The question of how shippers can reduce their transportation costs conjures up "a situation with a lot of moving parts," Bentz says. "It requires a level of skill and experience to get the optimum network out of it."
There is, of course, a certain amount of “low-hanging fruit” to be picked. Shippers can identify early opportunities to cut costs, but they should also be looking at their transportation programs holistically. They need to consider the entire network of freight flows, both inbound and outbound. The key to optimizing the transportation portfolio to meet demand is the use of advanced mathematics and analytics, Bentz says.
It’s still possible to optimize one’s transportation program even if one doesn’t control every aspect of it. “Control is not the operative word.” Bentz says. “It’s really [all about] how I take cost out of my supply chain.” He says shippers should work closely with suppliers, with emphasis placed on the maintenance of core-carrier programs.
Shippers are liable to overlook valuable opportunities for lowering transportation costs. Deregulation has placed too much of an emphasis on discounting. “That horse has been driven into the ground,” Bentz says. Still, competition is a valuable tool for controlling prices, as well as offering carriers the opportunity to improve their utilization rates.
From the start, one of the biggest challenges that shippers face is turning raw data into usable information. “Most clients I’ve worked with have had challenges getting accurate data in a timely fashion,” Bentz says. Shippers need to examine their costs in the light of restructuring and optimization efforts, to the point of engaging in total portfolio management.
“By balkanizing the effort, you miss opportunities,” says Bentz. “Air and ocean freight has to hit the road at some point.”
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