3PL Archives

What Can A 3PL Invest in Today to Remain Competitive for Tomorrow?

Logistics Service Providers | By Clint Reiser • 11/09/2022

ARC Advisory Group’s research on the warehouse technology markets (WMS, Warehouse Automation, and Mobile Warehouse Robotics) shows that 3PLs are prominent investors in technology. Other end-user based research we have conducted shows the pressures of e-commerce fulfillment demands, labor shortages, and tight margins are factors driving these investments. Furthermore, research from third-parties, such as CBRE show that 3PLs have been leading industrial real estate leasing activity recently – due in part to growth in e-commerce and the desire of companies to outsource fulfillment operations to 3PLs. It is beneficial to complement these sources of market information with detailed discussions with those directly involved with day-to-day operating environment. Doing so provides valuable “color” to the overall trends. I had the opportunity to speak with Alan Prillaman, SVP of Client Services at Open Sky Group, about the 3PL market. Open Sky Group is a global specialist in the Blue Yonder (formerly JDA RedPrairie) supply chain platform. Alan works with 3PLs in his current role, and also worked directly for a 3PL earlier in his career. I asked Alan a few questions to obtain his perspective on the 3PL warehousing environment. First, for some historical context, I asked how the challenges facing 3PLs have changed since his time working directly for a 3PL. And more recently, what commonalities do you see among the 3PLs clients you are working with at Open Sky Group? Below are some key points from our discussion. I hope you find his insights as informative as I did.

How 3PL’s Operating Challenges Have Evolved

Alen stated that today’s common operating challenges existed years ago, but they are more prevalent today. The biggest changes have been in the progression of technology and consumer expectations. There have been a lot of disruptors in the industry recently. Certain retailers and certain customers continue to raise the bar in meeting delivery and fulfillment of orders – and this has become a competitive advantage for the fulfillment organizations that can make this happen. And some companies, such as Amazon, may be willing to lose money on fulfillment to gain market share. This can place additional cost pressures on other organizations. Also, labor shortages are more severe today than they were when he worked at a 3PL. In today’s environment it can be a real challenge to find good, reliable labor that will work at a 3PL for an extended period of time. This has elevated the importance of warehouse worker training.

Alan worked in pricing for a 3PL. And he confirmed that operating margins at 3PLs are very thin. Meanwhile, they have demanding customer expectations to meet. This puts them between their clients and their clients’ customer demands. Thin margins are often addressed with capital investments in business – lowering the variable costs of fulfillment. However, large capital investments typically require high volumes of throughput for an extended time frame to offset the large fixed costs. 3PL contracts are often in the 3 -5 year range. This time frame is often too short or too excessively risky to spend $10 million on a highly automated conveyance system. Digital automation, such as WMS, labor management, voice picking, etc, tends to be less risky than large physical automation. This is due to its lower fixed costs and broad applicability to various operations. Software solutions can address training issues (multi-language instructions, easy to understand business rules) and provide improved productivity and efficiency with relatively minimal costs in comparison to physical automation.

How Open Sky Group’s 3PL Clients are Addressing Today’s Operating Environment

Virtually all 3PLs face challenges relative to the thin operating margins in the industry. Open Sky looks first at helping its 3PL clients maximize the utilization of the assets (people, process, technology) they currently have in place. Open Sky will engage with a client that is often considering potential forms of automation. They will conduct a detailed assessment of a client’s operations and often determine that the client isn’t fully leveraging what is available within the WMS and labor systems. Quite often they are leaving a lot of opportunity on the table such as using task interleaving, minimizing overall travel time, or other lower cost alternatives to automation. His experience working in operations at a 3PL informs him that there can be a domino effect of taking on too much too fast that can minimize or delay reaching the desired efficiency and quality goals.

Open Sky has seen a number of its 3PL customers adopting lower cost forms of automation – such as autonomous mobile robots (AMRs). Many e-commerce retailers have a true peak season in the Novemenber or December time frame. OpenSky will see instances where labor forces will virtually double in size during that time. So if a 3PL is using AMRs or GTP systems to support these clients, they will have a need to scale that automation as well. Some autonomous robotics providers will actually lease their bots on a temporary basis to help clients during peak periods for a time frame such as 3 months, then take back the leased vehicles after that peak period. This helps 3PLs align costs more directly with throughput volumes and provides the flexiblity that many 3PLs require.

Flexibility is especially important for 3PLs operating in a multi-client warehouse environment. Open Sky has some 3PL customers that have 20 of their clients in a single large facility. And those clients tend to turn over fairly often. There is a good deal of variability in the fulfillment requirements for each client (for example, various value-added services, etc).So if a 3PL has a high-cost, inflexible system that doesn’t meet the needs of a new client, this can cause problems with a highly variable business of a 3PL. Systems that are beneficial to these 3PLs are typically those that are applicable to a wide range of client needs. Some examples include WMS, voice directed picking, pick/put-to-light, and other options help with reducing overall training time, drive quality of fullfillment up, and drive the need for headcount increases down.

Final Word

The biggest change since Alan worked at a 3PL is the number of technology options available. There are so many options available both on the digital automation with the improvement in WMS systems and voice systems, the user interfaces and IOS and Android platforms; and in the forms of physical automation, such as AMRs that do not require the level of infrastructure that was required for legacy AGVs. With all of these options out there, it can be a challenge to find out what is out there, what applicable to their application, and what is tried and proven. Going to trade shows can be beneficial to 3PLs to see what is out there. Finally Alan suggests, “Be sure not to follow too many shiny objects. Take an inventory of what you have at your disposal today. Make sure you maximize what you have . Whatever solution you are looking at, make sure it is tried and proven in the market, and that it is scalable.”

Ocean Spray Improves On-Time Delivery with Managed Transportation Services

Guest Commentary | By Chris Cunnane • 06/05/2019

A few weeks ago, I spoke with Keli Sanford, Logistics Manager at Ocean Spray. In that role, Keli is responsible for inbound raw materials going into the plant and finished goods leaving the plant, as well as overseeing Canadian warehousing and transportation. In her years at Ocean Spray, Keli has had a lot of first-hand experience with their business relationship with CH Robinson.

Ocean Spray has a two-fold relationship with CH Robinson. First, the company uses CH Robinson as a carrier. CH Robinson has been a top volume carrier for Ocean Spray for over 15 years and the relationship has developed into a partnership. Additionally, Ocean Spray uses TMC (CH Robinson’s transportation management system [TMS]) as managed TMS in house.

Prior to partnering with TMC for a managed freight solution, Ocean Spray’s transportation management was a decentralized system. This meant that it was managed at individual distribution centers. Under this plan, each region was working with local carriers with little corporate oversight. To better succeed as a company, it moved to a 3PL relationship (company unnamed) to manage its transportation. This strategy consisted of a 3PL managing Ocean Spray’s carrier relationships. The 3PL worked remotely from its headquarters and had little interaction with Ocean Spray’s operations, customer service, or supply chain teams. However, Ocean Spray was still looking for a more efficient and productive system.

In deciding the best course of action, Ocean Spray initially looked at purchasing software to handle its transportation management needs but couldn’t find the right fit. Ocean Spray also looked at web-based solutions for inbound, but these solutions still didn’t work well for all of its needs. In the end, the company decided on TMC; the key piece was an onsite team and the ability to work together side-by-side with Ocean Spray’s transportation employees.

The implementation process was easier than expected, mostly due to the fact that the TMC team was in the building. Once the solution was up and running, Ocean Spray began to see the benefits. On-time delivery is clearly one of the most important metrics for any company that is shipping goods. After the implementation, Ocean Spray saw its on-time delivery rates increase to around 95 percent. This had two major impacts. First, it made the sales team happy because it drove better collaboration with customers and ensured reliable deliveries. Additionally, it improved customer loyalty.

The second benefit the company saw was an increase in first carrier acceptance rate. When looking at a scorecard of shippers and carriers, first-time acceptance rate can be crucial. Ocean spray has seen acceptance rates increase which has resulted in cost savings on its transportation spend.

TMC has managed about 70 percent of Ocean Spray’s freight volume historically. The remaining 30 percent of business is vendor managed raw materials, retail customer pick-up, or business that just doesn’t make sense to run through TMC. Ocean Spray has done a phased approach to integrate through TMC, whether that is transportation modes or business units. For example, the company needs a business case to integrate (if there is 1 mode and only 1 carrier, it probably won’t migrate over). In 2018, TMC managed 80,000 loads for Ocean Spray. And, over the last two years, TMC business with Ocean Spray has grown by over 9% (attributed to new business) and now TMC manages over $55 million of Ocean Spray’s spend. The majority of the growth has come from TMC adapting to Ocean Spray’s needs with innovative solutions, including sustainability efforts.

One of the main benefits of working with a trusted partner for 15+ years is communication. For Ocean Spray, working with TMC has been a great relationship. As Keli pointed out, because of the length of the relationship, Ocean Spray still talks to most of the same people in management for every project. Additionally, Ocean Spray gets an instant response to inquiries. The depth of the relationship has resulted in a joint effort to build the transportation department over the years. Working side by side, day in and day out, infuses a sense of trust for both Ocean Spray and TMC.

Looking ahead, the relationship between the two companies shows signs of growth. TMC has shown a track of record of success with Ocean Spray. According to Ocean Spray, the people part of the relationship has been a huge factor; they are dedicated to their account and have a dedicated team for Ocean Spray. This ensures that they know who to reach out to for immediate answers.

On the TMC side, technology and the pace of change are key for continued success with Ocean Spray. The relationship helps the Ocean Spray supply chain get ready for what is next. Working side by side, the two companies will be able to become more efficient and do more to drive business results.

Iconex Uses 3PL to Drive Business Benefits

Transportation | By Chris Cunnane • 04/17/2019

A few weeks ago, I spoke with Kim Harper-Gage, Senior Vice President, Operations and Supply Chain at Iconex. Iconex is the world’s largest maker of paper receipt rolls for the retail, banking, and restaurant industry. Additionally, the company makes custom labels for various industries such as logistics and retail. Iconex is a global company with operations in North America, Chile, and Europe. The basis of my conversation with Harper-Gage was about their relationship with managed transportation services provider GlobalTranz. GlobalTranz is a full-service transportation and logistics provider, offering managed transportation services, project logistics, and supply chain solutions.

The relationship with GlobalTranz began as Iconex acquired two companies at the end of 2017. Iconex realized that with three different companies bringing their freight spend and transportation needs under one umbrella, they were undertaking a huge project. Prior to the acquisition, the three companies were managing their freight spend and transportation differently. One company was using a TMS to manage transportation, and the other two were on a basic freight and logistics structure working with companies via individual contracts with truckload and less-than-truckload suppliers. The three companies also had three different freight payment systems.

At the end of the third quarter 2018, Iconex put out an RFP looking at six different 3PLs. In the end, the company selected GlobalTranz as it had the scale Iconex was looking for as well as a long-term plan for managing its business profile. Namely, Iconex could add on more locations, and GlobalTranz provided a realistic and stretch ROI.

Iconex has a total freight spend of a little more than $10 million; the majority of this is in North America, with GlobalTranz managing truckload and less-than truckload shipments. While international shipments have not been added on yet, it is in the long-term plan of the relationship. One area of interest for me is what system 3PLs use to manage transportation and freight payments. I asked Harper-Gage whether Iconex identified a TMS that it wanted GlobalTranz to use or whether GlobalTranz went with its preferred solution. GlobalTranz proposed their system as the best option for managing transportation. As part of the kick-off, this was one of the things Iconex was looking for. GlobalTranz toured multiple facilities, getting to know the site, people, and the business. The proposal came with GlobalTranz’s recommendation for a TMS.

The most important aspect of a 3PL relationship is the business benefits of working together. I asked Harper-Gage about the benefits of working with GlobalTranz. In the five months they worked together, Iconex has started seeing the savings the two companies mutually agreed they would see – the company is hitting the run rate they agreed upon. Iconex started with truckload and added less-than-truckload. GlobalTranz has provided a roadmap on how to get savings, extensive reports that show savings and KPIs; and, using their tools, is building the confidence that they will deliver the savings they promised and could hit upside as well.

Harper-Gage pointed out that the trucking industry has a lot of variability happening; capacity and regulatory changes, for example, have led to price increases. The relationship with GloablTranz has provided a good stable base of supply for them. For example, if someone drops a truck in a region, they can re-route to make sure supply gets delivered. GlobalTranz manages the tactics around all the changing issues in the industry for Iconex.

So how has GlobalTranz lowered transportation costs? Harper-Gage identified their current state as phase one savings impact. The biggest impact has been a cheaper cost per lane due to negotiations and their relationships for truckload and less-than-truckload. Additionally, prior to the relationship, Iconex was using two or three freight payments systems; now a centralized, simplified process has reduced fees and internal complexities. Iconex is hoping to launch international shipments with GlobalTranz in the Q2 timeframe. To date, Iconex has seen 8 percent savings so far.

The benefits go beyond simply saving money on transportation costs. Communication is a key factor. Harper-Gage pointed out that the two companies have weekly meetings since the implementation. Also, GlobalTranz has been quick to respond to other inquiries. For example, Iconex ran into some unique times where they needed warehouse space. GlobalTranz has been helpful in finding the right location at the right cost with the right requirements. It wasn’t in the contract, but GlobalTranz was able to pull together some good solutions. Harper-Gage said that while they have not determined the exact savings, she does think it is significant.

How Transparent Is Your 3PL Network?

Guest Commentary | By Rob Achtzehn • 08/24/2017

When dealing with the nuances of complex transportation networks, an organization often relies upon multiple transportation-focused 3PL providers, ultimately resulting in a fragmented network that lacks visibility and effective communication. Often this isn’t by design, but organically manifests itself due to different parts of the business being run by different groups. Furthermore, it can be seen frequently in companies that have grown through acquisition or consolidation. In these instances, one business unit used 3PL A and another used 3PL B. Operational status quo continued, and the company never got around to rationalizing its network.

On the other hand, sometimes a company wants to keep a few 3PLs engaged as leverage. That way they can constantly threaten 3PL A with taking away their business and giving it to 3PL B. This can be effective in keeping 3PL’s rates competitive with the market, but this is never considered a best practice or an ideal way to manage a 3PL network, and should ultimately be avoided. All 3PLs are going to the market to secure rates, unless a given 3PL provides direct capacity in the form of trucking assets. Instead of pitting 3PLs against one another to establish rates, a company is better served by evaluating things like procurement practices, carrier management and amount of spend under management at the 3PL level. Many times the difference in rates between 3PLs is really all about the margin anyway. If there is distrust with a 3PL, then companies shouldn’t be doing business with it to begin with.

To gain a better measure of rates, a company should regularly benchmark the rates it is receiving from the 3PL. If it is still unsure about the 3PL’s rates, the company can structure a cost-plus program with its 3PL to see what the 3PL is paying.

Operational Problems That Can Occur With Fragmentation
From an operational standpoint, a lack of visibility across the different networks and different systems can be problematic. Without that visibility, potential opportunities get overlooked, particularly in terms of matching inbound freight with outbound freight. Trucks could be going right by one another on the road that could have been utilized for backhauls within one’s own network.

While this practice is fairly complex, it becomes increasingly difficult when the lanes and data are locked up in different systems, leaving the shipper without access or opportunity to benefit all parties involved. Coordination is tougher as well. Getting multiple 3PLs to work together for the greater good is never easy. Co-opetition is a fun buzzword, but a very difficult strategy to convince partners to adopt and implement.

Options to Consider

When attempting to gain visibility of a fragmented network, consolidation of 3PLs can serve as a potential solution. Recently, our firm partnered with a company for a project that would help it consolidate its network. Ultimately, the company sought a reduction from three major 3PLs to a single 3PL. Even though there were some services that were better from certain 3PLs, there was also some redundant overhead by having three 3PLs working in the network. Many organizations have to evaluate the delicate balance between costs and service levels to determine where the best opportunities lie.

For organizations that want to maintain a balance of 3PLs, there are also some systems that can be implemented that lay across multiple 3PLs to give a shipper visibility across its entire network. These systems obviously take some time, talent, and treasure to implement. However, they are a way to keep numerous 3PLs engaged while giving the shipper the ability to see across the individual businesses that the 3PLs are managing. Shippers truly drive action when they commit resources and time to making use of that platform and engaging with the 3PLs.

Evaluate All Components and Parties Involved
A crucial step to creating greater visibility begins with identifying the organization’s criteria for determining whether consolidation versus overlay proves the best option. This starts with the evaluation of each 3PL to see if multiple 3PLs provide unique services or fit into multiple areas of the business that force the use of more than one 3PL. Furthermore, companies must determine the value they receive from each 3PL by defining the services provided and identifying which services are not easily transferable to another 3PL (i.e., dedicated, cross-docking, load planning, account management, etc.).

Another thing companies should consider is whether the 3PL has additional services not currently being used that align with future company goals. If so, how can the company utilize those services to achieve the desired solution? Furthermore, companies should identify if its business or any segment of its business is highly specialized and limits the number of 3PLs that could service the organization.

Finally, companies should evaluate the people, process and technology provided by each 3PL and how that aligns with its overall business both currently and in the future. Determine which 3PL’s culture best aligns with the company’s corporate culture. This will allow the possibility for a sustained partnership, and at the very least, efficient communication.

Potential Benefits
The benefits associated with consolidation could potentially result in lower costs, but organizations will definitely achieve higher transparency and better communication, which paves the way to better solutions as well. So, just getting visibility to what is happening will not magically allow a shipper company to unlock a ton of value, but it can help create a more efficient supply chain. One of the big benefits of using a single 3PL can be about rate savings, but the overall focus should be more about cost savings as related to efficiency. It can also be a catalyst that enables centralization of the transportation function.

There is no one solution that works for everyone. In some cases, consolidation of 3PL providers may prove the best strategy. In others, it may be an interconnected network of 3PLs. Relying upon an experienced team of professionals to evaluate an organization’s existing network is the first step. From there, they can help figure out what model works best, and if needed, which technology platform best supports the desired model. This remains a key component to implementing the visibility and communication a successful network needs to move towards optimization.

Rob Achtzehn is a Senior Manager in the Transportation Practice at Chainalytics. He has more than 20 years of experience across all areas of transportation and logistics, including sourcing, private fleets, TMS, warehousing operations, and business intelligence.

5 Reasons Why LTL Rates Are Changing & What to Expect

Guest Commentary | By Greg West • 07/20/2017

If you’ve been in transportation or logistics for any length of time, you already know that nothing stays the same for long. Recent less than truckload (LTL) rates and capacity levels have been below the historical levels we saw from 2005-2010. But that could change—and it’s already started.

Most general rate increases (GRIs) happened late last fall. They’re typically on an annual cycle, so we expected to see them come this fall. But they’re here already. The increases aren’t any larger than expected, but because they’re happening earlier in the year, they still add up. And it’s possible—in fact it’s happened before—that we could see two GRIs in a twelve-month cycle. This is similar to the way ocean rates rise; if the demand exists, rates may rise multiple times.

LTL shipping changes don’t exist in a vacuum

While the autumnal GRI may be here sooner than usual, the shift isn’t exactly coming out of left field. Other aspects of the transportation industry face similar changes and challenges. Transactional truckload rates are also up rather substantially, and the upcoming ELD mandate may affect truckload efficiency later this year. These types of changes promote a lot of movement between LTL and truckload service.

Top 5 reasons why LTL rates are increasing

There are probably an infinite number of reasons why we’re seeing LTL pricing changes, but we’ll focus on what we believe are the top five—the reasons large enough to tip the scales for everyone, not just a specific company or industry.

There’s more e-commerce, and it’s changing the game. With the advent of “free shipping,” consumers no longer hold their online order until they can justify the shipping costs. Since products sold online ship directly to consumers’ homes rather than to brick and mortar stores, there’s more emphasis on the final mile than ever. And all of these small shipments are adding demand in the LTL space and potentially lessening the demand for full truckloads.
Manufacturing is growing too. According to the ISM index, the manufacturing sector shows nine consecutive months of expansion. That means more transportation, for both the raw materials used in the manufacturing process as well as for the finished product that’s being moved to distribution centers (DCs) and customers.
Carriers are using technology to price better. Just as shippers use historical shipping data to improve their supply chains, LTL carriers are adopting technology that helps them be more efficient and better understand what freight is profitable and what freight isn’t.Dimensionalizers are just one example of the latest technology that carriers are using. Dimensioning machines can accurately calculate the amount of space a shipment needs within a trailer rather than rely on the national motor freight classifications (NMFC). These tools lead carriers to be more accurate in allocating cube and weight, which can affect shared capacity pricing.
Driver shortage. It’s summer time. The season when everyone wants to be outside—including drivers. People like taking their vacations during nice weather, and enough drivers taking summer vacations can throw off a carrier’s coverage. Even more pressing is the number of drivers that leave their driving jobs for construction jobs every summer. Combined, these situations are adding a great deal of pressure to the availability of drivers.
Operations changes. While new LTL carriers rarely come on the scene, we do see acquisitions and consolidations among existing LTL carriers. This can cause capacity that was once readily available to leave the market entirely.

In addition, several regional LTL carriers are adjusting their service areas, adding stress in the areas most affected by changing service boundaries.

How you can ease the burden of an LTL price increase

It’s safe to say that rate increases are inevitable and oftentimes unavoidable. That’s not to say that it’s impossible to soften the blow.

If changes to your LTL rates are significant, consider finding a third party logistics provider (3PL) to work with. Often, their knowledge, combined with a consultative approach, can help you uncover other ways to affect your supply chain—from modal optimizations to consolidation strategies. They’ll be able to help you determine if small parcel, consolidation, LTL, or multi-stop truck is your smartest move.

As vice president of LTL Transportation at C.H. Robinson, Greg West manages sales, operations, carrier management, training, and all other aspects involved in growing the company’s less than truckload (LTL) business. He holds additional responsibilities in growing the company’s consolidation centers and European Groupage business. Before joining C.H. Robinson in 2004, Greg spent 17 years at Roadway Express in operations and sales positions. He has also served as Education Chairman and as President of the CSCMP Minnesota Chapter. Greg holds a degree in Finance from the University of Iowa.

Leveraging Network Effects to Improve Managed Transportation

Logistics Service Providers | By Steve Banker • 06/19/2017

Jeff McDermott, the Sr. Vice President of Transportation at GEODIS, made the point in a conversation with me that there have been several new entrants providing managed transportation services. “Cloud-based transportation management systems (TMS) have lowered the barriers of entry in this field. But small players don’t have the economies of scale.” By economies of scale, Mr. McDermott is referring to network effects; being able to leverage visibility to large numbers of transportation moves and contracts to provide better service for their shipper customers. Jordan Kass, the President of Managed Services at C.H. Robinson TMC, added that this is also an advantage of managed transportation over TMS. Several other large 3PLs providing managed transportation services (MTS) made similar points to me in recent weeks.

Network visibility partially reflects the freight under management (FUM), the dollar amount of freight managed by an MTS provider on behalf of their shipper clients. But asset-based and brokerage-based MTS providers also have network visibility that includes their asset-based shipments or the transportation spend that flows through their brokerage network. For example, in an annual financial report submitted to the SEC, Ryder mentions $4.7 billion in “purchased and/or executed freight moves on our customers’ behalf.”

Finally, MTS providers that sell public cloud TMS have visibility to the transportation procured by their TMS clients. BluJay Solutions, for example, has $2 billion in freight under management, but they have visibility to an additional $37 billion in transportation spend from their TMS customers, parcel, and freight forwarding service lines.

Mr. Kass of C.H. Robinson TMC points out, that the “density of networks managed” matters too. If a billion dollar in FUM is based on several modes and industries, there are fewer network synergies than from a provider with a narrower focus. Vincent Chiodo, the Senior Vice President of Transportation Management at Transplace, agrees, but with a qualification. “If it is a type of trailer is widely used across industries, such as a 48 or 53 foot long dry box trailer, then the opportunities are greater to achieve network synergies based on FUM. In contrast, by having visibility into a billion dollars of FUM for bulk transport, a provider will need to be more product commodity and lane focused to achieve network opportunities across a provider’s ecosystem of customers.

The following table shows the FUM of a selection of leading MTS providers. There are other MTS providers with over a billion dollars in FUM I don’t yet have data on (I’m in the middle of a market study on this market).

Managed Transportation Service Provider	Freight Under Management
BluJay Solutions	$2.3 Billion
C.H. Robinson	$5.4 Billion
GEODIS	$1.2 Billion
Penske Logistics	$4.3 Billion
Transplace	$6.5 Billion
XPO Logistics	$2.7 Billion

Several 3PLs explained that they could do better strategic procurement of carriers based upon the visibility of their transportation network. The MTS suppliers can look at shipper origin-destination pairs and how they are changing. Then they can look at the carrier moves, and destination points where carriers are delivering loads and may have empty backhauls. BluJay Solutions looks at the shipment destinations by day of week, carrier service levels, and tender acceptance rates. When they find a carrier that is a potential match on a lane, they also seek to leverage their visibility into the carrier’s performance on that lane. Tim Hinson, the Chief Operating Officer at BluJay Solutions, explained “We then say ‘Mr. Carrier, if you are OK with this, we’d like to share your KPIs (key performance indicators) with the shipper.’”

For large asset based carriers, they don’t need to make an educated guess whether there are backhaul opportunities at a destination. If it is their trucks, they know. They can than offer their assets to a shipper at a preferential rate and create a win/win if the shipper agrees to add them. Brokers, who also offer managed transportation services, can offer up carriers in their brokerage network in a similar manner.

Mr. Chiodo of Transplace agreed with me that network visibility creates opportunities to do collaborative shipments involving multiple shippers to a common destination. He also agreed that European shippers are further along in collaborative shipments than those in North America, but over the past few years, North American shippers have become more open to pursuing these types opportunities than ever before.

GEODIS has done a better job of cracking the code on coloading based upon an integrated offering – warehousing and managed transportation services. Mr. McDermott from GEODIS said that in their case, many of their consumer goods and food & beverage shippers use them for both managed transportation and warehousing. They may have several shippers transporting goods less-than-truckload (LTL) to the same Walmart or Target distribution center. Because their warehouse and transportation management systems are tightly integrated, because they have visibility to a large network of consumer goods moves, and because they run several warehouses in the same campus location that include many consumer goods clients, they can frequently consolidate LTL shipments into more economical truckload moves.

Mr. Hinson of BluJay Solutions explained the analytic advantages associated with network visibility. “When I was on the shipper side, managing a $500 million Profit & Loss operation, time was precious. If someone could provide insights into my operation, that was valuable.” That is what BluJay does with their network-based analytics. BluJay sells both function rich TMS – in a multitenant, public cloud architecture – and managed transportation. This spend allows for a variety of transportation benchmark analytics. BluJay’s TMS and MTS customers have access to BluDex. BluDex is an aggregation of shipper and carrier market transactions for dry van and refrigerated shipments across North America. BluDex tracks contract as well as spot markets, and improves procurement planning. The benchmarking is based on peer group shippers, “shippers with a similar spend and modes.” Mr. Hinson added that telling a shipper that “their tender acceptance rate is better than the market average is mildly interesting. But we follow that with ‘here is an opportunity to improve your performance.’”

Transplace, Mr. Chiodo explained, also does benchmark analytics based upon their network. “We do it in hubs to drive density. So a hub might not be a specific origin or destination, for example Peoria, IL, but rather from the Chicagoland area. We also benchmark rates, accessorials and fuel surcharges by vertical to allow our customers to compare their rates and charges against their industry vertical as well as outside their vertical.

Mr. Kass at C.H. Robinson TMC agrees that a network can provide analytic information. But in examining a carrier’s service level you need to recognize that “much of a carrier’s performance depends upon the customers they are serving.” If a carrier’s trucks are in an industry where trucks are commonly manually unloaded, turnaround times and on time delivery performance will be affected. In short, you start with benchmark metrics, but need to apply logic to those numbers.

In conclusion, the MTS market is becoming more crowded. But the largest players in the market point out that network visibility can provide better carrier procurement, more consolidation opportunities, better integrated services, and better benchmarking. Finally, I’d like to give a special call out to eyefortransport who had their 3PL and Supply Chain Summit in Chicago this week. There was great networking and lots of good content, including surrounding the topic of Managed Transportation.

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