Monthly Archives: January 2016

Trending Transportation News: January 2016

Here’s a recap of transportation news stories throughout the month:Winter_Driving-1.jpg

Intermodal Decline for First Time Since ’09. Intermodal freight declined in Q4 for the first time since 2009 on a year-over-year basis. In 2015, intermodal accounted for 48% of all rail shipments and increased about 2% for the full year.

 

FMCSA Lowers Random Drug Testing Level in 2016. The FMCSA reduced the minimum annual percentage rate for random controlled substances testing for commercial drivers from 50% to 25% for 2016. Based on the controlled substance random test data in FMCSA’s Management Information System in 2011, 2012, and 2013, the positive rate for controlled substances random testing fell below 1%.

Oil Prices Affect Transportation. The US average retail diesel price continues to fall (from $31 a barrel, to $30 a barrel, to $28 a barrel). According to the DOE, oil inventory stands at its highest point in nearly a century. The Gulf Coast region is home to the largest Global Refining Center – a lot of product is being pumped out of there, making prices lower.

Decline in Truck-Crash Deaths. The rate and total number of fatalities involving trucks weighing 10,000 pounds or more has declined. ATA President Bill Graves said, “The short-term decline is welcome news, but the important figure is the long-term trend.”

Jonas. Hundreds of truckers were stuck on highways and in travel plazas during Winter Storm Jonas which bombarded drivers from the East Coast to the Midwest. The West Virginia Turnpike and the Pennsylvania Turnpike reported several accidents that stranded cars and trucks. The National Guard was called to provide food, water, chains and shovels for the motorists. It was a dangerous situation for motorists, but one that was avoidable for trucking companies. Were you prepared for the disruption?

Case Study: Manufacturer Reduces Freight Spend Through Automation

Flatbed-2.jpgSituation

A North American producer of refractory bricks and mortars, with a network of over 30 plants and distribution centers throughout U.S. and Canada, was concerned about their transportation strategy. The company was apprehensive about their total freight spend, but didn’t know the best way to reduce costs.

 

The corporate transportation program had plant level dispatch, decentralized execution and sub-optimal carrier usage. The manufacturer shipped emergency shipments regularly and did not manage truck-flow within plants.

Solution

PLS Logistics completed a Logistics Opportunity Assessment to identify inefficiencies and opportunities in the manufacturer’s current processes. Because of PLS’ thorough analysis, the transportation management provider  was granted a six month trial period and began automating the manufacturer’s transportation processes, which had been handled manually in the past. Automating dock scheduling and shipment tendering reduced time spent on transportation and reduced overall costs.

After a successful six month trial, PLS was brought on to manage more transportation services. First, PLS defined and measured KPIs for the client to track the progress of logistics optimization. PLS provides tactical execution and control of this client’s carrier commitments, and also manages all emergency shipment requirements.

3pl_value.jpgResults

After 1 year, the results of outsourcing transportation management for the manufacturer prove greatly beneficial.

  • Implemented standard metrics
  • Maintained on-time delivery more than 95% of the time
  • Introduced automated shipment status notifications to improve customer service and help avoid disruptions
  • Introduced new carriers into this client’s freight program which increased available capacity to support shipment surges or emergency shipments
  • Consolidated invoices to save time on administrative tasks and reduce costly errors
  • Improved dock controls and processes which increased efficiencies and reduced the need for second-shift labor
  • Improved the manufacturer’s core carrier utilization, resulting in a 5% improvement in freight costs handled by their original carrier network, as well as an 8% reduction in costs for spot market shipments

This manufacturer was able to overcome their biggest transportation hurdles and reduce their freight spend by outsourcing transportation management.

Click here to learn how one PLS client reduced inbound freight costs by tens of thousands of dollars.

Lessons Learned from Supply Chain Disruption

SupplyChainDisruption.jpgSupply chain disruptions span from day-to-day risks like malfunctioning equipment to high-impact threats like natural disasters.

90% of companies believe supply chain disruptions have a dramatic impact on their business and financial performance, but only 60% pay even marginal attention to reducing risks.

The 40% of companies that do invest in preventing disruptions are considered to have a mature risk mitigation program. Companies that invest in risk reduction capabilities perform better operationally and financially – something for CEOs and CFOs to note.

Learn from these 2 examples of how separate companies dealt with supply chain disruption:

Example 1: A communication technology company encountered a severe supply chain disruption when a lightning bolt hit a power line at a company manufacturing facility. The bolt triggered a fire, which ruined millions of electronic products. The company employed a single-source policy, which means there was no other supplier to get the product from. Production was disrupted, thanks to a missing part, resulting in major loss on the bottom line.

Example 2: A popular technology company released an innovative product which was in high-demand by the public. It wasn’t long before pre-order wait times increased from days to weeks to months. The slow rollout can be attributed to one of the company’s suppliers, who produced a defective component and experienced a shortage of a specific material. The company was able to overcome the disruptions because it employed multiple suppliers.

SupplyChain-1.jpgHaving several suppliers or back up suppliers for the same component is one of the strategies that companies with resilient supply chains adopt to mitigate risk.

The above examples highlight the importance of a reliable supply chain. In a reliable supply chain, the company has identified flexibility as a key step to increase efficiency. A risk management program with flexibility provides companies with strategic value.

Flexible supply chains can recover from disruptions more quickly than those companies without flexibility, giving them the competitive advantage in the market place.

Supply chains can take steps in order to reduce risk and maintain resilience by creating a crisis management plan and diversifying vendors and suppliers. Understanding potential threats to the supply chain and their effects helps companies mitigate them efficiently.

Related PLS s:

Source: http://theconversation.com/apple-watch-shows-value-of-strong-supply-chains-and-opportunity-in-disruption-41129

 

How to Use Big Data in Freight Transportation

BigDataword.jpgBig data has been a buzzword for some time, and for good reason. There are some pretty radical potential applications of big data, such as accurate demand forecasting or industry-wide real-time visibility. Oracle calls big data the “electricity of the twenty-first century – a new kind of power that transforms everything it touches in business, government and private life.”

But how does it apply to freight transportation?
Most transportation data revolves around operating a transportation management system (TMS), which tracks and analyzes freight performance. Implementing a big data initiative can be overwhelming and the return on investment is hard to predict.

With the use of a TMS, there are practical ways to start utilizing data that’s readily available to optimize freight movement and reduce transportation spend.

Transportation Metrics that Matter
There are multiple transportation metrics that a shipper can track, but there are 5 basic metrics that give visibility into transportation performance and cost:

  1. Average Time-in-Transit: Calculated by taking the sum of time-in-transit and dividing it by the number of trips. This metric is useful for finding how long it typically takes your freight to reach its destination. Shipping and production schedules can be altered based on this information to improve service.
  2. Inbound Freight Costs as a Percentage of Purchases: Calculated by dividing total inbound freight costs by total purchase amounts in a given period. Use this metric to judge inbound performance, the effect inbound transportation has on your bottom line, and whether freight paid or freight collect is a better payment method.
  3. Outbound Freight Costs as a Percentage of Sales: Calculated by dividing total outbound freight costs by total net sales. Transportation is typically viewed as a high-cost to control, rather than a strategic asset and competitive advantage. With that in mind, this metric reveals to what degree freight costs are an obstacle to increased revenue, and also gives an idea of overall transportation performance.
  4. Mode Selection Efficiency: Calculated by dividing the number of shipments sent on the optimal mode by the total number of shipments. For this, each lane must have a designated optimal mode. While calculating mode selection efficiency may be time-consuming, it provides valuable data that shows the accuracy and productivity of decision making within a logistics organization. It also reveals opportunities for significant cost savings.Reports1.png
  5. On-time pickups: Calculated by dividing the number of pickups made on-time by the total number of shipments. This metric measures performance of the freight carriers servicing a shipper. It can help find the best carriers and show how much certain carriers affect logistics operations.

Simply tracking data is not enough to make a difference within an organization and reduce transportation spend. Practical applications of big data in transportation require shippers to set goals, understand the metrics they’re measuring, and most of all, take quick and decisive action on the data available.

 

Related PLS s:

 

Transportation Management in the Oil & Gas Industry

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Low oil prices, growing supply inventories and decreasing global demand have created new challenges in the oil and gas (O&G) industry. Historically, O&G companies’ soaring profits masked the poor state of logistics operations within their supply chains. Now that profits are thin, oil and gas companies are rushing to save money wherever they can. O&G companies realize the savings potential in their disordered logistics processes, specifically in transportation management.

Addressing Customer Satisfaction with Freight Management

August_News_Round_Up-639134-edited.jpgIn a few years, 89% of companies will compete almost entirely on customer experience. “Options are no longer a privilege during the shopping experience,” says Christoph Stehmann, COO of Digital Commerce Solutions, Pitney Bowes. “Retailers must focus on offering diverse options in order to attract consumers throughout their shopping experiences.”

Consumers are demanding because they’re more informed than ever before. The popularity of online shopping has empowered consumers to expect low prices, multiple shipping options, free returns and quick, on-time delivery.

93% of consumers find shipping options to be an important factor in their overall shopping experience. Business are finding it harder and harder to meet on-time delivery promises to customers because of obstacles like the truck-driver shortage and the difficulty of last mile logistics.

How can freight management help overcome these roadblocks? Businesses are responding to delivery demands by strengthening carrier relationships and monitoring performance metrics.

  • Supply Chain Strategy
    • A static or slow supply chain process won’t work with high demand for quick delivery.
  • Inbound Freight Management
    • Lower costs by moving from a Freight Paid to Freight Collect method. Freight Paid is when costs are paid by the shipper. Freight Collect is when costs are paid by the consignee.
  • Transportation Management System
    • Real-time and historic data reveals trends so that companies can make more informed decisions, identify inefficiencies and reduce overall costs.

As consumer’s shipping expectations continue to increase, retailers must pay attention to their shipping options and service. Changing supply chain processes to be proactive and collaborative, managing inbound freight moves, and implementing transportation management software will create operational efficiency which will benefit the end-consumer.

Related PLS Posts:

4 Reasons Why Transportation is Crucial to Manufacturing Operations

Manufacturing_plant.jpgThe driver shortage, government regulations and rising operating costs are some of the biggest challenges facing the transportation industry. The number of drivers is quickly decreasing, and the remaining drivers are demanding a salary raise. Due to these challenges, higher shipping costs are anticipated.

Rate increases will prove troublesome for manufacturers who are already taking extensive steps to reduce shipping costs. Many manufacturers are nearshoring and reshoring operations to avoid the costs of international shipping. Some manufacturers are redesigning product packaging to make their freight more attractive and cheaper to transport.

Why is transportation management so important to manufacturers?

  1. Operating Costs. Manufacturing activity in the United States has been sluggish and is expected to decline for the next several years. Decreasing activity means less and less revenue for manufacturers. This is a big factor behind the recent nearshoring/reshoring initiative. The rise in transportation costs has made freight movement a cost-saving priority among executives, as it is typically one of a manufacturer’s most inefficient processes – especially inbound freight movement.
  1. Data Mining. Efforts to optimize transportation have led to new processes, routes and carriers. To measure the efficiency of the transportation changes, manufacturers are increasingly turning to transportation management systems (TMS) for real-time performance data. This data is often a missing piece that fits into the larger puzzle of inventory movement, logistics processes and supply chain management. A TMS helps a manufacturer realize end-to-end visibility, which is a gateway to lean processes and reduced operating costs.
  1. Process Control. Manufacturers don’t have the ability to control raw material prices and other economic trends that increase their operating costs. They do, however, have the ability to take control of transportation. Inbound freight movement is typically an inefficient process without much visibility to costs. Vendors markup shipping prices, anywhere from 15 – 50%, and hide the cost of transportation in the overall cost of materials. When manufacturers take control of this process, they will immediately reduce costs.
  1. Service Improvements. End consumers are demanding better service all the time. These tough demands are passed up the supply chain, as B2C businesses need a higher quality of service that they can pass on to their customers. On top of this, B2B e-commerce is gaining popularity rapidly – a new logistics challenge that businesses struggle to overcome. If a manufacturer provides consistently poor service, they are likely to lose customers, just as a B2C business would. Improving freight movement is an obvious answer to this problem, especially when historically it has been ignored by manufacturers.

Click here for a case study about a manufacturing client who saved 20% on transportation spend.

PLS Logistics Services Continues Expansion, Opens Office in Charlotte

New Office to Bring 200 Jobs to Charlotte, North Carolina

CRANBERRY TOWNSHIP, PA – January 18, 2016

PLS Logistics Services (“PLS”), a leading provider of technology enabled supply chain and freight brokerage services, announced today that it has opened a new branch office in Charlotte, North Carolina. This is PLS’ 12th office nationwide, and was opened to meet the needs of PLS’ expanding client base.
The office opened January 18, 2016 with an initial team of 20 employees and expects to hire 200 additional employees over the next several years. The office is located in the Fifth Third Center Building at 201 North Tryon Street, Suite 1500, Charlotte, North Carolina.
“PLS’ technology driven approach to transportation continues to drive growth and we are excited to announce the opening of our newest branch location,” says Greg Burns, PLS’ Chairman, President and CEO. “By adding new employees in the area, we will be able to tap into the strong sales talent that Charlotte offers and better support our shipping and carrier partners.”
PLS chose Charlotte as a new office location because of its access to quality professional talent, which is the key to PLS’ growth and expansion strategy. Interested candidates can apply immediately at plslogistics.com/careers or contact McKenzie Roark at eroark@plslogistics.com. Prior logistics industry experience is not required, as employees receive extensive training and support.

About PLS

PLS Logistics Services is a leading provider of logistics management, brokerage and technology services for shippers across all industries. PLS handles millions of loads annually across all major freight modes: flatbed, van, LTL, rail and barge, air and ocean. The PLS carrier network consists of over 20,000+ trucking companies along with Class-1 railroads and major barge companies. To learn more, visit www.plslogistics.com or call (724) 814-5194.

Media Contact

Caitlin Kelly
Content Marketing Manager
(724) 814-5194
publicrelations@plslogistics.com

The Main Reason it’s Time to Throw Away Manual Processes

manual.jpgA 2015 Logistics Management survey shows that only 35% of shippers are using transportation management systems as part of their overall supply chain management strategies. Companies that rely on spreadsheets and manual interactions with suppliers are spending a lot of time on functions that can be automated by a transportation management system. With a TMS, companies can be active in pursuing lower costs, faster lanes and productive solutions.

Why are so many companies avoiding the abundant benefits of a TMS? What benefits does a TMS offer a company?

A TMS is best known for its routing, scheduling, reporting capabilities. Besides more effective monitoring and better management, a TMS provides shippers with…

  • Access to Carriers. With a TMS, shippers gain access to a broad network of carriers. They are able to automate an RFP, which saves time. A TMS secures reliable, low-cost capacity since multiple carriers compete to move the freight.
  • Valuable Data. Properly analyzing data gained from a transportation management system helps shippers develop better supply chain procedures, optimize freight moves, create more effective inventory management and reduce overall costs. The analysis of data can identify pain points that otherwise would have gone unnoticed.
  • Greater Customer Service. By the year 2020, customer experience is predicted to be more important than price, product or brand choice as a differentiator in purchasing decisions. TMS software provides visibility into performance, and enables shippers to have real-time, tangible information that helps find solutions to productivity and performance.
  • Proven ROI. The technology lowers freight spend through gained business intelligence. Shippers can make better decisions, use preferred carriers, improve processes and negotiations, find better routes, and reduce accessorial and excess fees.
  • Support of Omni-Channel. As e-commerce grows in popularity, companies must find a way to manage multiple sales and information channels. A TMS will alert companies of disruptions, track transportation spend, monitor performance metrics, provide real-time visibility on inbound shipments and reduce overall costs by finding new ways to ship more effectively. This keeps inventory moving quickly and helps deliver a superior experience for the customer, despite the complexity of omni-channel commerce.

A TMS helps companies effectively move freight from origin to destination. This supply chain tool delivers the data needed for companies to drive value through visibility. The main reason to throw out manual processes and capitalize on TMS functionality is to reduce transportation spend and develop deeper insight into operational processes.

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Market Update: How the Transportation Industry Starts the Year

TruckDock.jpgLast year turned out to be a great year for transportation. Rates stayed fairly even despite predictions that they would rise, trucking companies were able to make significant profits for the first time in years, and capacity was loose enough to meet demand.

There are numerous predictions of what will happen in 2016, but it may be more useful to take a look at where the industry is at this point in time. Below are several trends occurring within the transportation industry that are shaping the way it operates and will continue to influence the industry this year.

Trucking Regulations and the Economy

The trucking industry faces new, debated regulations. Due to the fragile state of the economy and the importance of over-the-road trucking, new regulations have the potential to worsen problems in transportation and ultimately harm the economy. HOS rules, CSA scores, and the ELD mandate are among the most controversial regulations and have the most potential for harm. Read more here.

Big Data is More Important than Ever

Businesses have been collecting and analyzing data for years, but it’s becoming more important every year. A TMS is fundamental for insight and is necessary to be competitive in today’s world. Surprisingly, only 35% of companies use a TMS. The other 65% of businesses are missing out on a huge opportunity to enhance operations. Big data has radical potential, but software like a TMS makes it easy to begin data mining in a practical and profitable way. Read more here.

IoT_Communication.jpgPreferred Shipper Phenomenon

The driver shortage is slowly getting worse. The transportation industry is expected to be short 74,000 drivers in 2016. Consequently, truck capacity becomes a rare commodity. Carriers are becoming more selective with the freight they haul so they can ensure the few drivers they can hire and retain are happy. Shippers will have to compete with one another to keep their freight moving regularly and at a reasonable price. Shippers who are chosen by carriers, or ‘preferred shippers’, will pay less for transportation and receive better service. Read more here.

Trucking Companies Begin to Prepare for Disruptive Technologies

3D printing is advancing every day and is not far away from being ready for widespread use. This will drastically alter trucking routes. Shipments of product components (i.e. parts of a car), a foundation of the trucking industry, will be nearly eliminated. Products will be made much closer to their point of sale, eliminating the need for cross country trips. On top of this, nearshoring will redirect truck traffic south to north, as opposed to west to east, as manufacturers move to Mexico and South America. Truck trips will be shorter and less frequent, and the need for some services, such as the long-haul trucker, will be eliminated. Carriers are trying to understand what ways their company will be impacted by 3D printing, and how the industries they serve will be impacted, in order to prepare for industry disruption. Read more here.

Transportation Costs Are Rising

The cost of shipping remained relatively stable for most of 2015, but rates are rising, with the implementation of annual GRIs and fuel surcharge adjustments. Despite the low price of diesel, carriers are raising rates to compensate for all the lost revenue they’ve experienced in the past. Read more here.