It can be challenging to find a quality truckload carrier, but having trusted partners is a pivotal part of every shipper’s logistics operation. You must choose well as their ability to get the job done directly affects your company’s service to customers and your profitability – two crucial things.
According to a recent article published by Food Logistics, consumer demand for functional beverages, which provide additional energy or nutritional value for individuals, is skyrocketing due to current health trends and as a market response to COVID-19.
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.
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.
It seems when you ask 5 people to define a 3PL, you can get 5 different answers. Not only is this confusing to those of us that call ourselves a 3PL, it’s confusing to our customers as well.
As the freight market continues to evolve and tighten, carriers can be more selective about the freight they accept. As a shipper, making your freight more favorable to carriers will ensure you have capacity when you need it most.
By following payment terms, being flexible with delivery schedules, providing visibility to your carriers, being up front with expectations, providing driver amenities, and keeping the lines of communication open will make you a shipper of choice to your carriers and therefore, your freight is more likely to selected by a carrier when capacity gets tight.
Selecting a third party logistics provider can be a cumbersome task. Whether you're looking to outsource the logistics functions you currently handle yourself or you're hosting another bid process to replace or validate the current provider, it is a large undertaking with many variables. The market for third party logistics partners is changing rapidly with the innovations in technology both in the warehousing and transportation arena. Developing a Request For Proposal (RFP) for a 3PL partnership should not consist of the same tactics as shopping for transactional items; your 3PL selection should be strategic as it is a complex and valuable purchase that will ideally turn into a long-term professional partnership.