Five Reasons to Choose a Managed Transportation Strategy

A grueling, two-year inflationary freight cycle now shows signs of turning. Shippers with complex needs and tight budgets are outsourcing more of their freight to managed transportation providers. Here are five key reasons why: 

1 Skilled Talent is Scarce     

After two brutal years, shippers are likely to see the U.S. freight market turn in their favor in the next 6 to 12 months. But making the most of the market shift won’t be easy: Capacity will be tight, with many truckers, 3PLs and freight brokers having left the industry. For shippers, two lean years of cost-cutting have left headcount depleted. 

No one consistently rides market cycles perfectly, but the right planning, expertise and optimal balance of physical staffing and technology can help. Supply chain complexity and costs have risen sharply, partly because of omnichannel e-commerce growth. There is now a greater need than ever for planning around resilience, customer expectations and regulatory compliance. 

Bringing the right talent in-house can be a challenge in a tight labor market with a persistent skills gap. Small and midsized companies with limited resources, and large companies navigating multi-lane, multi-carrier complexity, are handing off some or all of their freight to third-party providers with the vital expertise, optimization/automation solutions, and access to trucking and warehouse capacity already in place.  

“When you think about headcount, there's the obvious cost of salary,” explains Danielle Shuey, Vice President of Service Delivery with Chicago-based logistics solutions and managed transportation provider Loadsmart. “But there's the added expense of managing headcount — including investment in recruitment, training and retention.”

2 Scalability Takes Flexibility

Pent-up demand and ongoing market volatility have elevated the need to scale quickly up or down as conditions dictate; easier said than done without significant capital expenditure or outside support.

"Most shippers don’t have the ability—and aren’t sitting on the resources—to hire new talent at the drop of a hat,” said Robb Porter, head of shipper solutions & managed transportation at Loadsmart. “But they need to have a solution in place that is both cost effective and can be deployed fast when there’s disruption in the market or they experience a surge in demand. It’s not a matter of ‘if’ there will be fluctuations, but ‘when,’ and the shippers that prepare now during relative calm are the ones who will come out on top.”

Under a managed transportation model, a designated account manager serves as a principal contact with the client’s team, leveraging the expertise of in-house or partner specialists to deliver and fine-tune solutions, either for day-to-day operations or strategic planning. As demand and volumes fluctuate, the provider’s team helps to fine-tune load and route planning, carrier or mode selection, freight audit and payment and other factors, to assure continuity and consistency of service. Clients can add, adjust or drop services as needs change. 

3 Resilience: Who Gets the 3 a.m. Call?

COVID presented the most extreme case for building resilience but pointed to a larger problem: Supply chain planning models and infrastructure aren’t keeping pace with supply chain complexity, leaving operations fragile and vulnerable to disruption.  

A storm, heatwave or cold snap can choke off regional or even global production, triggering supply shortages. A bridge collapse, grounded ship, labor action or Red Sea drone attack can redirect or strand thousands of shipments. Panic over a Fed announcement or a negative comment from a social media influencer can pile up massive inventory overhangs. 

Visibility is key to predictability, Porter maintains. You need to understand the current state of your operations and get alerted when something changes. But it goes beyond knowing what’s been disrupted when an event occurs, you also have to have the capability to respond quickly to those exceptions. “Shippers need to be able to make decisions on rerouting, replacement inventory, alternate carrier or mode selection and cost as soon as possible when something deviates,” said Porter. “Being able to execute end-to-end, from procurement to final invoice, can make all the difference when there’s disruption. There’s no time for process breakdowns or red tape.”

4 The Right Space at the Right Rate

Managed transportation providers operate between shippers and carriers to identify sweet spots in volume, routing, freight seasonality or schedules, in order to optimize performance and asset utilization for both. 

That might mean combining client and supplier LTL shipments going to the same destination in order to build full truckloads. Or optimizing freight to shift lower-priority moves to intermodal while keeping to delivery commitments made in service-level agreements. Or coordinating in-route deliveries of freight by priority, to avoid parcel pricing with long-haul LTL or truckload and regional carriers or USPS for final delivery. 

Analytic capabilities add visibility to boost performance and value for both sides of a carrier contract negotiation, leveraging volume to provide backhaul and continuous move business. Small and mid-sized shippers, in turn, qualify as preferred shippers through their aggregate business. 

5 Technology is Simpler, Data is Not

Midsize and smaller manufacturers and retailers, including startups, face difficult choices ahead. The hope in early 2022 that markets were stabilizing led to planned expansions in new markets with new products. The year ended in retreat, putting the focus back on resilience and cost control. 

Now inflation is easing, but orders are slow to return. Many investments in digital transformation strategies are stalled; downsizing and layoffs are common. Managers would rather wait for clearer signals that the market is turning but, by then, contracting could dry up, as truckers rush the exits for the spot market and higher rates. 

Large shippers are willing to press forward with technology adoption in pursuit of competitive and sustainability goals. That applies pressure on their suppliers and vendors, with new business conditional on higher levels of digital maturity when it comes to onboarding and integrating data with larger partner supply chains. 

The most critical need for all is actionable data, backed by analytics, planning and reliable capacity, that allows for informed business decisions and fast crisis response. 

Loadsmart Integrates People, Technology and Capacity 

Chicago-based logistics solutions provider Loadsmart launched in 2014 as a hybrid digital freight brokerage, offering digital tools to simplify freight planning, procurement and execution, with optional human operational support as needed.

The strategy evolved to include expert support teams and a robust network of shippers, carriers and fleet managers, to expand freight options and improve asset utilization. The concept has raised $346 million in funding to date from investors like Black Rock, Maersk Growth, Ports America, CSX Corp. and TFI International. 

Loadsmart employs some 400 logistics and software engineering experts. It offers software-as-a-service (SaaS) via its shipper transportation management and carrier truck management systems. Key technology differentiators include: 

• Automated full-truckload pricing and booking for all 900,000 U.S. lanes via its AMI and TMS;

• The ShipperGuide TMS procurement portal to manage shipping requirements, view carrier spot and contract rates, and tender and manage loads; 

• The Opendock warehouse loading dock appointment scheduling system, serving 3,000 warehouses with 600,000 monthly appointments to improve efficiency and cut dwell time;

• Managed Transportation, a bundled package of à la carte transportation services and technology targeting shippers with $3-100 million in annual freight spend, which can be accessed on an à la carte basis and customized to meet operational or planning needs.

Resource Link: https://loadsmart.com