Monthly Archives: February 2016

State of Rail Transportation: Rising Costs but Still Viable Option for Shippers

Rail_Transport.jpgRail transportation has historically been cheaper and slower than over-the-road (OTR) transportation. It’s a valuable service for raw materials, freight that is not time-sensitive or freight that is expensive to haul. As OTR costs rise, many shippers look for new opportunities to reduce overall transportation spend, and despite the current rise in rail costs, intermodal is a practical alternative.

Rail Transportation is Experiencing a Slump

Rail companies, since the fourth quarter of 2015, have seen revenues fall. In fact, Q4 revenues for the top 6 rail companies were down by one fifth of what they were in 2014, and could drop by another 20% in 2016. On top of this, rail companies have planned less capital expenditure projects for 2016, due to lower expected revenues.

The last 10 years have been a golden age for rail companies – profits high, freight volume consistent and private companies spending as much on rail infrastructure as the U.S. government spent on fixing roads. The 6 biggest freight-rail firms’ revenue grew by 58% between 2004 and 2014.

But now, rail companies are facing a tougher economic environment due to the commodity price crash. The coal industry is hurting badly due to government regulations and the cost effectiveness of natural gas for domestic power generators. The shale industry has all but stopped production due to the current oversupply of oil and gas. These commodities had made up a significant portion of rail freight.

Without these customers, freight-rail companies’ revenues have shrunk. In response, they must raise the price of transporting goods.

To be clear, rail companies are not hurting in the same way coal or shale companies are. Freight-rail companies have a net debt of 1.8x gross operating profit. Even though times seem tough for rail companies, it’s viewed as temporary, and the companies have enough resources to weather the storm.

Trains are slower than trucks. And, when they’re more expensive, shippers move rail/intermodal freight to OTR carriers. So how can rail transportation still be a viable option for shippers?

3PL Rail Capabilities

Third-party logistics (3PL) companies have access to tens of thousands of carries, which include Class 1 rail firms. Shrinking revenues, looser capacity and higher rates all point to the fact that rail companies need to haul more freight. A 3PLs large network of rail carriers allows them to make the bid process more competitive – which significantly drive down base rates.

3PLs have the capacity, proficiency and technology to make rail freight movements profitable with a high quality of service. 3PLs have many capabilities in the rail industry to save you time and money.

Intermodal.jpgNotable rail capabilities that 3PLs possess:

  • Ordering Cars
  • Tracking Car Supply
  • Monitoring Demurrage
  • Entering Shipping Instructions
  • Tracking Cars En Route to Destination
  • Identifying and Solving Disruptions Before they Become Disastrous
  • Quoting Rates
  • Auditing and Paying Freight Invoices
  • Coordinating Transloading
  • Measurement and Reporting of Freight Performance and Costs

When you’re partnering with a 3PL to move goods by intermodal or rail, they are able to provide you with detailed reports on performance and costs which are critical to efficient operations. Visibility into these processes is the first step to optimizing and streamlining transportation management. You can’t reduce costs until you know what’s costing too much. Data produced by a TMS supports your choice of carriers, mode and lane for each of your shipments.

Here is a quick overview of the most important points of visibility a TMS provides, specifically relating to rail transportation:

Rail Performance

Rail Costs

Contract Carrier Compliance – percent acceptance

Base Rates – benchmarked by industry standard

Load Times – time spent actually loading freight

Premiums – broken down by reason codes

Lead Times – length of time to secure a shipment

Customer Mix Change – long vs. short haul costs

Light Loads – number of not fully loaded trucks

Fuel Spend – compared to industry average

Current Outbound Car Locations – real-time status updates on outbound freight progress

Dedicated vs. Common Carrier Costs – difference in costs between dedicated and public carriers

Current Inbound Car Locations – real-time status updates on inbound freight progress

Truck vs. Rail Premiums – measure by lane where applicable

Demurrage and Dwell Time Reports – summary of loading/unloading inefficiencies

Detention Costs – costs accumulated from inefficient loading/unloading

Fleet Utilization – summary of efficiency of dedicated or public carriers

Freight Cost Recovery – overall freight spend vs overall revenue

 

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Trending Transportation News: February 2016

  • Non-Manufacturing Grows for 72nd Straight Month. The Institute for Supply Management (ISM) reported that non-manufacturing activity continues to point towards growth. ISM uses the NMI index to measure non-manufacturing growth and found the economic activity in the non-manufacturing sector continued to grow especially in finance/insurance, real estate/rental, agriculture, health care and public administration.
  • Customer Expectations Overpower Retailer Capabilities. The click and collect model is a blend of online convenience and in-person shopping. As many as 42% of consumers have tried the click and collect method, but stores are having trouble with execution. Retailers aren’t traditionally set up for real-time inventory and customer fulfillment.
  • PLS Opens 2 More Office Locations. In January, PLS opened its 12th branch office in Charlotte, North Carolina. In February, PLS opened its 13th branch office in Las Vegas, Nevada. Both offices opened to better support the company’s shipping and carrier partners.
  • Perishable & Reefer Market Grows. Major shipping lines have ordered more temperature-controlled containers. Drewry Shipping Consultants say the global capacity of reefer container shipments is expected to grow by 20% over the next 3 years. (Learn more about Temperature-Sensitive Shipments)
  • Diesel Prices Increase. The price of a gallon of diesel fuel increased by 0.3 cents during the week of February 15. The price is still at the lowest point in more than 11 years and is 91.7 cents cheaper than it was during the same week, one year ago. The slight increase ends the long streak of diesel price drops.

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Rising Transportation and Logistics costs, Research

Inbound Freight Costs are Rising. What are logistics managers doing to better manage costs?

Inbound Freight Costs are Rising. What are logistics managers doing to better manage costs?

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INBOUND LOGISTICS IS A COMPLEX PROCESS that can consume more than 40% of the average organization’s annual freight budget, according to Aberdeen Group, which estimates that total inbound freight spend alone consumes between 3.6% to 5.2% of a firm’s total annual sales. Due to inbound freight savings’ direct impact on the organizational bottom line, shippers that make it a supply chain priority reap significant inventory efficiencies, better cost containment, and a higher chance of achieving productivity and service goals.

The Independent Steel Alliance and PLS Logistics Services Partner to Provide Independent Rebar Fabricators with Logistics Services

ATLANTA, GA – February 25, 2016

The Independent Steel Alliance (“ISA”) has signed a transportation partnership agreement with PLS Logistics Services (“PLS”), a leading logistics management services provider. This agreement will allow ISA’s purchasing members to receive freight transportation services at competitive rates while earning loyalty rebates in exchange for selecting PLS as their preferred carrier.
Said ISA Executive Director Chris Casey, “Traditionally, our rebar fabricator members place an order with a supplier and simply use the carrier designated by the supplier. With the PLS partnership, ISA Members will be able to shop the supplier’s freight rates with PLS and receive competitive pricing. When our Members select PLS as their freight carrier, PLS will pay a rebate to the Members. It’s a win-win for both parties.”

“In today’s competitive environment, cost effective transportation solutions are critical to long-term survival, and PLS is pleased to further enhance the competitive position of ISA Members,” said Greg Burns, President and CEO of PLS Logistics Services. “The fabricated rebar industry is a freight-intensive one, and this agreement enables ISA Member companies to realize significant cost savings by leveraging the buying power of the largest flatbed network in North America.”
PLS currently has branch offices nationwide in Pittsburgh, PA, Philadelphia, PA, Jacksonville, FL, Tampa, FL, Houston, TX, Dallas, TX, San Antonio, TX, Phoenix, AZ, St. Louis, MO, Seattle, WA, Las Vegas, NV and Charlotte, NC. In 2015, Inc. Magazine ranked PLS Logistics Services among the 5000 List of Nation’s Fastest Growing Companies.

About Independent Steel Alliance

Atlanta-based Independent Steel Alliance is a member-owned purchasing cooperative of independent rebar fabricators in the US and Canada. ISA’s mission is to achieve measurable and significant financial returns for its members by leveraging collective purchases for patronage rebates from suppliers. In its first three years of operations, ISA Members have earned significant rebates by supporting ISA Supplier-Partners. ISA is also a leader in providing unique content and networking opportunities tailored specifically for the independent rebar fabricator community.

For more information about ISA, including information about joining the cooperative, visit the ISA website at http://www.IndependentSteelAlliance.com.

About PLS Logistics Services

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.

Contacts

For Independent Steel Alliance
Chris Casey
Executive Director
(404) 577-0207
Chris@IndependentSteelAlliance.com

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

Supply Chain Management Best Practices: Resilience

Disruption.jpgSupply chains are diverse and complex – so are the potential risks that could disrupt them. A good supply chain management strategy invests in resilience. Resilience refers to the time it takes supply chains to predict and avoid risk, as well as respond and recover from costly disruptions.

75% of companies experience at least one major supply chain disruption a year.

Supply chains are vulnerable to risk which makes detection time an important metric.

What is detection time? Detection time is the time measured from the instant a supply chain disruption is realized to the time the incident takes place.

Detection time is a key factor of supply chain resilience. Companies that quickly identify oncoming disruption are more competitive in the market place. Every day, threats occur that could disrupt standard operations and reduce productivity.

Examples of supply chain threats that create disruption:

  • Natural disasters
  • Market challenges
  • Upstream supply risks
  • Production problems
  • Lack of capacity
  • Cargo damage or theft
  • Distrust in supplier relationship

A company can’t eliminate every disruption, but proactive thinking and documented processes can minimize negative financial impact from a halt in operations. Companies should never ignore potential risks – they will not go away. Planning will make a big difference between success and failure.

To implement best practices for risk management, ask yourself:

  • What threats does your organization face?
  • What consequences would those risks have?
  • What’s the likelihood the risk would happen?
  • If the risk is probable, how do I develop a plan of avoidance?

resilience.bmpOne approach to overcome disruption is to create a resilient supply chain. The resilient supply chain requires 2 critical components: the capacity for resistance and the capacity for recovery. Resistance is the supply chain’s ability to reduce the impact of disruption, and recovery is the supply chain’s ability to quickly resume normal operations after a disruption.

For a resilient supply chain risk management strategy:

  1. Identify: what risk is most likely to compromise the organization’s supply chain? (internal and external)
  2. Analyze: evaluate risks and determine potential outcomes and effects
  3. Respond: define the next steps to protect and secure the supply chain

Many find success in developing a resilient supply chain by segmenting it; segmenting your supply chain creates flexibility by providing you with alternative suppliers and routes.

Ultimately, when an event disrupts business, the supply chain must be able to adjust. A company’s response to disruption is based on its risk management and supply chain management strategy. When the unexpected happens, or when identified risks become real, resilience will overcome the associated challenges.

 

 

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The Remarkable Impact of Processing Big Data in Transportation

Only 23% of companies have a big data strategy, which isn’t surprising, considering there’s an estimated 2.5 quintillion bytes of data created each day. It’s impossible to analyze it all, but leveraging big data in transportation and logistics can enhance operations and elevate the bottom line.big_data_ebook.png

Big data has nearly limitless potential. It’s a powerful tool that transforms everything it touches. A transportation management system (TMS) can turn data into something indispensable – actionable intelligence.

 

Download the PLS ebook Powerful Reporting Improves Insight to:

  • Create value in your supply chain using new business intelligence
  • Learn how transportation benefits from big data analyses
  • See examples of customized TMS reports
  • Understand how one of PLS’ clients benefited from big data initiatives

 

 

 

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What is ITS and How Will it Help America’s Infrastructure?

Automated_Trucks.jpgTraffic and population growth create demand for new roads, but most regions don’t have the space or money to build new infrastructure. Today’s concerns over infrastructure, traffic congestion, energy use and safety are being addressed by new transportation-focused technology.

Anthony Foxx, US Transportation Secretary, said that the nation’s transportation infrastructure should be an outrage to every American.

The condition of US transportation infrastructure has been a serious issue for the transportation industry. In fact, fixing America’s roads became a highly debated congressional topic. After 32 short-term transportation funding laws, in 2015, the FAST Act was passed with the intent to improve the nation’s transportation infrastructure.

The nation’s population is expected to grow by 70 million people in the next 30 years. Freight traffic is projected to increase 45%. Even with the new FAST Act, infrastructure will struggle to keep up with demand.

New transportation technologies such as autonomous vehicles, alternative fuels, vehicle-to-vehicle communication, keyless fleet management, and traffic analytics are evolving in order to meet infrastructure challenges.

These technologies are referred to as ITS, intelligent transportation systems:

Autonomous Vehicles: Autonomous vehicles are capable of traveling safely in less space. Driverless vehicles will alter the transportation system. Highway efficiency is low with humans behind the wheel. The space between vehicles is based on human physiological limits of perception and reaction. Driverless-vehicle technology will allow the gap between vehicles to shrink significantly, which will increase the carrying capacity of existing highways.

Alternative Fuels: In 2013, the US imported about 33% of the petroleum it consumed, and transportation was responsible for nearly three-quarters of total US petroleum consumption. Alternative and renewable fuel will help increase energy security, improve fuel economy, lower fuel costs and reduce emissions. Alternative fuels will reduce costs of operating and maintaining vehicles which will improve economic development for the infrastructure.

Vehicle-to-Vehicle Communication: Vehicle-to-vehicle communication is a crash avoidance technology, which relies on the communication between nearby vehicles to warn drivers about potentially dangerous situations. The Department of Transportation estimates this technology could eliminate 70-80% of accidents caused by driver error when used with lane control, auto-braking and adaptive cruise settings.

ITS is expected to transform transportation into a connected, safer, greener and more efficient landscape.

ITS:

  • Improves transportation safety
  • Creates mobility through integrated communication technology
  • Process and share information to prevent collisions, keep traffic moving and reduce environmental impacts
  • Distribute real-time traffic data to websites, apps, TV stations

With ITS, common transportation challenges will be a thing of the past – less delays due to clogged ports, less wasted fuel from sitting in traffic, and real-time information to create a connected infrastructure.

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Market Update: Industrial Distributors Have Serious Service Issues

Industrial_Distributor.jpg

It’s a difficult economy for industrial distributors. Industrial demand is down – in Q4 of 2015, manufacturing orders were down 20% YoY. Amazon’s low prices and convenience make it difficult to compete. The drop in oil prices, cheap imports and the strong U.S. dollar all affect manufacturing output, which leads to lower revenues for distributors.

Distributors can stay competitive and gain market share by providing unique and valuable service offerings. The problem is that distributors typically have poor transportation management, which makes any implementation of valuable services difficult.

There are 2 main problems with the way transportation is handled by industrial distributors:

  1. Inbound Freight Transportation

The most basic problem with inbound transportation for distributors is that vendors typically control this function. Not all, but most vendors will use transportation as a profit-center by charging too much, and hide the true price of transport in the price of the product.

Industrial distributors have the option of owning their inbound freight. This way, they can optimize freight modes and save money for both parties involved, all while keeping the supply chain moving quickly and efficiently. 

Distributors typically have many moving parts in their company, which makes inventory management difficult. Subpar warehouse operations lead to insufficient staffing for receiving shipments. When carriers have to consistently waste time at a particular shipper’s dock facility, they will not want to send their drivers there in the future, leading to inflated costs and more difficulty securing capacity.

  1. Low Rate of TMS Adoption

Few industrial distributors utilize transportation management systems (TMS). Without a TMS in place, there’s no visibility into shipment status, price or overall transportation performance. With manual processes in place, many distributors simply book the fastest loads they can find in order to provide good service. However, using expensive carriers and relying on expedited shipments can consistently hurt the bottom line.

Limited visibility into transportation processes exacerbates the problems distributors face with inbound transportation. A TMS will provide visibility into inbound freight, revealing the hidden costs of transportation and upcharges used for profit. A TMS also provides shipment status updates, allowing distributors to schedule proper staffing for receiving functions.

Without visibility into transportation management, industrial distributors will not be able to implement profitable changes that improve service levels. A TMS provides detailed performance data to identify inefficiencies and start making service improvements.

Industrial distributors need to differentiate themselves through a variety of quality services. Shrinking, plummeting demand makes inventory and transportation management difficult, however, well managed transportation practices can address many of the service problems industrial distributors are facing.

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PLS Logistics Services Continues Expansion, Opens Office in Las Vegas

New Office to Bring More than 200 Jobs to Las Vegas, Nevada

CRANBERRY TOWNSHIP, PA – February 15, 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 Las Vegas, Nevada. This is PLS’ 13th office nationwide, and was opened to meet the needs of PLS’ expanding client base.
The office opened February 15, 2016 with an initial team of 20 employees and expects to hire 200 additional employees in 2016 from the Las Vegas area. The office is located in the Bank of America Plaza at 300 South 4th Street, Suite 600, Las Vegas, Nevada.

“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 strong sales talent that Las Vegas offers and better support our shipping and carrier partners.”
PLS chose Las Vegas as an 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 Stephanie Price at sprice@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

E-Commerce Changes Traditional Retail Shipping Strategies

Customer demand and connectivity are high, and retailers are struggling to keep up with the competitive omni-channel environment. Supply chains are shifting in order to accommodate the rapidly changing landscape for the way people buy and the way goods are moved.

Shipping options are important to 4 out of 5 Americans, so retailers are rethinking their transportation strategy in order to meet common customer expectations like quick delivery and hassle-free returns.

Online sales in the United States are expected to reach $523 billion in the next five years, up 56% from $335 billion in 2015, according to Forrester Research Inc. The growth of e-commerce can be credited to convenience, flexible service, and free, fast delivery. However, omni-channel supply chains are still maturing, leaving a wide gap between consumer expectations and retailer capabilities.

One solution to get products to people quicker is to move distribution centers closer to consumers; or better yet, use existing retail storefronts as a DC. Shipping goods from store locations to consumers is an effective way to use space and assets. The ship from store method is an advantage to retailers because it saves time, costs less and delivers goods quicker.

Online shopping is filling more trucks, but the length of the haul is shorter. “Since DCs are closer to the customer, truckload miles (per trip) have decreased by nearly 25%. The net effect is a cut in truckload capacity,” said Derek Leathers of Werner Enterprises. Truckload capacity is already under pressure due to the driver shortage. Although this shipping model gets products to people quicker, it creates less efficiency on the asset side.

Shippers are creating transportation strategies that count on delivery performance and the most efficient mode. Shippers have to establish relationships with carriers in order to obtain capacity on their desired lanes and get competitive rates.

Retailers who have adopted the ship from store method have found that it reduces transportation spend because the store services local customers and parcel carriers typically charge less for short distance deliveries.

Using a store as a DC comes with challenges. Companies are expected to fill more orders faster and at a lower price; shipments are not always delivered on time, managing fulfillment at a store level is time consuming, and there is little visibility into the overall process. If systems don’t update inventory in real-time, these challenges could affect the bottom line and customer experience.

So, as more shoppers choose online retail, what’s next for retailers’ supply chain?

Some retailers are experimenting with same-day delivery, but this service is expensive. Other retailers are experimenting with the strategy ‘ship to store’, where customers can pick the item up at their convenience. And another option is ‘ship to alternative destination’ method, where a customer can pick up the item at a local, predetermined access point.

One thing is certain, as omni-channel retail continues to grow, shipper-3PL relationships will increase. A 3PL will support retailers and organize opportunities to increase profits and customer loyalty by providing consistent delivery performance and monitoring shipment status through real-time data.

In the unpredictable world of e-commerce, a 3PL is able to consolidate inventory, determine demand, find cost-effective solutions to move and manage goods, and simplify operations.

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