Accenture's Spend Trends Report from Q2 (published in October) covers a number of macroeconomic areas affecting procurement and supply chain costs while also diving into a number of category-specific trends. One area the research brief explores is the logistics market, offering a global perspective on it and opportunities for savings and procurement improvement.
For example, the Accenture team makes the observation that shippers will benefit from taking “a different sourcing approach that relies more upon local/country level market knowledge, different contracting norms, different fuel programs, etc. to drive savings in a tightening supply environment.” In other words, there is not one strategy to pursue in a centralized manner, even with regions (e.g., “Europe”) for specific modes – LTL, truckload, rail, etc. We must truly “get local.”
Another trend Accenture explores — one that we’ve covered extensively on Spend Matters (see coverage here and here) — is the shift in pricing models in the area of small parcel. Specifically, FedEx and UPS both announced moves to a new pricing scheme, dimensional pricing, that “calculates shipping cost based on package volume — the amount of space a package occupies in relation to its weight.”
This is a game changer (not in a positive way) for the logistics market. As Accenture observes, “the new pricing model will affect roughly 70 percent of packages shipped by volume today, and shippers could be looking at potential rate increases in the range of 20 percent above current levels when the dimensional pricing models are applied to the smaller packages they ship today. This is before other standard rate increases and assessorial charges.”
To overcome added costs, Accenture recommends companies work with “their carrier representatives now to understand how the new dimensional pricing models will apply to them and what the potential impact on shipping costs will be. In parallel, shippers should take a fresh look at their overall delivery networks and perform a bottoms-up analysis of network and competitive options to optimize total shipping costs.”
Readers interested in the topic will be curious to know that Spend Matters collaborated with Accenture (Procurian) on an examination of the logistics market. We encourage you to read our analyses below.
Stay tuned as our coverage of Accenture’s report continues.