Logistics Summer Pricing Trends and Sourcing Strategies: New Joint Research from Spend Matters & Procurian

We're thrilled to announce a new research partnership that’s been a long time in the making with Procurian: Category Watch. Procurian and Spend Matters Category Watch is co-authored by category specialists and market intelligence managers from Procurian and Spend Matters analysts. The primary contributors to this first edition of Category Watch focused on the logistics market are Ed Sands, Global Practice Lead-Logistics (Procurian); Scott Youngs, Logistics Category Management Group Leader (Procurian); Lee Geller, Logistics Network Operations Lead (Procurian); and Jason Busch (Spend Matters). This edition focuses on trucking and intermodal data, trends and recommendations (free with registration).

Our data-driven Category Watch series will be structured in specific sections to help readers tasked with sourcing and managing the lifecycle of categories to gain actionable, market pricing, and sourcing knowledge about current conditions. The research is free, and is designed to highlight the collective category knowledge and market insights of our partner Procurian, who has graciously donated its time and knowledge to this joint project.

In this first edition focused, we start with the briefing points and pricing section of the category research brief, which covers a range of data-driven areas (e.g., regional city pairs price trending and cost per mile [CPM] price trends). We also explore market dynamics, including how large orders for Class A Trucks in previous years are now trending in the other direction (and what this means for shippers). The Procurian team provides a CPM forecast throughout the remainder of the year based on current trending thus far in 2013.

The next section of the analysis, 2013 Sourcing Strategies, explores the changing market economics of the logistics industry and intermodal trending (including an exploration of truckload vs. intermodal shipment volumes by mileage band as well as charts exploring intermodal adoption percentages). This section also explores sourcing strategies focused on saving money in the fuel area through creative approaches. Lastly, our sourcing strategy analysis tackles the evolution of dedicated logistics and CPM data – and intersections on when private fleet strategies make sense. For example, we observe the following:

“Private fleet is like running a trucking company yourself, while dedicated fleet is contracting with a third party carrier to dedicate specific capacity to, as if you owned the fleet, but the carrier still owns the assets and operates them day-to-day. Companies must ask themselves the following questions when considering this opportunity, such as what does a trucking company need to operate, what are their systems, and what do they use internally?

Understanding cost per mile is important from an operating standpoint regardless of dedicated strategies. Logistics sourcing professionals should know precisely the cost for their carriers to operate equipment today. Not so long ago, it was around $1.20 per mile. Now it is $1.76 or so. Too often with shippers, the true costs are buried in different areas – fuel costs within one department, labor costs within another. Sourcing teams need to break through this to understand the baseline cost at which a carrier breaks even – and whether dedicated logistics opportunities make the most sense.”

Last, we end with a section we’ve called The Last Mile, which dances around a variety of topics, from driver weight and safety, additional sourcing, and negotiation price levers to the importance of tracking legislative activity and enforcement in managing total cost.

We’re super excited to share the results of this category analysis with Spend Matters readers. The Procurian brain trust is not only composed of some of the best minds in logistics when it comes to savings strategies, but also provides some of the most useful data and price trending information in the business. We’ll revisit logistics pricing trending data, forecasts and logistics strategies in the future with Procurian as this research series continues. But in the meantime, stay tuned for category coverage featuring IT price trending, sourcing strategies, and related areas.

Spend Matters readers can download Procurian and Spend Matters Category Quantitative Insights: Logistics (Trucking and Intermodal), via the previous link.

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