Transportation Industry Overview

Leaf
Cargo plane
Transport truck shipping freight on road

Quick points on the transportation industry

The Transportation Modes

  • Over the road (LTL & TL)
  • Expedited over the road (LTL & TL)
  • Intermodal
  • Courier (Surface & Air)
  • Ocean (CL & LCL)
  • Domestic and international air

Value of Benchmarking

  • Reduce rate negotiation conducted by staff exposed only to their own rate levels
  • Get comparables to know what your competitor is paying
  • Understand carrier capacity requirements
  • Understand carrier costs and how to use them to your advantage
  • Cover all the bases, contractually

Cost Impact of Density

  • Understand the impact of density, the most important and misunderstood aspect of transportation cost
  • Understand how cubic displacement rates are converted and charged in dollars per hundredweight
  • Know the difference between subject to cube vs. not subject to cube

Cost Impact of Packaging

  • Gain Protection against loss or damage
  • Avoid claim implications from reused packaging
  • Know the impact on product density and cost
  • Plan for disposal cost of packaging

Seasonality of Business

  • Protection against loss/damage
  • Reused packaging and the claim implications
  • Impact on product density and cost
  • Disposal cost of packaging

Freight Allowances

  • Often awarded to retailers who pick up their own shipments
  • Percentage of purchase price doesn’t always reflect actual cost
  • Benchmark costs against actual costs
  • No allowance for density considerations

Fuel Surcharges

  • Know how fuel affects your costs
  • Understand how carriers calculate fuel surcharges
  • Learn the strategies that can be used to control these costs
  • Know the best time to address fuel costs

3PL Service Providers

  • What is a 3PL service provider?
  • What are the benefits?
  • When and how a 3PL should be used?

Buying Threshold

  • Hard to control but worth an effort
  • Smaller minimums equal smaller shipments equal higher costs
  • Strategy for mode change based on threshold
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