Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

COVID-19 and Managed Transportation: Providers Work to Handle Shipping Volatility

Logistics Service Providers | By •

When companies want to reduce their transportation costs, while maintaining or even improving customer service, they have two main choices: implement a transportation management system (TMS) or outsource transportation to a managed services firm.

Managed Trans Explained

The managed transportation services (MTS) – also called managed trans – providers have planners in a control tower using TMS technology, who plan and execute loads on behalf of their customers. In winning deals, the MTS provider often examines a client’s existing business processes, develops a preliminary freight management plan, and then targets a percentage cost savings achievable for the client over the life of the contract. David Commiskey, the Vice President of Customer Solutions at GlobalTranz, points out that once a customer’s “freight spend reaches $25 million, the potential for savings from optimization goes way up.”

I’m doing a market study and a supplier selection guide on the MTS industry, so I’ve had conversations with executives across the industry. And of course, I wanted to know how COVID-19 was affecting the industry.

Freight transportation is very sensitive to economic volatility. BluJay Solutions, a provider of both TMS and MTS, is now offering their Freight Market Index for free. This report benchmarks key performance indicators derived from the over $18 billion in annualized freight under management transacting within BluJay’s Global Trade Network. In the commentary section of this report, Mike Mulqueen from JBF Consulting, this sensitivity is described nicely. “Carriers carefully tune their networks and allocate their assets based on historical and forecasted lane demand. This tuning is quite sensitive and unpredicted variability can have an extremely negative impact on the efficacy of the system.” COVID-19 certainly brought variability.

For example, manufacturers providing food products to groceries have transportation volumes that have surged in parallel with their sales, while food distributors who sell to restaurants have had their volumes plummet. And further adding to complexity, there are conglomerates that have some health-related product lines surging, while other product lines have plummeted. MTS suppliers need to deal with this volatility.

Managed Trans Providers Use a Variety of Tools to Secure Capacity

Typically, a large part of the value provided by a managed trans relationship is that the MTS supplier provides help and expertise surrounding strategic procurement. In this exercise, often conducted once a year, but sometimes less frequently, a shipper shares their projected lane volumes with potential carriers and the carriers bid on those lanes. A lane is a move from a point of origin to a destination, for example, from central California to Chicago. Carriers are generally selected by lane –- for both price and service.

But for customers whose volume has surged, the MTS provider will also need to secure capacity outside of the strategic procurement relationships.

Some managed trans providers are asset-based logistics service providers (LSPs). Shippers who select MTS providers who can dedicate trucks to their account may put a higher value on service excellence than other shippers. Or they may have lanes with big, important, and demanding customers where they want to use dedicated. Despite strategic procurement agreements, BluJay’s Freight Index shows that the average tender acceptance rates from primary truckload carriers has run between 70 and 90 percent since 2017. Companies that have dedicated transportation can expect to do much better on this key metric. Ryder System is this kind of managed trans provider. Steve Sensing, the President of Global Supply Chain Solutions at Ryder System, told me “we have 95% primary carrier acceptance rate, on average. For some customers, it’s as high as 98%.  We also have greater than a 95% on-time rate.” At the end of the first quarter, Ryder’s average fleet count for their dedicated clients stood at 9,400.

Managed Trans
Steve Sensing, the President of Global Supply Chain Solutions at Ryder System

Mr. Sensing further explained that their dedicated customers commit to a certain number of trucks in contracts that extend three to five years. With COVID-19, Mr. Sensing said, “We are in a unique situation. Less than a handful of customers are telling us they are impacted in the long-term.” Most of their customers think this a a 4-8 week cycle, after which things will begin bouncing back. “But in the last six weeks out Business Intelligence team has worked to redeploy some drivers and tractors that were idled in one industry and build up pop-up fleets for the food & beverage side of our business.”

Some MTS providers are also freight brokers. GlobalTranz, Transplace, XPO, Echo Global Logistics, and Coyote Logistics all have brokerage operations. In many cases the brokerage business is far larger than their MTS business. Thus, they have preexisting relationships with tens of thousands of carriers. But Mr. Commiskey of GlobalTranz points out that that they do allow other brokers to bid on freight that they can’t cover.

In conclusion, while we are in a global recession, and many companies have seen sales plummet, there are many companies in industries with surging sales. These lucky companies need to secure reliable transportation to meet surging demand. Managed trans providers have different tools to deal with this situation.

The Managed Transportation Services Outlook

Transportation | By •

Managed Transportation ServicesI recently wrapped up my Managed Transportation Services market study which looks at the total size of the market, the forecasted growth through 2023, and the leading suppliers across a number of categories including industry, region, and customer size. In an MTS arrangement, a shipper contracts with a third party to plan and execute their moves for them.  In other words, instead of having internal planners plan and execute moves, those planners are employed by the MTS supplier, but work on the shipper’s behalf.  While growth has slowed considerably in the 3PL market as a whole, this segment of the market is one of the fastest growing of all 3PL service lines, although from a much, much smaller base than carriage, brokerage, forwarding, or warehousing services.

There are a number of key growth drivers for the MTS market including the strong ROI attached to these arrangements, the rapidly improving technology of MTS suppliers, the need for real-time visibility and accurate ETAs, and the fact that the MTS market is massively underpenetrated. Even with this last fact, the amount of freight under management in MTS arrangements is quite high. The following table is estimated freight under management (FUM) of some of the largest MTS providers.

MTS Trends

 

I was recently interviewed by ARC Advisory Group’s Allen Avery to take a deeper look into some of the larger trends in the MTS market. The full interview is below.

One of the biggest questions is around the key trends driving customers to explore an MTS arrangement. While there are a number of key trends, I will highlight three main ones here. First and foremost, freight spend requirements for engaging in an MTS arrangement have changed. Just a few years ago, the majority of MTS arrangements sold to shippers with freight spend over $100 million.  These large customers demanded a customized solution, which is just not the case today. Instead, most MTS providers have standardized on one TMS and do not customize that solution.  This results in speedier and lower cost implementations.  Lower costs increase the ability to sell MTS to smaller customers, especially those in the $25-100 million and $5–25 million freight spend segments. These two segments are now considerably larger than the freight spend of over $100 million category.

Second, is the decision of whether to bring transportation management in-house or outsource it to an MTS provider. The freight savings and service improvements associated with TMS are quite similar to MTS arrangements. However, many shippers lack network design capabilities or a continuous improvement culture. Many MTS providers have expertise in these two areas, which can help shippers make that decision.

Finally, cross border commerce continues to grow. While trade wars and protectionism are clearly concerns, the economy is becoming more global in nature. Many shippers simply lack the capabilities to manage cross-border transportation. This is where a managed services agreement comes into play.

There is also the question of what trends and strategies should the MTS providers be monitoring and exploring. Once again, I will highlight three items of interest. One of the most important things for MTS providers to do is invest in TMS, real-time visibility tools, BI, machine learning, and predictive analytic capabilities.  Templated versions of the TMS should be developed for core verticals to speed implementations.

Second, MTS providers need to go global with their capabilities. Many suppliers are still focused on providing solutions in just North America or Europe.  Truly global capabilities depend upon using one TMS solution across all regions and then having regional control towers so that shipments can be tracked on a follow-the-sun basis.

Finally, suppliers need to place a premium on service. Success depends not just upon technology, but on service capabilities as well.  Top suppliers have a robust continuous improvement culture and the ability to provide advanced consulting in network design and strategic procurement. A couple of recent case studies I’ve written about Iconex (GlobalTranz customer) and Ocean Spray (CH Robinson customer) highlight just how important the service aspect is.

Final Word

The MTS market has grown steadily over the last few years and the outlook is for that growth to continue. There are several key factors that contributing to growth in the market. The significant ROI associated with MTS arrangements is the number one thing that most companies will look at. However, additional growth factors include better technology solutions, the increasing ability to provide global solutions, the changing nature of customer expectations, the advances in providing real-time visibility and shipment ETA, and the fact that the market is incredibly underpenetrated. MTS providers need to continue to invest in their solutions, with a focus on improving real-time visibility. Equally as important is the service factor. MTS suppliers need to place a premium on service, as it can be the difference maker when it comes to choosing a provider.

Managed Transportation Growth Drivers

Transportation | By •

managed transportation growthA while back, I wrote about the managed transportation services (MTS) market. According to ARC’s definition, in an MTS arrangement, a shipper contracts with a third party to plan and execute their moves for them. In other words, instead of having internal planners plan and execute moves, those planners are employed by the MTS supplier, but work on the shipper’s behalf. The market study I am wrapping up is restricted to revenues generated from control tower environments. A transportation control tower is a central hub where all the 3PL planners reside, contains a transportation management system, and includes technology capable of providing real-time, multi-party visibility to transportation information. It also excludes brokerage revenues and revenues associated with moving the shipper’s goods in assets owned by the 3PL, hardware and software revenues generated during implementation of the control tower IT environment, as well as short term consulting work like network design.

When looking at the main growth drivers for the MTS market, I highlighted the strong ROI from an MTS relationship. ARC Advisory Group has conducted multiple surveys that explored the ROI of both TMS and MTS, with the last two surveys taking place in 2014 and 2016. In the 2014 survey, 9 percent of respondents reported more than 12 percent freight savings from their MTS arrangement. However, at that time, 11 percent of respondents reported that the managed transportation arrangement actually increased their freight costs.  In contrast, by 2016, 32 percent of respondents reported savings of 12 percent or more, and only 4 percent of respondents reported that the managed transportation arrangement increased their costs.

While the ROI argument is clearly a key market driver, other growth factors exist as well.

Additional Growth Factors

First and foremost, MTS providers are providing better technology today. Historically, one of the leading complaints about MTS providers was that their technology was not good enough.  As these companies overcome that barrier, potential TMS customers may increasingly choose the managed services path. For those MTS providers that also offer a TMS, this allows for a transition from one service model to the other, with limited interruptions to service levels.

As the global economy expands, there is an increasing need for global solutions. This has led to the ability to provide global solutions among a few of the larger providers. From a structural standpoint, more customers are looking for a solution that provides a full global view of their supply chain. Outsourcing the transportation side of their supply chain to a global provider can alleviate stress during expansion.

A third growth factor is the changing nature of customer expectations. As expectations change, and supply chains become more complex, especially with the rise of omni-channel and e-commerce, shippers must evolve in order to stay competitive. With a shortage of qualified supply chain talent, many companies are looking to outsource their transportation rather than bring it in-house.

One of the most important parts of transportation is real-time visibility and shipment estimated time of arrival (ETA). There is a proliferation of companies integrating external data sources, such as FourKites, project 44, 10-4 Systems, MacroPoint (Descartes) to name a few. MTS providers are using these data streams to provide real-time visibility and predictive ETAs. As the MTS providers differentiate themselves based upon this ability, the market potential grows.

Finally, the MTS market is a massively under penetrated market. The growth in the 3PL market as a whole has slowed, but the MTS market is still growing fast. The MTS market is only a small portion of the overall market, and is from a much smaller base than carriage, brokerage, forwarding or warehousing services. However, there is still plenty of room for the market to grow.

Final Thought

The MTS market has showed strong growth over the last few years and all signs continue to point to its growth. While the 3PL market has slowed in its growth recently, the small segment that makes up MTS is not slowing like the carriage, brokerage, forwarding or warehousing services markets. There are a few key growth factors for the market. First and foremost, there is a strong ROI tied to the MTS model. On top of this ROI, MTS providers are continuing to offer improved technology to their customers. Changing customer expectations and an increasing need for global solutions are also fueling growth in the market. The final growth areas include improved real-time visibility and ETAs as well as the fact that the market is simply under-penetrated. While MTS arrangements will always compete with traditional TMS, TES, and new free TMS offerings, the market is still poised for growth.

AGCO Drives an 18 Percent Reduction in Freight Costs while Maintaining Service Levels!

Logistics Service Providers | By •

AGCO Corporation is a global leader in the design, manufacture and distribution of agricultural equipment offering a full range of solutions under the core brands of Challenger, Fendt, GSI, Massey Ferguson, and Valtra. Headquartered in Duluth, Georgia, AGCO is a public company and had net sales of approximately $7.4 billion in 2016.

Over the years, AGCO has been an extremely acquisitive company on a global basis. For many years, the supply chain operations continued to get more and more complex as the company grew.  Greg Toornman, the Global Director of Material Logistics and Freight, told me that changed in 2004. The initial focus on operational synergies was focused on production and purchasing. AGCO was migrating to a global equipment platform where they could build similar products around the world with a global supply base.  “In 2012, we defined that we needed to take a take a different approach to support our future supply chain needs,” Mr. Toornman said. “We needed to integrate and optimize our global supply chain network. We called this the Global Materials Management Transformation (GMMT).”

An initial conclusion was that inbound material logistics and freight management should not be run as separate operations. There were synergies that could be captured by running these operations together on a globally integrated basis. AGCO was also looking for a global transportation strategy that would be fully implemented across all regions by 2018. The regional teams were brought together to discuss strategy and define a future state. The company also engaged in SCOR transportation benchmarking to provide an objective view of their regional and global capabilities.

“We knew we needed company-wide buy-in based upon company-wide involvement, “ Mr. Toornman said.  “The regions were involved in designing the future vision and the decision making. We needed to make sure everyone was on board.  This was very important! So, as we looked at our options” to improve the transportation process. “We took into account the regional needs.”  They knew the final solution was likely to be a globally integrated transportation management system (TMS) capable of running in all regions of the world, a 3PL providing managed transportation services (which also relies on TMS technology), or a blended solution that was bit of both. Getting everyone on board upfront would help AGCO avoid customization and inefficiencies based on a lack of alignment.

As they looked at their regional capabilities, they realized a blended solution would fit them best. The North American and Latin American operations had worked with TMS and preferred to continue have their planners to use the new TMS; Europe and Asia were not familiar with this technology, and it was thought that managed transportation services (MTS) would fit their needs better. They looked at a few options. 4flow, who they selected, had the best references and global presence. 4flow has developed their own 4flow vista solution that is integrated with a  3rd party TMS. 4flow also provides transportation managed services where they design transportation networks, as well as plan and execute loads on behalf of their shipper customers.

In 2013, their business case to work with 4flow in Europe was approved. Within 18 months, the solution was up and running across the continent. 1500 suppliers were using a portal to schedule shipments to AGCO factories or warehouses used to support inbound shipments to the factory lines and aftermarket distribution centers. The suppliers submit their transportation orders (load details/destination) into the 4flow system by 2pm each day.  Once the 4flow Control Tower team receives the transportation data they need, they optimize the transportation plan for the following day’s pick-ups.  Carriers then receive load tenders and confirm back to the TMS.  Suppliers then receive notifications from the TMS defining the pickup time that suppliers are asked to have goods staged and ready to load on a trailer, or have filled drop and hook trailers for the following day. SAP’s Supplier Network Collaboration (SNC) solution is being integrated into the TMS to better optimize future inbound material flows, inventory levels, and costs.

AGCO’s results have been spectacular!  In Europe – they’ve since been rolling the solution out to the other regions and expanded the scope of planning in Europe – the internal rate of return was 72 percent. They achieved freight cost reductions eighteen months after going live of 18 percent! The savings didn’t stop. They have continued to receive 3-5 percent reductions in freight spend in subsequent years.

The savings have come in many areas.

Strategic Logistics Purchasing  has been a potent source of savings, responsible for perhaps 25 to 30 percent of the reduction in freight costs.  Whereas in manufacturing and purchasing , their global platform strategy is driving to a reduced number of suppliers with bigger shares of AGCO’s business, the opposite was true in transportation. Prior to managed transportation, “three major carriers captured approximately 80 percent of our freight spend. Now we have 70 carriers in Europe,” Mr. Toornman stated. “The TMS can manage the complexity effectively.  It allows us to cherry pick lanes and optimizes our costs.”

“We manage 100 percent of the carrier negotiations across all modes. But 4flow prepares the requests for quotes and helps execute the tactical aspects of the bids. For example, they design bid packages, explain the TMS performance expectations and SLAs (service level agreements) to the involved carriers”

More than 50 percent of freight savings result from optimization. The solution looks to cube out or weigh out trailers, looks for load consolidation and mode shift opportunities, and designs multi-stop shipments.  The multi-stop shipments look to combine less-than-truckload (LTL) shipments from different suppliers and increase milk run utilization. This both drives down costs and carbon emissions.

There are also saving and efficiencies from the self-billing functionality, which helps eliminate carrier overcharges and audit costs.  When a carrier agrees to a rate on a lane, that is what they are paid. The carriers’ create their invoices in the 4flow portal, where the invoice will be accepted if it matches the negotiated rates that are in the route rate sheets.  Demurrage and detention charges can be an exception. “But this is flagged up front.” If there is a supplier issue, AGCO can take the appropriate action. For example, maybe the supplier did not have their goods staged on time; AGCO can charge them for the demurrage. Or maybe the time window used for trailer loading is no longer applicable because of increased volumes; that time window can be expanded. In short, these exception flags do also help AGCO improve their inbound logistics processes.

One thing that is distinctive about the 4flow integrated TMS is that the same solution is used for both network design and day-to-day transport optimization. Going forward, AGCO is seeking to capture more savings in this area.  Many large shippers do network design projects on a preset schedule. For example, a company may do them once a quarter. But because Network Design is part of the same codebase as the TMS, the 4flow team can do new network designs for AGCO on an as-needed basis.

AGCO Team Achieves Massive Freight Cost Reduction
AGCO Logistics Team Accepts Prestigious Supply Chain Award

AGCO and 4flow are acclaimed for what they have achieved in Europe. AGCO’s Smart Logistics initiative won the 2017 ‘European Gold Medal in Logistics and Supply Chain’ from The European Logistics Association (ELA). The press release states that the AGCO “approach is based upon the principle of combining an intelligent transportation management system, a standardized supplier development process, and risk management into a central cloud-based IT solution. The innovative approach utilizes smart algorithms … as well as monitoring a wide range of geopolitical, weather, and economic factors on a real-time basis in order to optimize the material flow.”

ARC has been following the supply chain innovation at AGCO for some time. We previously wrote about their approach to real-time visibility and risk management, as well has having a high level executive from AGCO speak on this topic at our Orlando forum. But the AGCO story just keeps getting better and better.

High Touch, Blended Transportation Management Solutions Can Reduce Freight Costs

Logistics Service Providers | By •

H.C. Starck went with a blended transportation management solution, a solution that was part technology operated by their planners, and part managed services provided by Kuebix.  They had very good results from this distinctive solution.

H.C. Starck, headquartered in Munich, is a global manufacturer of metals including tungsten, molybdenum, tantalum, niobium, and rhenium, high-performance ceramics, and thermal spray powders. Many of their make-to-order products conduct electricity but, unlike copper, are impervious to many chemicals. Not surprisingly, many of their biggest customers are electronics manufacturers.

H.C. Starck selects a blended transportation management solution
H.C. Starck, Metals Manufacturer

In the U.S., they operate three plants: in Newton Massachusetts, Euclid Ohio, and Cold Water Michigan. The company’s products tend to be very heavy, and they usually ship less-than-truckload (LTL) in either dry van or flatbed. The lead times on their products are 14 to 20 weeks. As they near their order promise dates, they find they often must expedite shipments to keep big customers happy.

Mark Smolinsky, a Sr. Logistics Manager in the US operations, explained to me their journey to reduce costs without impacting service.  “Seven years ago, when we were owned by Bayer. Yellow Freight was our carrier for all three plants. We got quotes from leading 3PLs and were convinced we had great rates. One day this brash kid came in and said he could save us 10 to 14 percent.”

That brash kid was Dan Clark, the Founder and President of Kuebix. “We ended up giving him a try.  We didn’t realize that at the time they were just a three-person firm. He did save us 14 percent, though, about $360,000.”

Mr. Clark achieved this based upon a procurement event where he made use of his extensive knowledge of LTL tariffs. He asked for quotes based on a rather obscure tariff that was particularly favorable for shippers with heavy materials.

But the Kuebix relationship goes beyond procurement consulting. For H.C. Starck, this is a blended transportation management system and managed services solution.  Approximately every two years, Kuebix does a strategic procurement event. Kuebix continues to drive substantial savings from these events.

Next carriers are selected by lane, and the rates are entered into the transportation management system’s (TMS) route guide by Kuebix personnel. Kuebix TMS is used for both inbound and outbound moves.

Often, H.C. Starck tenders and executes loads. However, if there are rush shipments, or particularly complex shipments, the metals company calls Kuebix and Kuebix executes the moves. For expedited shipments, Mr. Smolinsky explained, “the Kuebix staff can often get us better rates on the spot market then we could get using the route guide.”

The rest of the process involves freight pay and audit. H.C. Starck pays the bills after Kuebix audits them for accuracy. The TMS solution is also used by both Kuebix and H.C. Starck employees for visibility, to make sure goods will arrive on time.

Mr. Smolinsky appreciates the customer service offered by Kuebix. The blended TMS/managed services approach means the transportation department can operate lean. Without this model, Starck would have to hire extra logistics personnel.

And every year Kuebix product development executives show up at Starck plants, sit down with the planners, and get face to face feedback on how their product can be improved. “We are no longer the biggest customer of Kuebix,” Mr. Smolinsky said. “Now there are bigger companies with more complex requirements than we have.” But that is all for the good. That means the product continues to be enhanced and that this new functionality is available should Starck ever need it.

Leveraging Network Effects to Improve Managed Transportation

Logistics Service Providers | By •

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 effects improve managed transportation

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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