This post is based on material from the 2013 Spend Matters / Procurian research brief: Summer 2013 – Logistics Pricing Review and Outlook (free, registration required). Contributors from Procurian include Ed Sands, Global Practice Lead-Logistics and Scott Youngs, Logistics Category Management Group Leader. Spend Matters contributors include Jason Busch, Executive Editor, and Pierre Mitchell, Chief Research Officer.
When it comes to transportation sourcing analysis, there is a range of factors contributing to the overall environment that all transportation teams need to consider. Take for instance the following facts:
- Today’s drivers are making as much as they did in the 1970s (but carriers have not necessarily passed on these savings).
- General modes are shifting from truckload and LTL to pool consolidation, intermodal, and rail.
- The economics of the industry have changed – the railroads have numerous tax credits and breaks compared with truckload and LTL.
The evolution of market economics can create options and opportunity for shippers. For example, if delivery windows do not need to be as narrow, there can be savings from changing modes. Much of this comes down to truly understanding end customer requirements, such as what date a customer needs a given delivery. If organizations can manage order patterns and where freight comes from, there are many levers to pull to drive savings beyond just rates.
Down the road, organizations can begin to focus on broader supply chain questions (how does loading dock operate, how does labor work and operate, what labor rules are in place, etc.). Total cost is really only about the total cost of logistics – not one mode, carrier, or lane.
Overall sourcing strategies that not only include price can impact mode usage. Consider the intermodal opportunity and adoption trending we are seeing in the market. Procurian marketplace data suggests that intermodal has become a popular choice and dominant mode as mileage bands increase.
In the full research brief, we provide two charts exploring market data on this topic, the first displaying Intermodal Adoption Analysis Based on Mileage Bands. Figure 3 shows truckload vs. intermodal sorted by mileage band. It is sorted by total volume of shipments. Figure 4 displays Intermodal Adoption Percentage based on intermodal usage as a percentage of overall shipments.
For further analysis of this topic, download the complete Spend Matters and Procurian research brief today: Summer 2013 – Logistics Pricing Review and Outlook.