Need Capacity? Get Flexible

Choosing from a portfolio of services will help you get product from here to there, and may also send savings straight to the bottom line. Here are seven guidelines to help you find the best carriers for your organization.

As tight market conditions continue to put pressure on the cost and availability of over-the-road transportation providers, carriers are rising to the challenge by creating cost-effective ways to move freight — whether by air, truck, sea, rail or a combination of these modes.

Using a mix of different transportation modes can offer shippers flexible, predictable capacity that aligns with their budget and helps maintain high levels of customer service. By examining organizational needs and matching those needs with the wide range of services available from carriers, shippers can find the best possible solution to meet their transportation requirements.

Long-term Relationships, Flexible Freight Form Foundation for Success

The first step transportation managers need to take when choosing from a portfolio solution is evaluating whether or not it makes sense for their situation. There are a number of criteria that, together, create the impetus for shippers to seek alternative shipping modes.

First, shippers must have the ability to be flexible across modes of transportation, transit time and cost. Does your organization really need to get that shipment to California in three days? If not, an alternate solution could be advantageous for you and your customer. If you can be flexible in when a shipment departs, flexibility and capacity benefits will follow.

Second, shippers must be willing to form long-term relationships with carriers. Transactional buyers — those that make purchasing decisions based on cost alone — may miss out on long-term cost savings and service benefits. Carriers engaged in long-term relationships often go the extra mile to improve customer service, create the most efficient modes and find ways to reduce costs in the supply chain.

What if you've identified that your organization is flexible and wants to form long-term relationships with carriers, but you remain unsure if a multiple mode solution makes sense?

Answering yes to the following questions may clarify your decision:

  • Do you have a complex supply chain?

  • Do you ship to multiple distribution centers?

  • Are you under constant pressure to reduce costs and deliver high service?

  • Is your distribution supply chain variable?

  • Do your customers have strict and varied on-time requirements?

  • Does your organization lack access to the technology and/or capital to help with supply chain optimization?

  • Are you being asked to reduce staffing?

Selecting the Best Carriers

Now that you've established that your organization can benefit from a multiple mode solution, selecting the right provider is critical. Following these guidelines can help you find the best carriers for your organization:

1) Put a Portfolio of Services to Work for You
Choose carriers that offer a broad range of services, and most importantly, those that can deliver each of them with excellence. The carriers you select for your organization should be able to demonstrate a proven track record in designing successful solutions that are comparable to your freight needs. Remember, your company's reputation is at stake if shipments are damaged, lost or late. Ask for customer references and evaluate the experience and credentials of potential carriers.

Selecting carriers that offer a broad portfolio of services also provides the opportunity to take advantage of volume savings over the long-term. Often, shippers take a short term approach focused on finding the lowest-priced bid. However, a bid implies that you have perfect knowledge of your needs and that nothing will change during the bid period. If rail service improves, for example, how do you switch from truckload to rail in the middle of a bid? And, comparing bids from an extensive list of carriers that offer various services at different price points is not an easy task. Imagine putting out a bid resulting in 100 responses: 10 can provide multiple mode solutions, 30 have intermodal capabilities; some have full truckload capabilities and still others offer brokerage solutions. Rather than coordinating your shipments among multiple carriers, carriers that offer a range of modes can simplify the process, handle the order from start to finish, and ultimately save you time and money.

2) Focus on Your Core Business with One Phone Call Resolution
Look for carriers that offer integrated, seamless service. Can the same person who handles quoting and invoicing also service your freight across all transportation modes, alleviating the need to contact different departments or companies to fill your order? The ability to move dynamically across modes of transportation is a key benefit of using carriers that offer a broad range of services that can be accessed in one phone call. Ideally, the tactical efforts involved in moving your freight should be invisible.

3) Minimize Your Risk Exposure
The larger the supply chain, the more vulnerable it is to disruption, especially as relationships between suppliers, manufacturers, retailers and customers become more and more complex. Shippers must ensure that they've anticipated all of the risks that could impact their supply chain, including those outside the walls of the carriers with whom they are working. Every entity that touches your freight should be adequately insured. Choose carriers that have audit measures and/or an integrated risk management program in place.

4) Plan for Geographic Reach
Purchasers with large transportation budgets and several distribution centers typically buy centrally to achieve regional or national reach. Know whether carriers have the specific geographic coverage to serve you and your customers. Even if you are not purchasing from offshore vendors today, it is likely that at some point in the future you may consider carriers that offer experience dealing with the complexities that arise in import logistics.

Do your multi-mode providers have a strong presence throughout North America and Europe? Do they conduct business at or near key ports? Are the carriers' operating centers and brokerage field offices close to customers' facilities? If your organization is doing business in Mexico and Canada, how familiar are the carriers with cross-border procedures? Do they have relationships with reputable customs house brokers and freight forwarders?

Cross-border shipping is a complex process. Carriers lacking solid relationships at key ports and across borders could significantly impact your bottom line.

5) Leverage Technology
Transportation managers are busier than ever, so handling tracking, booking, problem resolution, payment and other tasks online is very beneficial and time-saving. Carriers that provide no touch access to information, such as via the Internet or electronic data interchange (EDI), enable shippers to resolve problems at one central point, while offering instant visibility into their supply chains. Those who provide exception management and proactively alert customers to potential problems before they arise bring even greater value to the shipper.

6) Align the Equipment with the Job
Ensuring that carriers can accommodate your freight with the appropriate equipment is important. Do the carriers have access to equipment across multiple modes? Can they source trailers and containers, as well as trailers that can ride on railroads? Is the equipment specified to handle your freight requirements? Do the carriers have access to leased or other equipment in order to manage unexpected surges in volume? With the right equipment, carriers can leverage volume across multiple modes, providing better rates, improved service and low-cost transportation based on your transit requirements.

7) Find the Right Railroad Relationships
As capacity continues to force shippers to explore different modes, shipping over the rail is critical to meet increased customer demand. Find out which railroads your carriers have relationships with, and ensure that those networks provide the reach that you require. The more rail relationships each carrier has, the more flexibility you will have to shift freight between the rails in response to increasing over-the-road costs and changing rail service.

In all, by examining your organization's level of flexibility and shipping volume, you can effectively determine if a multiple mode solution will work for you. And, by diligently examining the capabilities of multi-mode carriers, you can find providers with the broadest mix of transportation solutions, as well as the best equipment, strongest reach, most reliable technology tools and the proactive customer service required to meet your needs. This type of provider can offer many benefits to the shipper, including additional capacity, extended geographic reach, improved (value) pricing, better reliability and greater service levels.

About the Author: Scott Arves is president, Transportation, at Schneider National Inc.

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