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Transportation Strategy SCMN 4780 Mode / Carrier Profile.
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Transcript of Transportation Strategy SCMN 4780 Mode / Carrier Profile.
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Mode / Carrier ProfileMode / Carrier Profile
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Shipper’s Transportation Network Shipper’s Transportation Network
SUPPLIER CUSTOMERPRODUCER
(Shipper)
Inbound Transportation
Outbound Transportation
Reverse Logistics
22Modal Carrier Profile Modal Carrier Profile
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47803Modal Carrier Profile Modal Carrier Profile
2010 Products Shipped ($B) 2010 Products Shipped ($B)
1,759
1,430
1,2671,061
880
696
692
689
578573
Machinery
Electronics
Motorized Vehicles
Mixed Freight
Pharmaceuticals
Textiles / Leather
Manufactured Products
Gasoline
Plastics / Rubber
Raw Materials
Transportation Strategy Transportation Strategy SCMN 4780SCMN 4780
Select Best Transport Mode
Transportation Mode Management Transportation Mode Management
Identify Performance Variables
Negotiate Rates & Service Levels
Select Carrier
Establish Freight Control Points
Evaluate Carrier Performance
44Modal Carrier Profile Modal Carrier Profile
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47805Modal Carrier Profile Modal Carrier Profile
Total Logistics Cost* as % of US GDP
* Logistics Cost is cost of moving, storing and managing goods
A major factor in the decline of total logistics cost has been reduced transportation costs. Transportation costs are lower because:
•Deregulation & subsequent restructuring of the freight transportation industry in the 1980s which triggered strong competition and lower shipping prices;
•Public investment in the US Interstate highway system in the 1980s and early 1990s reduced travel time and improved trip reliability for motor carriers; and
•Adoption of new technologies such as intermodal freight containers, e-Business, RFID tags, and satellite communications significantly improved the productivity and reliability of freight operations.
US Transportation – Recent HistoryUS Transportation – Recent History
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47806Modal Carrier AnalysisModal Carrier Analysis
US Domestic Modal StatisticsUS Domestic Modal Statistics
2010 US Shipments * (TONS) ($B)
Truck 12,490 68% 10,515 65%
Rail 1,776 10% 427 3%
Water 860 5% 343 2%
Air 12 0% 999 6%
Intermodal 1,380 8% 2,739 17%
Pipeline 1,494 8% 719 4%
Other 302 2% 323 2%
Total 18,313 16,065
* Source: US Department of Transportation
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47807Modal Carrier Profile Modal Carrier Profile
In a survey commissioned by the Council of Supply Chain Management, logistics costs rose to 8.3% of US GDP in 2010 vs. 7.7% in 2009. •Cost of US business logistics jumped to $1.2 Trillion in 2010 (up $114 B) •Inventory carrying costs increased 10.3% last year due to higher costs of taxes, obsolescence, depreciation and insurance. •Transportation costs were up 10.3% from the 2009 levels with trucking lagging behind the performance of other transportation modes.
With bleak prospects regarding the economy, transportation managers will continue to see freight costs increase and will have to answer to management as to why. What can shippers do to minimize the impact of freight cost increases?
1.Understand what you are paying for, not just base rates but fuel surcharges and all accessorial fees2.Consolidate shipments when possible including consolidating small parcel shipments into LTL quantities and LTL quantities into truckloads 3.Do not use expedited services unless they are absolutely required. 4.Continually benchmark the competition’s rates and charges5.Understand your carriers’ costs; what if anything can you do to reduce their costs so they can pass those savings back to you 6.Perform a comprehensive audit of your entire transportation spend using an outside audit firm
Current Logistics Cost SituationCurrent Logistics Cost Situation
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47808
2010 US Shipments - Tons
Truck Rail Water Air Intermodal Pipeline Other
Modal Carrier Profile Modal Carrier Profile
US Domestic Modal StatisticsUS Domestic Modal Statistics
Transportation Strategy Transportation Strategy SCMN 4780SCMN 47809
2010 US Shipments - Value ($B)
Truck Rail Water Air Intermodal Pipeline Other
Modal Carrier Profile Modal Carrier Profile
US Domestic Modal StatisticsUS Domestic Modal Statistics
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478010Modal Carrier Profile Modal Carrier Profile
Unites States Highway SystemUnites States Highway System
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478011Modal Carrier Profile Modal Carrier Profile
Highway System CongestionHighway System Congestion
Federal legislation to improve the US highway system discussion
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478012Modal Carrier Profile Modal Carrier Profile
CSA 2010 – Legislation Description CSA 2010 – Legislation Description Compliance, Safety, Accountability is a Federal Motor Carrier Safety Administration initiative to improve large truck and bus safety through reducing crashes, injuries, and fatalities that are related to commercial motor vehicles. CSA 2010 introduces a new enforcement and compliance model that allows FMCSA and its State Partners to contact a larger number of carriers earlier in order to address safety problems before crashes occur. Rolled out in December 2010, the program establishes a new nationwide system for making the roads safer for motor carriers and the public alike!
CSA Operational Model – implement a Safety Measurement System SMS) that …
•quantifies the on-road safety performance of carriers and drivers to identify candidates for interventions•determines the specific safety problems the a carrier or driver exhibits •monitors whether safety problems are improving or worsening
SMS uses a motor carrier’s data from roadside inspections, including all safety-based violations, State-reported crashes, and the Federal motor carrier census to quantify performance in the following Behavior Analysis and Safety Improvement Categories.
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478013Modal Carrier Profile Modal Carrier Profile
CSA 2010 – Improvement Categories CSA 2010 – Improvement Categories 1. Unsafe Driving - Operation of commercial motor vehicles by drivers in a dangerous or careless
manner. Example violations: Speeding, reckless driving, improper lane change, and inattention. 2. Fatigued Driving (Hours-of-Service) - Operation of CMVs by drivers who are ill, fatigued, or in
non-compliance with the Hours-of-Service (HOS) regulations. This includes violations of regulations pertaining to logbooks as they relate to HOS requirements and the management of CMV driver fatigue. Example violations: Exceeding HOS, maintaining an incomplete or inaccurate logbook, and operating a CMV while ill or fatigued.
3. Driver Fitness - Operation of CMVs by drivers who are unfit to operate a CMV due to lack of training, experience, or medical qualifications. Example violations: Failure to have a valid and appropriate commercial driver’s and being medically unqualified to operate a CMV.
4. Controlled Substances & Alcohol - Operation of CMVs by drivers who are impaired due to alcohol, illegal drugs, and misuse of prescription or over-the-counter medications. Example violations: Use or possession of controlled substances/alcohol.
5. Vehicle Maintenance - Failure to properly maintain a CMV. Example violations: Brakes, lights, and other mechanical defects, and failure to make required repairs.
6. Cargo-Related - Failure to properly prevent shifting loads, spilled or dropped cargo, overloading, and unsafe handling of hazardous materials on a CMV. Example violations: Improper load securement, cargo retention, and hazardous material handling.
7. Crash Indicator - Histories or patterns of high crash involvement, including frequency and severity. It is based on information from State-reported crashes.
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478014Modal Carrier Profile Modal Carrier Profile
Truck Driver ProfileTruck Driver Profile
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478015Modal Carrier Profile Modal Carrier Profile
Team Report – Carrier Performance Team Report – Carrier Performance
Carrier Report Card • Identify 4 - 5 areas of carrier
performance / KPI metrics (mode generic)
• Define the metric to be used to calculate performance in each area (mode generic)
• Prioritize the importance of each performance area (weighting factor)
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478016Modal Carrier Profile Modal Carrier Profile
LTL 27
TL 320
Domestic Truck Freight Statistics ($B)Domestic Truck Freight Statistics ($B)
LTL is much more concentrated market than TL• Top 25 LTL carriers = 88% of total LTL revenues (top 6 = 50%)• Top 25 TL carriers = < 10% of total TL revenues
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478017Modal Carrier Profile Modal Carrier Profile
Truckload (TL) Modal Freight Truckload (TL) Modal Freight
Producer Customerpickup delivery
• Shipments typically exceed 20,000 lbs. with weight limitations• Freight pickup at shipper and delivery to customer is scheduled • Delivery transit times based on distance and driver regulations• Carrier selection options are private, common, contract carriers • Rates are established by ______________________________
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478018Modal Carrier Profile Modal Carrier Profile
Truckload (TL) Freight Truckload (TL) Freight
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478019Modal Carrier Profile Modal Carrier Profile
COMPANY NAME SUBSIDIARY PORTFOLIO / COMMENTS 2009 Rev
($ M)
1 Swift Transportation Swift Transportation $ 2,338
2 Schneider National Schneider National, Schneider National Bulk Carriers $ 2,200
3 Werner Enterprises One-way Truckload, Dedicated, Cross-Border $ 1,433
4 U.S. Xpress Enterprises US Xpress, Xpress Global Systems, Xpress Direct, Total Transportation, Arnold Transportation, Abilene Motor Express, C&C Transportation, Smith Transport, Pinner Transport
$ 1,333
5 J.B. Hunt Transport J.B. Hunt Truck, Dedicated Contract Services $ 1,204
6 Prime Inc. Flatbed, Refrigerated, Tanker $ 992
7 C.R. England England North American, England Mexico, England Dedicated $ 979
8 Crete Carrier Corp. Crete Carrier, Shaffer Trucking, Hunt Transportation $ 849
9 Knight Transportation Knight Transportation, Knight Refrigerated $ 585
10 Ruan Transportation Ruan Dedicated Contract Carriage, Bulk Transportation $ 584
11 CRST International CRST Van Expedited, CRST Malone, CRST Dedicated Services $ 561
12 Covenant Transport Group Covenant Transport, Southern Refrigerated Transport, Star Transportation $ 541
Truckload (TL) Freight Truckload (TL) Freight
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478020Modal Carrier Profile Modal Carrier Profile
Market Challenges: • industry profitability with market-driven pricing • owner / operator vs. corporate ownership vs. hybrid ownership • stricter driver regulations / aging workforce• highway conditions • fuel costs
Specific Customer Selection / Performance Criteria
?
Truckload (TL) Freight Truckload (TL) Freight
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478021Modal Carrier Profile Modal Carrier Profile
Less-Than-Truckload (LTL) Modal Freight Less-Than-Truckload (LTL) Modal Freight
Producer Customer
Hub
Ter
min
al
Hub
Ter
min
al
line
haul
pickup delivery
• shipments range from 150 – 20,000 lbs.• due to smaller shipment size, costs are less than TL freight rates • LTL freight mixed with other shipper loads to gain trailer density • freight pickup / delivery is typically by regular driver routes • pickup-to-delivery transit times much greater than TL freight • rates are established by ________________________________
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478022Modal Carrier Profile Modal Carrier Profile
• LTL competes on transit times
• Terminals operations similar to distribution centers
• Success of terminal operation requires adopting LEAN principles (cross-docking)
• Challenge is to dynamically match-up terminal locations with customer delivery requirements
• IT solutions are essential •
LTL Hub Terminals LTL Hub Terminals
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478023Modal Carrier Profile Modal Carrier Profile
YRC Transit Times – Kansas City, MOYRC Transit Times – Kansas City, MO
Standard Transit DaysFrom Kansas City, MO
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478024Modal Carrier Profile Modal Carrier Profile
CARRIER NAME 2010 REV ($M)
COVERAGE
1 FedEx Freight $ 4,421 Nationwide, Canada, Mexico Non-Union
2 Con-Way Freight $ 3,026 Nationwide, Canada, Mexico Non-Union
3 YRC National $ 2,642 Nationwide, Canada, Mexico Union
4 UPS Freight $ 2,002 Nationwide, Canada, Mexico Union
5 ABF Freight Systems $ 1,395 Nationwide, Canada Union
6 Old Dominion Freight $ 1,377 Nationwide, Canada Non-Union
7 Estes Express Lines $ 1,352 Nationwide Non-Union
8 YRC Regional $ 1,257 Nationwide Union
9 R+L Carriers $ 1,077 Nationwide Non-Union
10 Saia Motor Freight $ 836 Midwest, Southeast Non-Union
11 Southeastern Freight Lines $ 723 Southeast, Southwest Non-Union
Less-Than-Truckload (LTL) Freight Less-Than-Truckload (LTL) Freight
Transportation Strategy Transportation Strategy SCMN 4780SCMN 478025Modal Carrier Profile Modal Carrier Profile
Less-Than-Truckload (LTL) Freight Less-Than-Truckload (LTL) Freight
Market Challenges: • stricter driver regulations / aging workforce• highway conditions • fuel costs• investments in technology with questionable ROI • hub terminal locations and operating costs
Specific Customer Selection / Performance Criteria
?