Executive Briefings

Higher Prices, Lower Service Levels Force Shippers to Find New Ways of Boosting Efficiency

Shippers and carriers face a host of issues related to rising transportation costs and tighter capacity, according to the new study by the Warehousing Education and Research Council (WERC). It should come as no surprise to any consumer of gasoline that 83 percent of transportation users experienced carrier rate increases over the past year, and most expect additional hikes this year. But price isn't the only issue of concern. Nearly 53 percent of those surveyed reported more service failures by their providers, according to WERC's "Transportation Capacity Issues 2006." Degrading service levels have forced nearly 74 percent of shippers to modify their warehouse procedures, while changing or adding carriers and modes. Some have turned to brokers to widen the pool of available carriers, while others have simply beefed up their rosters of approved carriers.

"The study indicates that many companies are paying more for less service and they are making adjustments in other areas to compensate," says WERC executive director Robert K. Shaunnessey. At the same time, shippers and carriers are collaborating more closely to boost efficiency and productivity throughout their  increasingly complex supply chains. The biggest modal shifts are from motor carrier to intermodal. For years, the latter has carried the stigma of spotty service, but rail now offers a strong alternative to over-the-road transport. Additional steps by shippers and freight handlers include extended operating hours, expanded use of drop-and-hook operations, addition of personnel, new transportation-management software and increased inventories. At least one company has gone so far as to ship less-than-truckload quantities as a full truckload. The cost was higher, says WERC, but so was the service reliability.

Visit www.werc.org.

Shippers and carriers face a host of issues related to rising transportation costs and tighter capacity, according to the new study by the Warehousing Education and Research Council (WERC). It should come as no surprise to any consumer of gasoline that 83 percent of transportation users experienced carrier rate increases over the past year, and most expect additional hikes this year. But price isn't the only issue of concern. Nearly 53 percent of those surveyed reported more service failures by their providers, according to WERC's "Transportation Capacity Issues 2006." Degrading service levels have forced nearly 74 percent of shippers to modify their warehouse procedures, while changing or adding carriers and modes. Some have turned to brokers to widen the pool of available carriers, while others have simply beefed up their rosters of approved carriers.

"The study indicates that many companies are paying more for less service and they are making adjustments in other areas to compensate," says WERC executive director Robert K. Shaunnessey. At the same time, shippers and carriers are collaborating more closely to boost efficiency and productivity throughout their  increasingly complex supply chains. The biggest modal shifts are from motor carrier to intermodal. For years, the latter has carried the stigma of spotty service, but rail now offers a strong alternative to over-the-road transport. Additional steps by shippers and freight handlers include extended operating hours, expanded use of drop-and-hook operations, addition of personnel, new transportation-management software and increased inventories. At least one company has gone so far as to ship less-than-truckload quantities as a full truckload. The cost was higher, says WERC, but so was the service reliability.

Visit www.werc.org.