Opinion: Competing in a Difficult Economy

This Opinion piece appears in the Aug. 27 print edition of Transport Topics. Click here to subscribe today.

By Ken Weinberg

Vice President

Carrier Logistics Inc.

Many carriers, beset by both the weak economy and pricing competition from brokers and third-party logistics providers, are seeking new ways to win, keep and better serve customers. Business lines such as home delivery, warehousing and alternative mail are adding to — or replacing — revenues cut by the economy and the competition.

Home delivery of merchandise ordered online or from traditional retailers is a growing field that now includes refrigerators, kitchen appliances, recliners, stoves and even relatively small items.

Carriers also are setting up centralized warehouses for regional groups of stores or Internet marketers that serve as distribution points for the home-delivery business.

And alternative mail services that sort by ZIP code and deliver mailings to the post office are being made available for heavy users of bulk mail.

Although these new revenue sources help, I believe that cutting-edge efficiencies that can be instituted to keep costs low and service quality high are even more significant when it comes to keeping both the accountants and the customers happy. With that in mind, many carriers today are looking to tighten up, streamline operations and reduce the costs of delivering their freight.

Years ago at trucking companies, people were put at keyboards and set to work re-keying data from one document into another, but for most of the trucking industry, those days are gone. Now, electronic data interchange and scanning are the norm, both in the office and for drivers out in the field. Data are scanned or keyed in once and then used for multiple documents and report functions.

And that’s just one of a number of new strategies for dramatically increasing efficiencies. For example:

• Automated rating, tracking and tracing — Shippers want to know (1) what it will cost to send their shipment, (2) where their shipment is at any given time, including right now, and (3) when it will arrive. They want to get this information instantaneously and electronically via e-mail alerts or the Web. And the Web, in particular, can be significantly less expensive for carriers than having executives tied up on the phone dealing with voicemail.

• Dock management — I know of one carrier that achieved better than 30% in on-the-dock and administrative cost savings just by using the latest dock-management tools to avoid misloads and shipments left behind. In addition to increasing the level of dock supervision, with today’s scanning capabilities, users can pinpoint shipment location 24/7 and completely dispense with paper notes and verbal instructions.

• Automated billing — Today’s carriers can bill customers automatically, tying into a robust rate engine based on current tariffs, customer-specific rates, discounts, minimums, accessorials and exceptions. Along with statement billing, up-to-date automated systems can handle rating, invoicing, reporting, tracing and appointments, providing interfaces on the Web for document delivery and automated clearing-house payment processing with banks.

• Driver communication using handheld devices — You now can be connected easily to every driver on the road. Dispatchers can stay in touch with drivers, automatically ordering and getting real-time confirmations of pickups and deliveries. The system enables the dispatcher to redirect a shipment instantaneously or convey new pickup or delivery instructions to drivers. This saves a lot of extra miles and a lot of extra time. Telematics (information combined with communications technology) improves and increases awareness of potential vehicle issues, such as engine failure or loss of refrigeration protecting perishable cargo, and therefore can help reduce damage claims.

• Mapping — Closely related to updated driver communication is today’s mapping system. Don’t just think of it as GPS. It can provide estimated time of arrival alerts for delayed shipments. In addition, it allows geocoding (finding associated geographic coordinates from other geographic data) so dispatchers can redirect shipments that are heading to the wrong location, avoiding late deliveries and saving mileage. Dispatchers can increase driver productivity by changing the order and locations of stops. Geofencing — i.e., tracking with GPS to assure correct geographic coordinates — can alert customers of impending delivery and/or pickups to reduce waiting time.

• Business intelligence — Using up-to-date business intelligence tools, trucking companies can determine which salespeople, which shipments and which routes or lanes are most profitable.

Transportation company managers need to find and develop ways to gain productivity, drive down costs, increase freight revenues and maintain a closer relationship with customers. It no longer makes sense to stay with “good old” ways of doing business. Compared with the cost of the status quo, updating pays off and may be just what carriers need to keep their companies in business and growing.

The author is co-founder of Carrier Logistics Inc., Tarrytown, N.Y., a provider of transportation and logistics software management systems.