UPS Freight to Raise Rates 5.9 Percent

Need a Transportation Boost?  5 Ways to Make a Difference

Imagine this scenario; you land a new position in the logistics area of a seemingly stable company, and the products they distribute and sell appear to be popular, but you quickly find that their transportation network is not designed to achieve the optimum results. 

I’m not talking here only about transportation rates.  After all, rate increases seem to be a fact of life in the logistics world, as William Cassidy addresses in the October 3^rd issue of The Journal of Commerce on-line.  In his article entitled, “UPS Freight to Raise Rates 5.9 Percent”, it’s not just UPS but other carriers who are raising rates.

So what do you do if your new found transportation area is in need of a thorough review?  Don’t turn and run, but instead, see it as a great opportunity to redesign the network and create tangible profits for your business. 

Start by considering these five important items:  

1.     Evaluate the merits of a private fleet vs. a dedicated fleet.  Not all companies manage a fleet operation, but maintaining a private fleet will usually result in a lower cost per mile and better control over performance as compared to a dedicated fleet.  However, a private fleet will carry a higher level of liability for your company, since the DOT licensing and insurance liability rests with the company who owns the fleet.  By using a fleet owned by a third party logistics company (i.e. dedicated), they assume the licensing and liability requirements.  This can be advantageous, especially if you contract with a dedicated provider who will partner with you to ensure the highest level of service.

2.     Capitalize on backhaul opportunities with your fleet.  In most fleet operations, there is always the opportunity to secure backhaul movements.  For a fleet that is delivering goods to a distribution center, retail store, or manufacturing facility, there may be situations in which a return trip may contain empty trailers.  Rather than allowing this to occur, work to find companies for whom you can carry their products back to your home base area or other feasible destination.  By doing so, you can at least cover your return cost and provide a service that is very competitive in price versus a common carrier.

3.     Conduct regular bidding for third party logistics support.  If you are using a third party for your dedicated fleet services or using a common carrier service, you should regularly bid the support at least every three years.  The bidding should include a detailed analysis of rates, including accessorial fees, and it should include qualitative factors such as financial strength of the company, systems support, claims ratios, and delivery time commitments.  A practice of regularly bidding your transportation services will help ensure that you are keeping abreast of the competitive market.

4.     Implement a freight bill auditing program.  Just because a fleet provider or common carrier has an agreed rate structure with your company does not mean they will always be 100% accurate in their billing.  You should implement an auditing program to check the accuracy of the billing to capture any overcharges.  This process can be accomplished through an internal system, or you can utilize the services of an outside audit company.  In either case, billing errors can occur, and correcting these can result in significant savings for your company.

5.     Evaluate team vs. single drivers in your fleet.  Speed to market is critical in today’s highly competitive business arena.  Using a team driver model in your fleet may result in quicker delivery times as compared to those with a single driver.  Single drivers are allowed to drive a maximum of 11 hours that must be followed by 10 consecutive hours off duty.  As a result, utilizing a team avoids the downtime and enables the drivers to quickly switch and continue with their route.  Keep in mind that the team driver concept is suited for long haul operations where the product is time sensitive.

Understanding your company’s transportation network is important in determining where you can implement improvements.  Starting with these five points will certainly get you on the right track to boosting your logistics performance.