Friday, March 18, 2011

Fuhgeddaboutit

Choosing most efficient routing is impossible without ongoing automated analysis.

With fuel costs on an upward spiral, you want to ship your goods in the most cost-effective manner. Choosing what mode of transportation to use for a given shipment is one of the very basic building blocks, right?

Well, as they say in Brooklyn, “fuhgeddaboutit.” Even something seemingly as simple as deciding between less-than-truckload (LTL) and the parcel carriers’ hundred-weight (CWT) options is maddeningly difficult, as complicated as the trucking companies and government regulators can make it. FedEx and UPS use seven zones to calculate rates from a given origin point, plus multiple tiers, discounts, and accessorial charges, while LTL operators price each shipment zip code to zip code, with their own set of variables.

With the various tiers, zones and classes, there are over 30 million possible combinations for any one shipment. And even if you run the calculations and get it right today, it will change tomorrow. The parcel carriers adjust their CWT fuel surcharges every month, while the LTL fuel charges change weekly. As of this writing, the LTL surcharge is over four times what the parcel carriers charge.

A dynamic routing system that “automagically” provides mode optimization and allocates your shipments between CWT and LTL, just for one example, can easily save a shipper hundreds of thousands of dollars annually. Dynamic routing has real advantages even without volatile fuel prices. In our current environment of wildly fluctuating costs, automated routing analysis is essential to make sure you’re not paying too much.

Kirk Shearer
President
TOTALogistix, Inc.
www.totalogistix.com
800-989-0054 x103

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