The Logistical Lowdown

As expectations for the logistics function continue to grow, new government regulations take effect, and innovative technology becomes more common in the industry, companies are finding it more challenging to handle processes on their own. Outsourcing warehousing and distribution to a third-party logistics provider (or 3PL) is an option that offers the resources necessary to meet the challenges while improving efficiency, keeping costs low, and managing demand.

Every company can use logistics to help scale its business and develop a unique competitive advantage. The effect logistics has on reaching these goals is something a Chief Financial Officer (CFO) is especially able to see and value, despite their minimal daily interaction with the function, because of their position within a company. Even though CFOs are more removed, they can still directly impact the cost efficiency in the logistics function.

A great example is how huge industry players like Amazon have been successful because of the investments they’ve made into their logistics infrastructure. These investments have allowed them to create a competitive advantage over other retailers which now places them in the position to compete against prior logistics partners they once heavily depended on. With input coming from the right financial perspective, logistics investments can be a huge enabler for other shippers in much the same way.

Our country is living in strange times, and it’s impacting how most industries operate. For some companies, the demand for their products and services have disappeared very quickly, such as travel-related businesses like airlines. In others, companies and employees are working harder than ever, such as in the healthcare space. And for certain manufacturers, it’s temporarily changing what they do, which will eventually impact shippers. 

In an ideal world, every one of a shipper’s loads would all be the same weight, have the same pickup times each day, and be between a very limited number of origin and destination pairs. Carriers love transporting this type of freight because it’s predictable. “Regular” lanes give carriers the ability to plan better, and as a result, earn consistent revenue and better manage their equipment and driver resources.

Ultimately this helps them manage their costs better, which can then lead to lower rates for their customers, too. Regular lanes also increase a carrier’s familiarity with the locations and products, which introduces more efficiency and better service to the entire logistics process.

As a mid-size trucking company that has been around for over 40 years, Keller has experienced our fair share of ups and downs in the industry. Through it all, we have been able to increase our diversification and expand our services for our customers. This diversification and expanded services have been critical in weathering the tough times. The current situation is unique in many ways and we all are affected, regardless of industry, and certainly some worse than others. With no real answers or experience on how a global pandemic will ultimately affect the supply chain in terms of longevity or what the “new normal” will look like, we can only share our experience with key patterns in uncertain financial times that diminish trucking capacity.

Our country is living in strange times, and it’s impacting how most industries operate. For some companies, the demand for their products and services have disappeared very quickly, such as travel-related businesses like airlines. In others, companies and employees are working harder than ever, such as in the healthcare space. 

President Trump recently invoked the Defense Production Act in response to the COVID-19 pandemic. This law, which was first engaged during the Korean War, essentially allows the federal government to regulate the private-sector to keep the production we need for battling COVID-19 (like ventilators, protective gear, or testing kits) moving. For certain manufacturers, it's temporarily changing what they do.

For the first time since 1938 when the hours-of-service (HOS) laws initially went into effect, the Federal Motor Carrier Association (FMCSA) temporarily exempted truck drivers transporting essential medical equipment and supplies on a federal level. This response is typical on a state or local level for emergency situations, like the current COVID-19 pandemic, because of the sheer amount of goods trucking companies are responsible for moving.

Many shippers question whether or not they should leverage the resources of a freight broker. But the answer is never simple because it will depend on several different factors.

What the truck is going on? 

Trucking bankruptcies have been a hot topic over the past year, with several larger carriers such as New England Motor Freight, Falcon Transport, and Celadon ceasing operations and in some cases stranding drivers out on the road. In addition to these larger carriers, every week there seems to be another longstanding carrier with 30-plus years in business deciding that the business just wasn’t worth it anymore. What is going on and what do things look like moving forward?

2018 marks the 40^th anniversary of the incorporation of Thomas E. Keller Trucking. Tom’s humble beginnings taught him the value of family, hard work, and building a legacy as told in his memoir, The Life and Legacy of Thomas E. Keller.