predicts that integrated solutions such as air-ground, air-sea, and other combinations will create more value for shippers and increase 3PL margins,” said Patrick Burnson, executive editor for Logistics Management and Supply Chain Management Review .
The big winner in the transportation race is going to be the domestic transportation sector
However, the big winner in the transportation race is going to be the domestic transportation sector, responsible for facilitating the last mile deliveries for the majority of eCommerce companies.
Calmer Waters for M&A to Mark Stability for the End of 2016
One of the most promising signs of 2016 is seeing the feeding frenzy of mergers and acquisitions finally dying down. Now that all of the smaller companies have either been absorbed or faded away, the transportation industry is able to turn its attention on the importance of building the right team, focusing on training and talent acquisition. This is important to note given the confusion and frustration of the M&A period that many companies have experienced caused by negative acquisition experiences and overpriced companies. With the dust finally settling, 3PLs and logistics companies can focus on adding value for their customers, which will come as no small undertaking.
With the dust finally settling, 3PLs and logistics companies can focus on adding value for their customers, which will come as no small undertaking.
The challenges of managing geographically dispersed supply chain operations as a result of increased globalization, has led to several companies to outsource their logistics function.
And difficulties with addressing logistical challenges has also led to increased outsourcing by wholesalers and retailers, thereby boosting the 3PL industry.
It found that emerging trends such as Big Data and availability of bespoke 3PL services are expected to drive the market over the forecast period,” says Andrew Allen, a CIPS contributor.
Improving Technology will Continue to Add Value
Another driving factor is the continuous improvement of technology which will only add value for all parties involved. Cloud based IT solutions help to control overhead costs while providing invaluable data in real time, which is necessary for the continued success of 3PLs and shippers alike.
All told, 2017 looks to be a more promising year for both Shippers and 3PL providers.
“I started with a 3PL and had a multitude of issues.”
“I do not see the value in a 3PL partnership.”
These are all quips heard when calling on potential new 3PL clients. When starting a 3PL partnership, the new customer gains visibility. A successful 3PL partnership gives clients visibility into their supply chain that they may not be ready to see and that may cause internal and external issues.
For example, the client had a carrier relationship before the 3PL came on board and the customer service rep would receive quotes from the carrier websites and book the shipment. When the invoice arrived, the accounting department did not have a proper system setup to make sure the quoted cost is also the invoice cost. Somewhere along the way there was a re-weigh or re-class and the invoice cost was 20% more than the quoted cost. The bill did not seem uncharacteristically high to accounting, so they processed the payment to the carrier accordingly.
There are a multitude of issues with this type of arrangement:
There is not a quote cost to invoice cost verification system.
This example is just one bill. What if the shipper is doing 50 bills a week? The cost can become exponential.
Why was there a re-weigh? Is the business using a certified scale? If every pallet was weighed on a certified scale the shipment was not be subject to re-weigh costs and re-weigh fees.
Why was there a re-class? Is the client up to date with the NMFTA? The class codes can sometimes change on a weekly basis and the shipper may not be aware!
The shipper is responsible for freight bill pay and audit. If the client is busy shipping more than 50 bills a week and receiving stacks of paper invoices, one could see why these extra fees are just being approved and paid.
What is the main KPI? Freight cost as a % of PO cost, so if a $100 shipment turns into a $200 shipment the profitability on that order just got reduced by 50%.
These are some of the issues found on just one shipment.
A good 3PL is going to pull up the mattress and shed some light to the bugs that have been hiding in your transportation program. As a shipper, know that the probability of issues being hidden are extremely high if they are not utilizing a 3PL. Let a 3PL handle your freight program and spend more time focused on your profits.
Do not be afraid of visibility – It is worse to not have any.
Technology Demands and the Freight and Logistics Industry
Quantum leaps in technology have brought our world more change since the first days of the internet. Technology is all around us, in our hands, in our cars, in our homes and we have the ability to communicate with someone or search for something within seconds by a device that can slide into our back pockets. Even with all this technology, many of the companies in the multi-billion dollar transport industry are still operating in the 1980s. Fax machines, filing cabinets, pen and paper coupled with hours of daily telephone conversations are the norm for many trucking and freight brokerage firms as they conduct business each day.
It is no surprise that these companies are not keeping up with industry demands and are being outflanked by new, lean technology companies.
These tech companies can do the same thing cheaper, better and faster – the holy grail of business self-actualization that most experts think impossible. The trucking sector took in $650 billion in total revenue in 2013, which originally caught the eye of some of these technologists from outside the industry. These tech gurus identified vulnerabilities within the trucking industry and weaknesses to exploit.
But some very forward thinking 3PLs pivoted as they saw the technologists from outside the industry riding the tech wave that was threatening to wipe them out. It remains to be unseen if the traditional 3PLs can head off the technologist’s steadfast march toward their domination of logistics.
The 3PLs that are succeeding are the ones that are adept and have embraced the technology platform.
Some of the industry leading 3PLs created exceptional online tools that helped leverage technology in their favor before these new start-ups came in to set up shop. Now, these leading 3PLs can display available loads, negotiate rates, tender loads, track loads, collect paper work through these online systems and begin the billing process as soon as the load delivers.
The missing piece is still matching empty trucks to available loads in a more efficient way.
There is ample room for improvement in this challenge. There are hundreds of thousands of loads being shipped each day, but the process of connecting the dots is very inefficient. Companies like Uber and Lyft, who have seemingly perfected the matchmaking process in the ride-sharing community, could easily make the shift to the trucking industry. It is the same concept- Uber matches empty car seats to people needing car seats. They could easily match empty trailers to shippers needing empty trailers if 3PLs do not continue to service their shippers as efficiently as possible.
A modern day shipper needs to partner with a progressive 3PL
A modern day shipper needs to partner with a progressive 3PL that utilizes the latest technology platforms in order to run a successful, efficient logistics program. These companies have proven their worth within the logistics community by their continued exceptional service. They have also proven their resiliency by adapting to advances in technology and staving off outside start-ups trying to break new ground.
While transport carriers are watching their rates drop due to overcapacity and weak demand, less-than-truckload (LTL) carriers are seeing rate increases in their annual contract bids.
LTL carriers have maintained the same pricing discipline they’ve held since they began slashing rates between 2008 and 2010, which lead to several quarters and even years of losses for a number of companies in the industry.
Being back in the “driving seat”, LTL carriers have been very selective with which 3PL’s they choose to partner with. The pricing programs we have in place at Blue Grace with our core carriers have genuine scarcity in the market that differentiates us from our competition.
Creating effective pricing programs can be challenging. Shippers are rewarded for wringing the lowest possible price out of carriers; carriers are keen to get paid the most for hauled mileages — a practice that’s not conducive to nurturing long-standing, high quality, rewarding partnerships.
But since a well-managed 3PL can handle LTL shipments for multiple shippers, they can match up shipments both from location proximity standpoint as well as pick up and drop off times to optimize delivery networks for carrier partners. Reduced empty miles, reduced truck idling time, improved truck utilization, and improved driver productivity are just a few benefits that are guaranteed and provide solid basis for an effective pricing program. Savings coming from these best-practices can be passed on to shippers in the form of overall transportation cost reduction.
It’s not about the price alone
Cost is important but we have been in the business long enough to know that it is not about the price alone. We have been monitoring and studying our shipping programs very closely and without exception, the accounts that have been hugely successful in the long run, are the ones where we’ve formed alliances with carriers. These alliances are collaborative relationships, in which we work together as partners to provide best-in-class services and solutions to our shipper customers.
Despite the size or complexity of the business, we rely on the processes we use and the value that we create.
We consider carriers as partners not as vendors.
It’s about talent; it’s about people and how to get them to work together for long.
These alliances, close relationship with carriers enables us to make fast decisions, which lets the parties to be more innovative and can get rid of unproductive work.
At BlueGrace, we have heard many times from potential customers that their current Third Party Logistics (3PL) provider is not proactive. They only interact with them when something goes wrong. At BlueGrace, we like to use the term “Continuous Improvement” with our Transportation Management customers. We keep building a better program from the first shipment, and we achieve it through proactive interaction with our customers.
Businesses using a 3PL for their transportation management were asked in a web survey where their 3PL was falling short of expectations. The answers are interesting but we’ve heard them multiple times. At BlueGrace, we have solutions for all of them:
“My 3PL Is Not Proactive Enough Identifying Continuous Improvement Opportunities”
The customer is left at a severe disadvantage when their 3PL does not actively search or report on continuous improvement opportunities. A 3PL needs to be a partner to the customer so they can work together to find these opportunities. Some come through day to day contact between the two parties and others come from data and business intelligence. Either way, KPIs and constant program monitoring combined with the communication between the customer and the 3PL can create some fantastic new scenarios. These opportunities can be as simple as changing to another a carrier for certain lanes, or on a larger scale- opening a new distribution center. Your 3PL should be able to determine these options at any time, using their own tracked data and support.
Your 3PL should be able to determine these options at anytime, using their own tracked data and support.
“Performance Issues Not Addressed In A Timely Manner”
This issue is very similar to a 3PL not being proactive with their customer. As shipments become delayed or product becomes damaged, a 3PL needs to help determine the issue and change the way the freight is handled. This all has to be done quickly and effectively so the program can continuously improve. It’s simple to avoid the performance issues until they become a major problem, but BlueGrace uses a proactive approach. By monitoring the data of customer shipments and comparing it to data from our extensive customer base, we stay ahead of performance issues.
“Slow To Implement Process Changes Or Other Requests”
BlueGrace isn’t the largest 3PL, but we certainly are not the smallest. We’ve built our company around our own technology platforms that have been customized by our IT department. When we need to integrate to save our customers time, we can do it fast. When we need to change support routing to handle increased issues or carrier changes, we can respond immediately. The larger the 3PL, the more difficult it is for them to be agile. We pride ourselves on the ability to move quickly in what can be a industry that normally reacts slowly.
The larger the 3PL the more difficult it is for them to be agile with your account.
“Poor Reporting and Visability Capabilities”
This last issue comes at no surprise to us. We’ve built our BlueShip 3.0 TMS system to integrate directly into any existing ERP or WMS system, including SAP. We can offer the highest level of visibility to our customers, so both sides know what is happening each day. The visibility we provide is a major benefit to our customers and even more so to our staff that can proactively manage your account. Our QBR (Quarterly Business Report) is designed specifically for your team to see your program based on quarterly data, providing an in-depth understanding of how the current logistics industry might be effecting your business.
Your 3PL should constantly be thinking outside of the box for your transportation program. They should be providing you with the tools and metrics that optimizes your freight spend, quarter after quarter. If they are not, contact us today and we’ll be glad to get your freight into a BlueGrace Transportation Management program. Our team is ready to turn your data into success!