Wednesday, October 3, 2018

Turning Over a New Rock

Shippers scramble to control costs in the rapidly changing environment.
Logistics managers are scrambling to find new ways to control costs, following a turbulent year with unprecedented spikes in surface transportation outlays, new regulations taking effect, and tariffs both already in place and looming on the horizon.

The new realities have shippers looking for ways to make themselves attractive to truckers, catering to them with extended loading dock hours, amenities for drivers, and working to become or remain a “shipper of choice.” Much like Uber drivers rating their fares, carriers note which customers make it easy to ship for them, and which cause bottlenecks or penalize drivers for being 15 minutes late. Hours of service regulations on long-haul drivers, backed up by electronic logging devices, force truckers to take a harder line and demand matching efficiency from shippers.

Executives in corporate suites have taken notice that logistics efficiency can have a pronounced effect on their bottom line, as company after company has had to cite surging supply chain costs in conference calls and quarterly reports as reasons for subpar financial performance. Consumers are being conditioned to expect that deliveries of their shipments will cost nothing, and happen immediately, adding stress and cost to the businesses that must provide the service to match those expectations.

As the traditional end of year shipping peak season gets underway, so is an incipient trade war with the United States’ major trading partners, notably including China The latest round of US tariffs on Chinese goods just took effect, with tit-for-tat retaliation by Beijing.  Levies of 25 percent have been threatened for essentially all goods imported from China are poised to take effect January 1. Spot rates for ocean and airfreight are volatile, with no one sure how these events will play out.

Rates aren’t falling any time soon, so that means turning over as many rocks as possible in search of supply chain savings. And pardon us if we’ve said this before, but “if you can’t measure it, you can’t improve it” – getting a handle on your logistics operations is the crucial first step to reining in runaway costs.

Kirk Shearer
President & COO
(973) 726-2103
TOTALogistix, Inc.

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