Ocean carrier profits and revenues are catching the headlines these days: "Ocean Freight Carriers made more money in 2021 than in the past 20 years" is the headline in Furniture Today, and it's shocking – but true. Spending on Ocean freight increased 23.6% last year, according to the most recent Council of Supply Chain Management Professionals’ State of Logistics Report.
Spending on truck delivery, which represents approximately 70% of all freight delivery in the U.S., surged 39.4% to $415.2 billion in 2021. With trucks traveling approximately 500 billion miles a year and last-mile delivery trending upward as e-commerce sales take a larger share of all retail sales, trucking performance plays a key role in supporting an efficient supply chain.
While the trend of rising fuel costs and the shortage of drivers and trucks are largely beyond the control of any one company to address- we’ve identified a few ways that logistics companies can take on board to improve performance.
There are savings and revenue opportunities in pricing, contracting, delivery performance, scheduling, loading, and network transparency that enable logistics providers to be prepared for tumultuous business cycles.
Non-dynamic pricing
Digitizing rates and contracts, automating self-serve booking, and adding business rules for add-on pricing leads to innovation in service and better revenue management.
Many companies may not be automating their rates and contracts and may also price at marginal cost driven by commoditization and broker practices, rather than value. When so many do this, the industry suffers in a race to the lowest price rather than performance and reliability.
Delivery Failures
Approximately 10-15% of deliveries don’t work out as planned. This could be due to a range of issues such as over, short, or damaged cargo, and attempts to deliver when there’s no capacity/equipment to receive a load or make a load. There’s a tremendous amount of value at stake that is easily reduced through deepening relationships with your trucking providers. Resolving delivery issues while they are happening shows a clear chain of custody and less work for all parties.
Unproductive Moves
Sub-optimal scheduling, loading, and empty or underutilized runs eat away at margins and efficiency. Utilizing technology to manage the complexity of operations, tracking performance metrics and analytics to measure the quality of service, and not just price, saves money and builds predictable and resilient delivery performance.
Inefficient pick-up and drop-off points
Up to 50% of moves in a yard could be reduced with a better exchange of data on truck flows and cargo. Enabling yards to use their equipment more effectively to stage cargo for pick-up and be ready for receipt will yield immediate savings. Leveraging modern cloud technology and integrations fills the information gap and a little information saves a lot of wasted truck moves.
Logistics costs for all industries in the U.S. continue to rise hitting $1.85 trillion in 2021, a 22.4% annual increase, representing 8% of the $23 trillion U.S.GDP last year. The value of delivery performance is big and getting bigger. Top shippers are realizing quick wins and planning for long-term benefits by actively adding the tools and making changes to how they manage their truck providers. It’s the only way to stay a step ahead of the next industry headline decrying the cost of logistics.
