Executive Briefings

LTL/Truckload Services: Win by Collaboration and Integration

Analyst Insight: The current advantaged freight rates in LTL/Truckload modes that most companies have secured during the down economy will not last. Tomorrow's leaders cannot rest and must begin to embrace collaboration tools and technology to support process improvements around the linkage of key partners both internally and externally and to embrace integration as the key to process improvement and transformation.

The area of largest transportation spend and overall shipment volume is in the LTL/Truckload category based on over 180 companies in Aberdeen's October 2009 study on Integrated Transportation. The transportation management sector is still advancing in both continuous improvement and maturity when it comes to technology adoption and solution capability. Unfortunately, the speed at which costs are changing and affecting daily operations has not slowed down. After years of manual processes and documentation, companies are coming to grips with the resources, time, and costs associated with trying to track and analyze the numerous truckloads of inbound and outbound volume and process them effectively and with agility. The daily / weekly changes in fuel costs and routing options are affecting contracts and negotiations that once seemed stable on a yearly basis. The global economy (with this past year's downturn) and the global supply chain have intersected; it is no longer acceptable to wait for fair weather to combat costs and stay competitive. The Best-in-Class responded by renegotiating with their carriers and partners to deliver freight rate reductions across most industry segments. The scale of these reductions (one large global chip manufacturer saved 36 percent) is unprecedented within the last decade with some of the Best-in-Class delivering double-digit reductions over the last year.

The current advantaged freight rates that most companies have secured during the down economy will not last. New strategies will continue to separate the Best-in-Class from the rest of the pack. For example, Best-in-Class companies are 21 percent more likely than all others to leverage multi-stop truckloads, and they are 23 percent more likely than all others to optimize their transport using backhauls. To effectively perform these advanced levels of dynamic optimization requires the right technology tools be available and that the daily practice of dynamic planning and routing be advanced enough to address multi-constraint scheduling and near real-time execution. 

The Outlook

Today's leaders must improve their ability to automate their visibility tools and BI to effect dynamic optimization of transportation activities across the end to end supply network. They must also embrace collaboration tools and technology to support process improvements with internal and external partners. These strategies will only come together if integrated well. Tomorrow's leaders will understand that tight integration is the key to process improvement and transformation.

The area of largest transportation spend and overall shipment volume is in the LTL/Truckload category based on over 180 companies in Aberdeen's October 2009 study on Integrated Transportation. The transportation management sector is still advancing in both continuous improvement and maturity when it comes to technology adoption and solution capability. Unfortunately, the speed at which costs are changing and affecting daily operations has not slowed down. After years of manual processes and documentation, companies are coming to grips with the resources, time, and costs associated with trying to track and analyze the numerous truckloads of inbound and outbound volume and process them effectively and with agility. The daily / weekly changes in fuel costs and routing options are affecting contracts and negotiations that once seemed stable on a yearly basis. The global economy (with this past year's downturn) and the global supply chain have intersected; it is no longer acceptable to wait for fair weather to combat costs and stay competitive. The Best-in-Class responded by renegotiating with their carriers and partners to deliver freight rate reductions across most industry segments. The scale of these reductions (one large global chip manufacturer saved 36 percent) is unprecedented within the last decade with some of the Best-in-Class delivering double-digit reductions over the last year.

The current advantaged freight rates that most companies have secured during the down economy will not last. New strategies will continue to separate the Best-in-Class from the rest of the pack. For example, Best-in-Class companies are 21 percent more likely than all others to leverage multi-stop truckloads, and they are 23 percent more likely than all others to optimize their transport using backhauls. To effectively perform these advanced levels of dynamic optimization requires the right technology tools be available and that the daily practice of dynamic planning and routing be advanced enough to address multi-constraint scheduling and near real-time execution. 

The Outlook

Today's leaders must improve their ability to automate their visibility tools and BI to effect dynamic optimization of transportation activities across the end to end supply network. They must also embrace collaboration tools and technology to support process improvements with internal and external partners. These strategies will only come together if integrated well. Tomorrow's leaders will understand that tight integration is the key to process improvement and transformation.