Monthly Archives: November 2016

7 Trending Transportation Updates: November 2016

  • Little Change in Economy, but Rate Increase Coming. Next year, the US economy won’t change much, growth expected to be about 2%. FTR predicts more of the same, but when you factor in low expectations, 2017 will feel like a good year. Shipping prices are expected to increase in 2017 and continue into 2018. FedEx, UPS and several LTL carriers have announced a series of rate increases effective in 2017.
  • Self-Created Holiday has Vigorous Delivery Window. Singles Day is the largest shopping day in the world, 4x bigger than Black Friday. Alibaba was expected to generate $20 billion in total transaction value. Last year, Alibaba did $9.3 billion in revenue on Singles Day, shipping 278 million orders in 24 hours. The same-day delivery window requires a new way of thinking about transportation and logistics. China struggles with delivery, mostly because of an underinvestment in infrastructure and inefficient regulation. So, Alibaba has pledged to invest billions of dollars in order to link third-parties to deliver shipments. (Source)

  • Busiest Thanksgiving Since 2007. 7 million Americans were expected to travel at least 50 miles for the Thanksgiving holiday, that’s 1 million more people compared to last year. This represents a 1.9% increase over 2015, and the most Thanksgiving travelers since 2007. AAA credits the increase of travel to inexpensive fuel (the second-lowest in a decade for the holiday travel period), rising wages and increased consumer confidence. (Source)

  • Record Breaking Cargo Activity at Port of LA. The Port of Los Angeles, the largest in the US based on container volume per year, had a record-breaking October. Cargo activity at the port surged 16%, making October 2016 the busiest ever for a western hemisphere container port. The port handled 814,574 industry-standard TEUs – the previous record was 800,063 in October 2006. Trucking drayage services aren’t experiencing the same volume; it has dropped 2.5% compared to this time last year. (Read: Will Cuba be the Next Major Transportation Hub?)
  • GOP-Led Congress Expected to Act on Highway Funding. Trucking and transportation industry executives would like lawmakers to advance and President-elect Trump sign a long-term plan that would address the federal Highway Trust Fund’s sustainability. As Transport Topics mentions, highway construction is expensive, and Congress has been disagreeing on the subject of funding infrastructure for almost 25 years. (Read: Will the 45th President Secure Infrastructure Spend?)

  • Brake Safety Week Results Are In. Commercial motor vehicles reported 13.2% of inspections resulted in out-of-service orders for brake violations during September’s Brake Safety Week. The CVSA reported 14.8% of inspected vehicles out-of-service with non-brake violations.
  • America’s Positive Outlook at Manufacturing. America’s growing energy sector is creating excitement among manufacturers and rail lines. Norfolk Southern Corp. is excited about long-term opportunities underway thanks to energy abundance in the US. “Cheap energy will influence manufacturing industries,” said the VP of Business Development at Norfolk. (Source)

 

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The North American Steel Alliance Signs Agreement with PLS Logistics for Transportation Services

CRANBERRY TOWNSHIP, Pa., Nov. 28, 2016 (GLOBE NEWSWIRE) — The North American Steel Alliance (“NASA”), a member-owned purchasing cooperative service in the metals distribution industry, has signed a transportation partnership agreement with PLS Logistics Services (“PLS”), a leading logistics management services provider. This agreement will allow NASA’s Purchasing Members to receive freight transportation services at competitive rates while earning loyalty rebates in exchange for selecting PLS as their preferred carrier.

“We are pleased to join forces with PLS Logistics Services, as a preferred supplier to North American Steel Alliance,” announced NASA’s CEO Lonnie Terry. “Transportation expenses are a significant line item for our members. This program provides a long-term opportunity for our organizations to confidently leverage both inbound and outbound shipments to obtain the greatest economies while receiving excellent service. This is our first significant step in leveraging NASA freight.”

“In today’s competitive environment, procuring low cost, reliable transportation is critical to long-term survival, and PLS is pleased to further enhance the competitive position of NASA Members,” said Greg Burns, President and CEO of PLS Logistics Services. “This agreement enables NASA Member companies to leverage 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, and Charlotte, NC. Inc. Magazine has ranked PLS Logistics Services among the 5000 List of Nation’s Fastest Growing Companies for the past three years.

About North American Steel Alliance

Incorporated in November of 1996, North American Steel Alliance is a member-owned purchasing cooperative serving the metals distribution industry. Today, NASA is comprised of over 118 independently operated steel service centers throughout the United States and Canada with over 365 distribution and processing facilities. Collectively, NASA represents annual revenues exceeding $9B dollars. Since 2007, the National Cooperative Business Association recognized NASA as one of the top 10 purchasing cooperatives in North America.

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 45,000+ trucking companies along with Class-1 railroads and major barge companies.

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Caitlin Orosz, Content Marketing Manager
724. 814. 5194, publicrelations@plslogistics.com

Market Update: Seasonal Freight Surge and Consumer Forecast

Adobe Digital Intelligence says that 31% of consumers start shopping before November 1, and 27% will start before Thanksgiving, so the supply chain plans for the holiday season for months and months in advance. So many of the year’s sales occur during the short two-month season, so the logistics process needs to be efficient enough to handle the increase of purchases. It’s estimated that retailers derive 20-30% of their annual profit during November and December. “The holiday season puts great pressure on supply chains because everyone peaks at the same time,” says NRS vice president of logistics and supply chain solutions.

The National Retail Federation announced that it expects
sales in November and December 2016 (excluding auto, gags and restaurant sales) to increase a solid 3.6% to $655.8 billion – significantly higher than the 10-year average of 2.5%.

Manufacturers, carriers, 3PLs, and suppliers prepare for expected supply chain demands and unpredictable disruptions with volume forecasts, market trends, inventory management, customer expectations, labor resources, and performance analyses. Suppliers and retailers optimize their supply chains and distribution networks so that they’re able to deliver high volumes of product on-time.

UPS expects holiday shipping volume to be about 14% higher this year than last year, making for a record peak season. UPS says its peak shipping day will most likely be Monday, December 19. FedEx expects about 10% growth in holiday season shipping volume. FedEx says it expects that the four Mondays leading up to Christmas will be the company’s busiest. The NRF is predicting that non-store sales will increase between 7-10% to as much as $117 billion.

As SDC Exec explains, successful supply chain planning doesn’t only mean supplying goods. The omnichannel environment requires that inventory is available for sale at the right price and right time through any channel the customer shops – then, the brand must fill an order from store stock, the retail network, or even a brand vendors warehouse.  In 2016, mobile is predicted to exceed desktop shopping during the holidays. Thanksgiving and Black Friday will see nearly 60% of mobile shopping and 40% of e-commerce.

According to ADI, Black Friday 2016 will set record sales, passing $3 billion, and Cyber Monday will be the largest online shopping day in history. Thanksgiving Day will grow the fastest, reaching $2 billion in online sales (15% YoY growth). “It’s clear that consumers have become more comfortable spending money online,” said Tamara Gaffney, principal analyst at ADI. “The convenience of not having to go into stores and deal with the stress and strain that take place during the holidays looks like one of the primary drivers for online sales growth this holiday season.”

Thanksgiving Gobbles Up Truckload Demand

In 2015, DAT reported Thanksgiving shipping boosted demand for dry vans and refrigerated trailers. The number of loads posted increased 7.1% while capacity was essentially unchanged (-0.3%).

It’s not surprising that refrigerated trailer demand is up at this time of the year, given that 250 million Americans celebrate Thanksgiving and flood grocery stores to fill their carts and tables with seasonal favorites.

This year, reefer volumes have been in a holding pattern, but the week of Thanksgiving traditionally provides a surge of demand for temperature-controlled trailers. The national average rate rose to $1.97 per mile during the first week of November, the highest since early July. Spot market reefer posts unexpectedly increased 10% the week of October 30. During the week of November 6, reefer rates slipped two cents, and some markets saw double-digit declines. The same week, refrigerated trailers load posts declined, but truck posts increased 3.4%. DAT trends show rates on the top reefer lanes have been hard to predict with weekly changes.

Factors that Can Affect Christmas Truckload Demand

  • Fuel Prices
  • National Average Rates
  • Weather
  • Capacity/Availability
  • E-Commerce

When it comes to the holidays, meeting customer’s logistics demands and optimizing the supply chain is essential. Manufacturers, carriers, 3PLS, and suppliers consider the various predictable and unpredictable factors that might change costs, routes, demand, and performance.

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PLS Logistics Services Featured in Logistics Tech Outlook’s Top 10 3PL Technology Solution Providers 2016

FREMONT, CA— PLS Logistics Services, a recognized leader in industrial freight shipping, has been announced as one of the 2016’s top 3PL Technology solution provider in the latest edition of Logistics Tech Outlook.

“We take pride in ourselves to honor PLS Logistics Services for earning a spot in our ranking list which features elite group of companies that is setting new benchmark in Logistics industry,” said Linda James, Managing Editor of Logistics Tech Outlook. “PLS Logistics Services provides everything a business needs to gain a competitive edge in today’s rapidly changing transportation environment.”

PLS’ proprietary web-based transportation management system – PLS PROSM – ensures that every freight move is optimized and tendered at the lowest cost, meeting service requirements while providing increased visibility through tracking, administration and reporting.

PLS provides flexible solutions that add value and efficiency to clients supply chain. It provides customize solutions based on their business requirements – whether they need all transportation initiatives outsourced, help with inbound freight management, outbound shipment visibility, individual plant, or individual mode management.

About PLS Logistics Services
PLS Logistics Services is a leading provider of technology-enabled transportation management, freight brokerage and outsourced transportation solutions for shippers across all industries. PLS handles millions of loads annually across all major freight modes: flatbed, van, LTL, rail, barge, air and ocean. The PLS carrier network consists of over 45,000 trucking companies, Class-1 railroads and major barge companies.

Logistics Tech Outlook is a technology magazine published from Fremont, California. It acts as an excellent platform for enterprises to showcase their innovative solutions that are setting new foot prints in the logistics industry. This magazine insight about the latest trending technologies that helps organizations to overcome the challenges faced in their business and remain competitive in market place. For more info, visit: www.logisticstechoutlook.com/

Omnichannel Takes on Food Industry, Gains Consumer Support

There is a shift in how consumers are approaching grocery shopping, using more channels than ever before. Grocery is an $800 billion market – online grocery sales are expected to grow, becoming a $24 billion industry in 2017.

“Retailers are grappling to not only understand consumers varied shopping patterns, but also capture shares of their increasingly fragmented shopping trips,” says Susan Viaman of IRI.

Although the food supply chain infrastructure is efficient, consumers are seeking home delivery and click-and-collect options, and grocery stores have to adjust, overhauling their fulfillment system to serve the omnichannel market.

According to Food Logistics, demand on food retail will be amplified by disruptive supply chain innovations designed to offer fast, exact fulfillment of customized orders. The ability to deliver original transportation solutions in on-time delivery, scheduling and visibility and utilize technologies in the warehouse will become a strategic differentiator for companies that want to remain competitive and gain market share.

Omnichannel Environment

“The conventional supermarket is a dinosaur,” says Phil Lempert, in a NRF article. “It doesn’t serve the needs of today’s shopper who is looking for more exciting offerings.”

The food industry has invested less than other sectors in understanding the consumer through e-commerce interactions. Consumers don’t cling to any one channel for buying; we know that they want to buy the product they want, when they want it, from whatever channel is most convenient. And, today’s consumers are demanding local, fresh, organic, and sustainable products and expect food companies to follow these demands, so the omnichannel landscape can’t be dismissed by grocers any longer.

96% of Americans have made an online purchase at some point in their lives, and four in five have done so in the last month alone, according to BigCommerce. Online shopping is extremely popular; Americans cite it as their preferred way to shop. One-third of US consumers are online grocery shopping. In 2016, grocery e-retail sales will hit double digits (17%), where only 8% of consumers bought groceries online in 2015.

“The reinvention happening in this space is being driven by the consumer. They’ve pushed the traditional supermarket operators to ask themselves, “How can I be different?’” says Farla Efros, HRC Advisory. “Consumers are time-starved, they like online ordering.”

Many grocers feel pressure from e-commerce, but the ability to interact with customers through multiple channels promises benefits, says Kevin Reader, KNAPP Logistics Automation, Inc. “An omnichannel customer is worth more than a single channel customer.”

Food Logistics cites 7 elements for a successful omnichannel retail supply chain:

  • Real-time visibility into inventory to reduce safety stock and inventory carrying costs.
  • Active control over access and allocation of inventory in real-time.
  • Processing and shipping of individual orders at the lowest cost, either direct-to-consumer or direct-to-store or for click and collect.
  • Fully automated distribution processes that will increase productivity and fulfillment rates using material handling equipment.
  • Flexible fulfillment paths to meet demand, regardless of which channel it comes from.
  • Maximized efficiency in every part of the supply chain to meet customer expectations.
  • Minimum cost to serve.


Leading the Way: Amazon Fresh

Amazon is notorious for reinventing itself and finding new ways to create value for its consumers and now it’s challenging grocery stores by breaking into the online food order and delivery business. By 2018, Amazon Fresh will have 20 locations. It grabs 84% of online grocery visits and 59% of online grocery spending. It’s developing new technology like license plate scanners and in-store kiosks to meet consumer demand. Amazon is constantly working on making shopping and buying easier, and grocery stores need to respond. Besides Amazon, Kroger and Wal-Mart are threats to supermarkets, based on their national footprints and the investments they have made in omnichannel fulfillment.

Logistics and Omnichannel

  • Distribution: The direct-to-consumer fulfillment method is creating a need for specifically built distribution centers. Direct-to-consumer forces more outbound, direct, fulfillment responsibilities.
  • Transportation: The expansion of e-commerce in the food industry has increased the volume of orders, which means utilizing more carriers to fulfill orders for shippers.
  • Technology, Visibility and Analytics: A transportation management system can handle the outbound and inbound operations, route modeling, dock scheduling, invoicing, and mode selection. When you’re monitoring your TMS, it’s simple to track your KPIs and determine new solutions to benefit your business. When you’re shipping from one DC to another, or from a brick-and-mortar location to the end user, it helps to know where the truck is and when it’s expected to arrive, which a TMS can help configure. Customers want visibility, too – they should be made aware of any disruptions during the product’s journey.

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Supply Chain Management Best Practices: Efficiency, Effectiveness

Supply chains are multifaceted and can be a noteworthy source of competitive advantage. To improve efficiency and effectiveness, companies have to improve predictability, optimize costs, minimize working capital, mitigate risk, and analyze data. Companies who strategically improve even one area of the supply chain create a ripple effect of operational advantages. A resourceful, successful supply chain helps businesses save money – from faster delivery time, shorter factory processing time, better inventory management.

What is supply chain efficiency?

Supply chain efficiency is an organization’s core standard of performance. Efficiency measures the ratio of work performed in a process and whether the process is using the best practices and making the most of available resources. Supply chain efficiency doesn’t always guarantee effectiveness. A supply chain might efficiently lessen costs, but if the end consumer is unhappy with the product, it’s ineffective. An effective supply chain focuses on the outcome and external standards.

Well-built supply chains improve margins, support expansion, drive positive consumer experiences, and reduce operating costs. Determining the best way to move a product to its destination takes consideration of optimizing order processing, receiving procedures, outbound schedules, and reverse logistics.

How do distribution networks play a role in efficient and effective supply chains?

A distribution network is the system a company uses to get products from the manufacturer to the retailer. Companies who leverage the supply chain as a strategic capability have built a durable distribution network. A fast, reliable network is a competitive advantage because customers are able to get products whenever they want them. Today, the trend is for distribution centers to be located close to major markets in order to reduce inbound and outbound miles. “The ability to get a product to market in 1-2 days when your competition can only deliver in 3-5 days is a serious weapon,” says Wulfraat, President of MWPVL International.

How does supply chain efficiency affect transportation?

For an efficient supply chain, companies create reliable transportation solutions. A transportation network empowers a company to reduce shipment costs and increase service levels with little disruption to any processes. An effective transportation network starts with shipment visibility. Visibility improves routing, capacity and profitability.

Shippers work with 3PLs to explore new transportation solutions. Organizations have to impress customers and innovate processes. 75% of 3PL users say 3PLs provide new and innovative ways to improve logistics effectiveness. The most frequently outsourced logistics activity is domestic transportation (80%). Regardless of mode or freight volume, 3PLs can assess and tailor solutions to a company’s needs.

Through a 3PL, companies can gather transportation and logistics information to forecast accurate needs, influence supply chain decisions and can ultimately grow process efficiency and customer service. Shippers need to first analyze the existing supply chain processes, distribution network and transportation solutions to find pain points and opportunities. Looking at current and predicted delivery lead-times, logistics expenses, and inventory assets are good data points to find a path to efficiency and effectiveness.

Partnering with a 3PL adds value and efficiency to an organization’s supply chain. The technology and resources that third-party logistics companies provide create flexibility, contain or reduce costs, increase space, enhance visibility, and most importantly, enables the organization to focus on their products and customers.

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4 Common Misconceptions about Non-Asset Based 3PLs

Logistics_operator.jpgMisconception 1: We don’t need to work with a logistics firm since we own our own fleet.

Fact: Whether your company leases or owns its own fleet of trucks, complications arise in the quest to maximize shipping efficiency.

  • Government Rules and Regulations: Carriers and drivers are responsible for safety and compliance. When government and transportation associations rescind, suspend and update the standards for drivers, it can be difficult to keep up. When demand shifts and current events call for change in capacity or routes, outsourcing lanes could be a better option than relying on your private fleet.
  • Rising Costs and Capital Investment: Operating your own fleet comes with financial obligations. Fuel, equipment, accounting and insurance costs affect the bottom line. Besides unpredictable costs that can be unprofitable, there are also liability issues. All fleets must carry insurance, usually with exorbitant deductibles. In case of an accident, a private fleet could suffer excessive financial loss. After accidents, law suits typically arise, and truckers rarely come out on top. Transfer this burden to a carrier who has a good reputation on the road. Working with a 3PL, you can find a carrier who meets your company’s safety requirements and values.
  • Customer Service and Added Value: For unique or unusual freight, a company will often use a 3PL to find the perfect driver. Public carriers are just as competent as private fleets with regards to routes, customers and products. Through a network of carriers, a 3PL can assign a driver to specific accounts. This way, they can develop a relationship and recognize the routes, products and requests.
  • Driver Landscape: Private fleets haven’t escaped the problems of the driver shortage. What if your top drivers leave you for a competitor? Public carriers have relationships with 3PLs, so they can help find solutions to guarantee capacity through backhauls or less than truckload moves. For a private fleet, the driver shortage limits options.

Does your company have a private fleet? Find out how PLS can find you backhaul opportunities here.

Misconception 2: Partnering with a transportation management provider for customized solutions will eliminate my job.

Fact: Outsourcing transportation management doesn’t mean turning over your job responsibilities. Outsourcing specific parts of business operations to an expert is not uncommon. Outsourcing is a relationship, a strategic partnership, which adds value to the entire organization. Outsourcing provides more time for you to focus on your core competency and discover cost saving results.

Outsourcing should be seen as a resource, to produce more efficient processes; it’s a tool that generates data; it’s a means to make better decisions; it’s an identifier of inefficiency and a key to overall growth.

Organizations expect to spend, on average, $65.4 million on transportation, freight services, and equipment in the upcoming year.

Misconception 3: If I work with a 3PL on transportation solutions, I’ll lose any or all visibility.ShipmentVisibility.jpg

Fact:  A 3PL’s transportation management solutions provide your company with historical and real-time shipment data. When leveraged and managed properly, big data is used to make smarter operational decisions and optimizes supply chains.

Visibility represents the real-time status of supply chain operations. Consumers, manufacturers and suppliers want to know where their order is at any point in the supply chain. For companies that want to keep visibility into its supply chain and shipments, they can partner with a 3PL and integrate advanced TMS technology that allows information to be gathered from internal and external sources. The real value in the increased visibility include more effective management, simple monitoring and ability to optimize business intelligence and practices.

Misconception 4: 3PLs offer a one-size-fits-all strategy.

Fact:  Transportation management has a suite of services to fit your business needs. A 3PL managing your transportation will work behind the scenes while you manage and monitor the decisions that are best for your business. A 3PL provider will enable you to eliminate tedious day-to-day activities, and deliver customized monthly reports comparing current and historical data.

Solutions to consider from a 3PL:

  • Freight Brokerage
  • Managed Transportation
  • Full Outsource Transportation
  • Technology and Management
  • Risk Mitigation

Whether you have objected to working with a 3PL because your business is too big, too small, has never used brokers or only uses preferred carriers, it’s time to reconsider.

A 3PL is able to provide an evaluation on current processes and find solutions that will cut transportation spend, improve service and processes, create shipment visibility and efficiently manage inventory.

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8 Things We Know About Uber-Otto Technology

The trucking industry has a reputation for being low-margin, highly fragmented and cyclical. Many tech companies have interest in shaking up and rethinking the industry.

  1. Uber has publicly introduced self-driving cars, but almost none of those driven miles are entirely autonomous. Uber’s self-driving cars are picking up passengers in Pittsburgh, PA.
  2. Uber Technologies, Inc. acquired self-driving truck startup, Otto, for $680 million. Uber-Otto is aiming to establish itself as a freight hauler and a tech partner in the logistics industry.
  3. Otto’s autonomous technology allows trucks to drive themselves on roads, but keeps two copilots on board since handling the open highways is a challenge. A trailer full of Budweiser beer drove itself 120 miles down Colorado’s I-25 in October 2016, with no one behind the wheel. Uber-Otto teamed up with Anheuser-Busch InBev for the delivery, which is the first time an autonomous truck made a commercial shipment.
  4. Industry observers don’t expect immediate buy-in to Uberization in trucking. Stifel analyst John Larkin said, “Shippers are simply not going to turn over a $250,000 load to a company that has technology, but little knowledge or experience in the highly nuanced world of freight transportation.” The Department of Transportation generated a 112-page document to confirm that those working on self-driving tech prioritize safety and share valid, non-proprietary data.
  5. Ultimately, Uber wants to change the competitive logistics landscape and Otto truck technology plans to partner with the industry. Uber and Otto are working to build a freight network that will connect shippers and carriers, similar to Uber’s model of matching passengers and drivers.
  6. Other companies are developing technology, too. Ford said it would have a fully autonomous vehicle in service by 2021. Tesla announced plans for an electric semi-truck. Uber has a 300-million-dollar partnership with Volvo to assist each other in developing self-driving technology.
  7. Morgan Stanley research anticipates that advanced transportation technology, including autonomous driving systems, platooning and electrification of trucking will offer carriers up to a 75% reduction in costs.
  8. Uber has launched another project, Uber Elevate, to bring flying cars to commuters by 2026. The VTOL aircrafts would be able to travel at 150 mph for up to 100 miles and carry multiple passengers, including a pilot.

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Expectations in Freight Transportation (2017 Edition)

The latest American Trucking Association (ATA) report predicts freight volumes and the amount of goods moved by truck will grow. Shipping rates are expected to increase as existing capacity is negatively affected by economic conditions and new regulations.

In the US Freight Transportation Forecast to 2027, between 2016 and 2027, overall freight tonnage will grow a total of 35%. During the same period, the amount of freight moved by trucks will grow at 27%. Even though economic and carrier conditions favor a “shipper’s market”, a realignment of factors – capacity, inventory, interest rates – will results in higher transportation rates in 2017.

Next year, truckload carriers will tighten up capacity, which will affect individual shippers differently. Since 2014’s capacity crisis, spot rates have been trending downward, at a combined rate close to 20%. “It’s a complete reversal of the market versus two short years ago,” says Matt Harding of Freight Market Intelligence Consortium. In the future, shippers have to be concerned with more than just price, they have to think about reliable capacity.

Jonathan Starks, COO at FTR, explains “Shippers are able to take advantage of a moderately loose trucking environment. This is largely due to the continued weakness in economic and freight conditions, especially in manufacturing and mining. And, shippers benefit from the fuel environment, which has remained subdued, helping maintain cost reductions. Now, a stable pricing environment seems the most likely scenario. That means that costs won’t fall significantly, but neither should fuel costs surge. This makes driver wages a key item to understand going into 2017. Shippers that understand how to best utilize a driver’s time will be able to take significant advantage of the process to help drive better rates during a time in which the market may once again see 2014-like surges in prices.”

Download: 3 Simple Steps to Become a Preferred Shipper

Other Insights from the Freight Forecast:

  • Truckload volumes are predicted to grow 2% annually between 2016-2022, and 1.6% per year from 2022-2027.
  • LTL volume and private carrier volume are also predicted to grow.
  • The ATA reports that revenue will increase from $906 billion in 2016 to 1.605 trillion in 2027 – that’s a 77% increase.
  • Dedicated fleets are being characterized as a bright spot for carriers and of increased importance for shippers.

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Supply Chain Collaboration: Benefits of Partnering with Your Competition

Supply chain relationships have evolved to be central to the success of 3PLs and their customers. Companies are finding innovative ways to make collaboration work for shared benefit, and by teaming up with suppliers, buyers and competitors, companies are reaping benefits of cost efficiencies and monetary availability.

In the 2016 Third-Party Logistics Study produced by Capgemini Consulting, results showed that 81% of 3PL providers support the concept that collaboration, even with competitors, can achieve logistics cost and service improvements.

According to SupplyChainBrain, in 2011, BMW and Toyota collaborated to create an environmentally friendly luxury vehicle. They shared costs, knowledge and supplies. Evan Rosen, author and research team leader, writes “Collaborating among competitors makes sense when the collaboration creates value for both parties, begins with structure and clarity, and involves non-differentiations processes.”

The logistics industry has a lot to gain by teaming up with competitors — reduced internal costs, acceleration of new project initiatives and market growth. Consumers win from the partnership, too- a luxury environmentally friendly car for example, or reduced wait times on returns, saving expenses on new equipment, higher quality products.

Companies that collaborate successfully have enjoyed reductions in inventories and costs, coupled with improved speed, service and satisfaction. According to Supply Chain Quarterly, companies can greatly impress prospects for collaboration by taking a thoughtful approach in how they implement the effort. The article identifies 6 important steps that can make the difference between having a productive collaboration or an unsuccessful one:

  1. Work together in areas where you have solid footing.
  2. Turn win-lose situations into win-win opportunities.
  3. Select partners based on ability, strategic goals, and value potential.
  4. Invest in infrastructure and people.
  5. Establish a joint performance management system.
  6. Collaborate for the long-term.

Organizations are recognizing the growing importance of collaborating in order to mitigate supply chain complexities, reduce transportation costs and gain market advantages. Supply Chain Management Review notes one of the greatest benefits of long-term supply chain collaboration are the rate savings that result from routinized procedures over the life of the relationship. The longer the relationship, the more indirect costs are reduced.

Successful supply chain collaboration isn’t an easy accomplishment, but it is worthwhile if the initiative is full thought out and pursued jointly through planning, communication, and monitoring.

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