Mode / Carrier Profile
Transportation Strategy
SCMN 4780
Shipper’s Transportation Network
Inbound
Transportation
SUPPLIER
Outbound
Transportation
PRODUCER
(Shipper)
CUSTOMER
Reverse
Logistics
Modal Carrier Profile
2
Transportation Strategy
SCMN 4780
2010 Products Shipped ($B)
Machinery
578
573
Electronics
1,759
Motorized Vehicles
689
Mixed Freight
692
Pharmaceuticals
1,430
696
880
1,267
1,061
Textiles / Leather
Manufactured Products
Gasoline
Plastics / Rubber
Raw Materials
Modal Carrier Profile
3
Transportation Strategy
SCMN 4780
Transportation Mode Management
Establish Freight Control Points
Identify Performance Variables
Select Best Transport Mode
Select Carrier
Negotiate Rates & Service Levels
Evaluate Carrier Performance
Modal Carrier Profile
4
Transportation Strategy
SCMN 4780
US Transportation – Recent History
Total Logistics Cost* as % of US GDP
* Logistics Cost is cost of moving, storing and managing goods
Modal Carrier Profile
5
A major factor in the decline of total logistics
cost has been reduced transportation costs.
Transportation costs are lower because:
•
Deregulation & subsequent restructuring
of the freight transportation industry in the
1980s which triggered strong competition
and lower shipping prices;
•
Public investment in the US Interstate
highway system in the 1980s and early
1990s reduced travel time and improved
trip reliability for motor carriers; and
•
Adoption of new technologies such as
intermodal freight containers, e-Business,
RFID tags, and satellite communications
significantly improved the productivity and
reliability of freight operations.
Transportation Strategy
SCMN 4780
US Domestic Modal Statistics
2010 US Shipments *
Truck
(TONS)
($B)
12,490
68%
10,515
65%
1,776
10%
427
3%
860
5%
343
2%
12
0%
999
6%
Intermodal
1,380
8%
2,739
17%
Pipeline
1,494
8%
719
4%
302
2%
323
2%
Rail
Water
Air
Other
Total
18,313
16,065
* Source: US Department of Transportation
Modal Carrier Analysis
6
Transportation Strategy
SCMN 4780
Current Logistics Cost Situation
In a survey commissioned by the Council of Supply Chain Management, logistics
costs rose to 8.3% of US GDP in 2010 vs. 7.7% in 2009.
• Cost of US business logistics jumped to $1.2 Trillion in 2010 (up $114 B)
• Inventory carrying costs increased 10.3% last year due to higher costs of
taxes, obsolescence, depreciation and insurance.
• Transportation costs were up 10.3% from the 2009 levels with trucking
lagging behind the performance of other transportation modes.
With bleak prospects regarding the economy, transportation managers will
continue to see freight costs increase and will have to answer to management as
to why. What can shippers do to minimize the impact of freight cost increases?
1.
2.
3.
4.
5.
6.
Modal Carrier Profile
Understand what you are paying for, not just base rates but fuel surcharges
and all accessorial fees
Consolidate shipments when possible including consolidating small parcel
shipments into LTL quantities and LTL quantities into truckloads
Do not use expedited services unless they are absolutely required.
Continually benchmark the competition’s rates and charges
Understand your carriers’ costs; what if anything can you do to reduce their
costs so they can pass those savings back to you
Perform a comprehensive audit of your entire transportation spend using
an outside audit firm
7
Transportation Strategy
SCMN 4780
US Domestic Modal Statistics
2010 US Shipments - Tons
Truck
Modal Carrier Profile
Rail
Water
Air
Intermodal
8
Pipeline
Other
Transportation Strategy
SCMN 4780
US Domestic Modal Statistics
2010 US Shipments - Value ($B)
Truck
Modal Carrier Profile
Rail
Water
Air
Intermodal
9
Pipeline
Other
Transportation Strategy
SCMN 4780
Unites States Highway System
Modal Carrier Profile
10
Transportation Strategy
SCMN 4780
Highway System Congestion
Federal legislation to improve the
US highway system discussion
Modal Carrier Profile
11
Transportation Strategy
SCMN 4780
CSA 2010 – Legislation Description
Compliance, Safety, Accountability is a Federal Motor Carrier Safety Administration
initiative to improve large truck and bus safety through reducing crashes, injuries, and
fatalities that are related to commercial motor vehicles. CSA 2010 introduces a new
enforcement and compliance model that allows FMCSA and its State Partners to
contact a larger number of carriers earlier in order to address safety problems before
crashes occur. Rolled out in December 2010, the program establishes a new
nationwide system for making the roads safer for motor carriers and the public alike!
CSA Operational Model – implement a Safety Measurement System SMS) that …
• quantifies the on-road safety performance of carriers and drivers to identify
candidates for interventions
• determines the specific safety problems the a carrier or driver exhibits
• monitors whether safety problems are improving or worsening
SMS uses a motor carrier’s data from roadside inspections, including all safety-based
violations, State-reported crashes, and the Federal motor carrier census to quantify
performance in the following Behavior Analysis and Safety Improvement Categories.
Modal Carrier Profile
12
Transportation Strategy
SCMN 4780
CSA 2010 – Improvement Categories
1.
2.
3.
4.
5.
6.
7.
Unsafe Driving - Operation of commercial motor vehicles by drivers in a dangerous or careless
manner. Example violations: Speeding, reckless driving, improper lane change, and inattention.
Fatigued Driving (Hours-of-Service) - Operation of CMVs by drivers who are ill, fatigued, or in
non-compliance with the Hours-of-Service (HOS) regulations. This includes violations of regulations
pertaining to logbooks as they relate to HOS requirements and the management of CMV driver
fatigue. Example violations: Exceeding HOS, maintaining an incomplete or inaccurate logbook, and
operating a CMV while ill or fatigued.
Driver Fitness - Operation of CMVs by drivers who are unfit to operate a CMV due to lack of training,
experience, or medical qualifications. Example violations: Failure to have a valid and appropriate
commercial driver’s and being medically unqualified to operate a CMV.
Controlled Substances & Alcohol - Operation of CMVs by drivers who are impaired due to alcohol,
illegal drugs, and misuse of prescription or over-the-counter medications. Example violations: Use or
possession of controlled substances/alcohol.
Vehicle Maintenance - Failure to properly maintain a CMV. Example violations: Brakes, lights, and
other mechanical defects, and failure to make required repairs.
Cargo-Related - Failure to properly prevent shifting loads, spilled or dropped cargo, overloading, and
unsafe handling of hazardous materials on a CMV. Example violations: Improper load securement,
cargo retention, and hazardous material handling.
Crash Indicator - Histories or patterns of high crash involvement, including frequency and severity.
It is based on information from State-reported crashes.
Modal Carrier Profile
13
Transportation Strategy
SCMN 4780
Truck Driver Profile
Modal Carrier Profile
14
Transportation Strategy
SCMN 4780
Team Report – Carrier Performance
Carrier Report Card
• Identify 4 - 5 areas of carrier
performance / KPI metrics
(mode generic)
• Define the metric to be used
to calculate performance in
each area (mode generic)
• Prioritize the importance of
each performance area
(weighting factor)
Modal Carrier Profile
15
Transportation Strategy
SCMN 4780
Domestic Truck Freight Statistics ($B)
LTL 27
TL 320
LTL is much more concentrated market than TL
• Top 25 LTL carriers = 88% of total LTL revenues (top 6 = 50%)
• Top 25 TL carriers = < 10% of total TL revenues
Modal Carrier Profile
16
Transportation Strategy
SCMN 4780
Truckload (TL) Modal Freight
•
•
•
•
•
Shipments typically exceed 20,000 lbs. with weight limitations
Freight pickup at shipper and delivery to customer is scheduled
Delivery transit times based on distance and driver regulations
Carrier selection options are private, common, contract carriers
Rates are established by ______________________________
Producer
Modal Carrier Profile
pickup
delivery
17
Customer
Transportation Strategy
SCMN 4780
Truckload (TL) Freight
Modal Carrier Profile
18
Transportation Strategy
SCMN 4780
Truckload (TL) Freight
2009 Rev
($ M)
COMPANY NAME
SUBSIDIARY PORTFOLIO / COMMENTS
1
Swift Transportation
Swift Transportation
$ 2,338
2
Schneider National
Schneider National, Schneider National Bulk Carriers
$ 2,200
3
Werner Enterprises
One-way Truckload, Dedicated, Cross-Border
$ 1,433
4
U.S. Xpress Enterprises
US Xpress, Xpress Global Systems, Xpress Direct, Total
Transportation, Arnold Transportation, Abilene Motor Express,
C&C Transportation, Smith Transport, Pinner Transport
$ 1,333
5
J.B. Hunt Transport
J.B. Hunt Truck, Dedicated Contract Services
$ 1,204
6
Prime Inc.
Flatbed, Refrigerated, Tanker
$ 992
7
C.R. England
England North American, England Mexico, England Dedicated
$ 979
8
Crete Carrier Corp.
Crete Carrier, Shaffer Trucking, Hunt Transportation
$ 849
9
Knight Transportation
Knight Transportation, Knight Refrigerated
$ 585
10
Ruan Transportation
Ruan Dedicated Contract Carriage, Bulk Transportation
$ 584
11
CRST International
CRST Van Expedited, CRST Malone, CRST Dedicated Services
$ 561
12
Covenant Transport Group
Covenant Transport, Southern Refrigerated Transport, Star
Transportation
$ 541
Modal Carrier Profile
19
Transportation Strategy
SCMN 4780
Truckload (TL) Freight
Market Challenges:
• industry profitability with market-driven pricing
• owner / operator vs. corporate ownership vs. hybrid ownership
• stricter driver regulations / aging workforce
• highway conditions
• fuel costs
Specific Customer Selection / Performance Criteria
?
Modal Carrier Profile
20
Transportation Strategy
SCMN 4780
Less-Than-Truckload (LTL) Modal Freight
pickup
Producer
Modal Carrier Profile
line
haul
21
Hub Terminal
shipments range from 150 – 20,000 lbs.
due to smaller shipment size, costs are less than TL freight rates
LTL freight mixed with other shipper loads to gain trailer density
freight pickup / delivery is typically by regular driver routes
pickup-to-delivery transit times much greater than TL freight
rates are established by ________________________________
Hub Terminal
•
•
•
•
•
•
delivery
Customer
Transportation Strategy
SCMN 4780
LTL Hub Terminals
• LTL competes on transit times
• Terminals operations similar
to distribution centers
• Success of terminal operation
requires adopting LEAN
principles (cross-docking)
• Challenge is to dynamically
match-up terminal locations
with customer delivery
requirements
• IT solutions are essential
•
Modal Carrier Profile
22
Transportation Strategy
SCMN 4780
YRC Transit Times – Kansas City, MO
Standard Transit Days
From Kansas City, MO
Modal Carrier Profile
23
Transportation Strategy
SCMN 4780
Less-Than-Truckload (LTL) Freight
CARRIER NAME
2010
REV
($M)
COVERAGE
1
FedEx Freight
$ 4,421 Nationwide, Canada, Mexico
Non-Union
2
Con-Way Freight
$ 3,026 Nationwide, Canada, Mexico
Non-Union
3
YRC National
$ 2,642 Nationwide, Canada, Mexico
Union
4
UPS Freight
$ 2,002 Nationwide, Canada, Mexico
Union
5
ABF Freight Systems
$ 1,395 Nationwide, Canada
Union
6
Old Dominion Freight
$ 1,377 Nationwide, Canada
Non-Union
7
Estes Express Lines
$ 1,352 Nationwide
Non-Union
8
YRC Regional
$ 1,257 Nationwide
Union
9
R+L Carriers
$ 1,077 Nationwide
Non-Union
10 Saia Motor Freight
$ 836 Midwest, Southeast
Non-Union
11 Southeastern Freight Lines
$ 723 Southeast, Southwest
Non-Union
Modal Carrier Profile
24
Transportation Strategy
SCMN 4780
Less-Than-Truckload (LTL) Freight
Market Challenges:
• stricter driver regulations / aging workforce
• highway conditions
• fuel costs
• investments in technology with questionable ROI
• hub terminal locations and operating costs
Specific Customer Selection / Performance Criteria
?
Modal Carrier Profile
25
Transportation Strategy
SCMN 4780