Time for some self reflecting… August 14, 2023
While not over the Logistics industry has had tremendous turmoil in the last few months. And certainly not over but at least we know the trouble items to deal with.
My questions for all is simple; “How do you rate you handled it all?”
Did you take serious the risks and consider alternatives?
Did you communicate to peers and management what was happening?
Did you have a plan for the directions that could/did take place?
Did you act appropriately and take necessary actions when things happened?
These answers are for you to honestly answer and look for ways to improve.
Self improvement is based on self awareness.
If you aren’t always getting better somebody else will for you. 🙂
FedEx Ground Prediction Coming True – August 8, 2023
Well… last week I said this –
“The real winner in this contract is FedEx… they will follow the UPS lead on the rate charts and accessorials without any of the labor cost impacts UPS will have. Two years from now FedEx may have a contractor revolt take place for FedEx Ground if they don’t pass some of the windfall to them.”
Today on FreightWaves –
“Former contractor says FedEx Ground must address driver wage disparity with UPS
Patton says 15% bump in compensation needed for contractors to stay competitive”
It’s coming my friends… Time to review your small parcel agreements is now.
UPS Contract Impact On Rates In the Future – August 2, 2023
I know we are breathing a sigh of relief that UPS settled the contract negotiations and also suffering the demise of Yellow and the Regionals. Tough week for the 30,000 Yellow employees and the thousands of shippers they served.
Today’s post is about Small Parcel. Please take what I have to say seriously.
UPS is purported to have put $30 billion of new money on the table over 5 years for the Teamsters to settle.
That’s “$30” with a “B”.
That’s “$30” with nine “0” behind it
Justin Herbert’s new record setting NFL contract is $262.5 million over 5 years.
The largest Powerball Jackpot ever was just over $2 billion
I think the scale is clear.
While you can be grateful there was no strike you immediately need to think about the next 5 years. In no way does UPS intend to absorb that financial hit. UPS made $11.6 Billion in profit in 2022 so the new labor agreement reduces that by 50%. The shareholders in UPS will not accept that reduction and expect them to increase the level of profit they make.
How will they do that?
I expect them to announce at least a 9.9% General Rate Increase (GRI) to the rate charts which for most shippers is a 15%-20% hit. I expect them to increase the rate caps they have in place for their largest customers. Drum roll please… watch the new fuel surcharge scale, the new accessorials, and the accessorial rates they will apply to you. They will continue to find a way to deliver a 10% profit rate to the shareholders if not more.
The real winner in this contract is FedEx… they will follow the UPS lead on the rate charts and accessorials without any of the labor cost impacts UPS will have. Two years from now FedEx may have a contractor revolt take place for FedEx Ground if they don’t pass some of the windfall to them.
So what do you do? I’m going to say this with nicest intention possible.
Get over yourself and your contract. Have an expert help you review your agreements and see where you really stand in the marketplace. Plan for next year. Be ready to counter the rate increases before they come to you.
I know when I was a Shipper… I never returned calls to the small parcel contract firms. I had it all figured out. I was wrong.
If you are serious about getting in front of the impending firestorm in 2024 let’s talk. I can help get your agreements analyzed at no charge with a little bit of work on your part. I don’t care how big your spend is you should take the time to benchmark your agreements so you can be prepared.
If you do nothing then don’t complain on LinkedIn or anywhere else about what happens to you. I don’t think any shipper will escape this freight train coming down the tracks. Time is of the essence… this is as critical a business issue as any Supply Chain can have.
Yellow Going Down – August 1, 2023
I was listening to the Chairman of the Board this morning and then thought of my friends at Yellow… Actually thinking of all those who used to be at Yellow.
And now, the end is near
And so I face the final curtain
My friend, I’ll say it clear
I’ll state my case, of which I’m certain
I’ve lived a life that’s full
I traveled each and every highway
And more, much more than this
I did it my way
Sad to say… past and current leadership of Yellow and the Teamsters did it their way and it wasn’t good enough.
UPS and Teamsters Tentative Agreement – July 25, 2023
As most of you have heard there is a tentative agreement between UPS and the Teamsters. This should result in no work stoppage but keep a close eye out on locals who typically go rogue on the National agreement.
1. UPS put $30 billion on the table in new money
2. UPS shares closed down 1.9% yesterday
3. Eliminate 22.4 workers. A word to describe part time workers.
4. It is estimated a 10-day UPS strike could have cost the U.S. economy more than $7 billion
5. Current full- and part-time UPS workers will get $2.75 more per hour in 2023, and $7.50 more per hour over the length of the 5 year contract
6. Existing part-time workers, who the union said were making as little as $15.50 an hour as starting pay in some parts of the country, will be raised up to no less than $21 per hour immediately, and starting pay would be increased to $23 an hour during the life of the contract. UPS disputes this saying PT workers averaged $20 per hour including benefits such as free health care.
Good news for us next week. The Teamsters are celebrating what they call a complete win for them. UPS keeps the money rolling in.
Be very careful in December when the General Rate Increases (GRI) are announced. UPS is not giving away $30 billion without a plan to recover it from somebody and those “somebodies” are the shippers. I would not be surprised to a 9.9% GRI which really is 12%-15% for most shippers.
I also expect FedEx to follow the UPS lead on the rate chart which picks them up the same revenue without the corresponding cost impact of the Teamster agreement.
Ready yourself and budget accordingly.
Slippery Truth – July 20, 2023
Boy.. the truth is getting slippery and hard to find.
Are the Teamsters or UPS to blame for this late game dramatics of going back to the table 7 days before the contract expires? I remember the UPS CEO said 6 months ago it would be “late and loud.” So far spot on…
The Teamsters or Yellow? Since the day Yellow about out Roadway Express the company has never been really healthy. The Teamsters have issued a strike notice in response to Yellow not paying the Health Care and Pension contributions they were required to. If they shut down for even a couple days I don’t see them ever opening up back up again.
You have to make up your mind as to how you react to these issues. If I were in charge of your shipping I would:
– Today start giving longer transit parcels to FedEx
– Today do not tender freight to the Yellow family of companies.
If Yellow goes down your freight is likely lost forever. There will be nobody to recover your freight for you. The banks who will own the estate aren’t going to help you. Months later whoever buys the real estate or trailers might be willing to give it/sell it back to you as compared to throwing it all in a dumpster.
I know taking freight out of their system only accelerates their demise but protect yourself. Yellow, and the Teamsters, can look in the mirror about why the company is going down.
Negotiation Through PR Departments – July 2023
Let’s talk about the danger of negotiating contracts through Public Relations departments.
Both UPS and Teamsters are now flopping around, helpless, blaming the other party for the breakdowns of the talks. UPS said the Teamsters don’t want to negotiate and the Teamsters say UPS won’t put their best offer on the table.
UPS can come off looking like the greedy corporate behemoth. They have made an almost insane amount of profit since 2019 and they don’t appear eager to share it with the workers who did the work to get them there. They got a sweetheart contract in 2018 that set the baseline for these talks and the Teamsters are working hard to overcome it.
UPS also has rolled over on many pain points already for the Teamsters. The necessary addition of heat protection for the drivers and getting rid of two tier wage systems is a big move on their part.
The Teamsters are at risk of being viewed as entitled and petulant children. They haven’t argued with the statements on average driver pay of over $90k per year. Screaming for more seems selfish but I don’t know the details or facts. In addition to giving Yellow the middle finger they are being made to look as selfish children.
The Teamsters do deserve to correct a very bad contract and benefit as the shareholders have from the COVID windfall. They worked every day and delivered every package while most of us worked in relative safety at home.
It is hard to cheer for either side as neither really cares about us the shipping public. Any labor rate impact will get passed on to us next year in the GRI. FedEx may crow about UPS doing that and they will fall right in line and match the rate sheets as they have their own issues to resolve.
However this ends up we, the shipping public, lose. If that’s the case then I hope they settle and avoid the strike that will cripple our economy. Either way we pay.. with no strike at least we don’t suffer that indignity.
Small Parcel Update and Yellow – July 2023
Well… an old topic seems to be resurfacing in a large way in the last month.
The International Brotherhood of Teamsters.
They are at the table with UPS and YRC right now fighting over crucial contracts for both the Teamster members and the companies they work for.
I will try to nutshell them…
UPS: After being part of the growth and profit explosion UPS has experienced since the last contract in 2018 the IBT is looking to get what they call a fair share for the members. Make no mistake.. they are mad at the last contract signed by last employer friendly IBT leadership and the new President is looking to make that back up. They recently asked for the last – best offer from UPS to give to their members to vote on before the contract expires on July 31.
I’m still 55/45 that they will strike… down from 60/40.
Good old YRC.. the combination of Yellow Freight and Roadway along with 3 strong regional carriers. YRC is trying to merge the network of the 4 carriers into “1 Yellow” and act as one carrier. That is supposed to drive productivity savings and free up cash from real estate sales. YRC stayed open in the pandemic due to a CARES loan of $700 million in which the USA Federal Govt took a 29.6% ownership stake in YRC. The Teamsters have given a number of large concessions to YRC to help them stay afloat and they say “no more.” YRC stated they have cash enough to last maybe mid-July or August 1 and are suing the Teamsters. The Federal government may step in as a “too big to fail” action as YRC has a 10% market share. If YRC goes down the shipping public better be ready for a large $$$$ hammer from the remaining carriers in rate increases and freight embargoes.
I’m 70/30 YRC stays open but objectively… should be allowed to fail and let the industry get healthy without this continued drama.
Stay tuned and keep watching!!!!
Tough Year In Supply Chain – June 2023
It’s been a tough year for risk management in the Supply Chain.
The port contract issue for LA/LB seems to have been solved so YAY for that!
The Teamsters and UPS contract negotiations are still far from closed but UPS seems to be more flexible than I thought they would be. I haven’t seen the number but can only imagine how much it will cost to fit the network out with air conditioning for package cars.
One thing to keep an eye on is the never-ending challenge YRC has making money. The Teamsters have stepped it up over the last few years to help them keep the doors open but they are making noise that they are done with that.
Supposedly YRC has cash until August 1 and then the doors will have to close if nothing else changes.
If YRC goes out of business… the ramifications will be felt by everybody if you use them or not. The remaining LTL carriers will immediately raise rates no matter what the contracts say, there will be limits put on what you can ship for types of freight, and possibly you will find your volumes subject to embargoes.
No matter how you view this problem, self inflicted by YRC management or not, it will be a serious challenge in the industry to recover the capacity and rates will go dramatically upwards if they shut down.
Pay attention to this.
Small Parcel Communication – April 2023
Just as a calendar reminder. I highly recommend that by June 1 you be sure to have updated your peer and management teams on the current status of the UPS and Teamster contract discussions.
The Customer, Operations, and Supply teams especially need to be aware of the situation. No action is really required but building awareness allows them to adjust their communications.
Customers may want to pre order or up their orders
Operations & Supply may want to bulk up their buys
No one knows for sure what will happen yet. It’s too early. I would urge you to assume that any possible job actions will have at least a one-month impact if the Teamsters walk out for a week. It will compound quickly if it goes on longer.
All you can do now is communicate it. In the next few weeks you will need to start contingency planning.
Small Parcel Time Clock – April 2023
A reminder on time ticking away.
Do you have a small parcel strategy for this summer’s main event?
Do you know what the main event is?
It is reported that UPS and the Teamsters have begun talks to negotiate the labor agreement that expires on July 31. It is the opinion of many that there will be some type of strike or work stoppage.
Does your management know there is this potential?
Do you have any type of plan?
Have you discussed this with your team?
If you can’t answer yes to all three questions you aren’t doing your job and are behind the clock now.
Be Kind – April 2023
I had a memory pop up today for some reason today. Might be dealing with the market extremes triggered it.
So… way back when in the day I was the corporate transportation manager for a larger company. One of our largest customers had their own fleet they picked up freight on.
Not unusual but what went weird was they acted like an LTL carrier and charged us for those freight moves. And they were expeeeeeensive…. and we didn’t have a choice but to use them. You grumble about it but it is what it is.
One day I’m having lunch with the general manager for the customer carrier. Even though I’m the customer/shipper I’m buying. LOL
He sat there and bragged how profitable they were and how much they thought of themselves and their operation. All the while I’m seething because I didn’t have a choice. Those who know me well might be surprised to hear I kept my mouth shut! LOL
I relay this story as a reminder to us all that when dealing with things where we have either 100% or 0% of the power it changes our perspectives. From either side of this power struggle…
Be Kind. Be Humble. Always.
Small Parcel Heads Up – March 2023
Two comments on small parcel this week.
1. Have you evaluated your contingency plan for the possible UPS strike in July?
Not saying you need to leave UPS.. not saying the strike is a guarantee to happen. You owe your company a thoughtful, reasoned, strategy and let the executive team know. If the worst scenario happens and UPS goes on strike, and you have NO contingency plan, you will deserve to fired. If you don’t do any planning, you are not doing your job.
2. Regional Carrier Usage
Be careful using regional carriers as there is some serious question on the financial health of some of them. Be diligent on vetting new carriers and ask your financial services team to evaluate them. In the past I asked our A/R Credit team to evaluate them as if they were a potential new customer and would we give them credit. The answer can be scary…
Dig In The Details – February 2023
I’ve had a couple experiences in the last few weeks to reinforce my recurring theme here on LinkedIn.
You HAVE to dig in the details.
No matter what you are doing… carrier bids, warehouse layouts, forecasting, I don’t care. If you fly high over the data you are not doing it right.
In the Lean world they talk about “Going to the gemba.” Going to the real place where work takes place. Data scrubbing is no different and you “learn to see” when you do that.
Want to screw up a warehouse layout? Have a statistical anomaly in your demand data that you don’t see and waste money on racking and have to redo it later.
Want to screw up a carrier bid? Put lane data out there that doesn’t really exist, or has changed, and watch carriers’ pound on your later.
Listen…. we all make mistakes no matter how hard we try to position the data in the most accurate way possible. That can be lived with.
Fly over the data with no review, or context, and you deserve the bad things that are about to happen to you.
It’s really up to you.
Opportunity Knocking? – Jan 2023
“What is opportunity, and when does it knock?
It never knocks. You can wait a whole lifetime, listening and you will hear no knocking.
You are opportunity, and you must knock on the door leading to your destiny. You prepare yourself to recognize opportunity, to pursue and seize opportunity as you develop the strength of your personality, with your self-respect alive and growing.”– Maxwell Maltz
New Year’s Resolution – December 2022
Well… it’s that time again. Time to again make New Year’s Resolutions that, made with the best of intentions, never seem to be realized.
1. I resolve to finally get the proper dimensions, weight, and correct class on my Bills of Ladings.
2. I resolve to use a TMS that accurately rates shipments and can communicate seamlessly with my carriers.
3. I resolve to be honest, at the level most possible, with my carriers on the volumes they can expect to see describe the deliveries accurately so they can price fairly.
1. I resolve to have fair fuel surcharges, that I don’t make margin on, so both sides are treated fairly.
2. I resolve to live up to my contractual commitments for service and not make decisions based on convenience.
3. I resolve to be honest for service times and not mislead customers with transit times, especially to manufacturing companies, who need to know exactly when shipments will arrive.
OK… the above are a bit tongue in cheek because they are the biggest sins committed by both sides and not likely to be worked on very hard by either side. An exaggeration maybe, but I don’t know of many who comes to the table with clean hands.
We all need to be better in our approach to business relationships and focus on fairness and a level playing field that allows both sides to be successful. 2023 promises to be a challenging year as the last 3 have been when you take both sides into account. Both sides have had their challenges and market revolutions to deal with.
As Dalton said in the movie Roadhouse… “Be Nice”
Fast vs Slow – December 2022
There was a book published a number of years ago that I was reminded of today…
It’s Not the Big that Eat the Small… It’s the FAST that Eat the Slow!
It is very true!
Lean in Supply Chain – December 2022
A year ago I posted about the CSCMP article. “Is Lean the problem or the answer?”
I still believe in the core principles of Lean. The elimination of waste and focus on value adding processes.
Lean as a tool can accommodate Supply Chain disruptions that we experienced. Of yes… you would have had the same problems as far as product availability and inflated acquisition costs. But you would have had a plan to exit the crisis with minimized disruptions.
If your organization thought Lean was the problem then you are facing warehouses full of inventory, bought at the highest possible costs during the pandemic, and looking at Excess and Obsolete write-offs next year with more still coming in.
Suppliers are dealing with the bullwhip effect right now. You asked them to work 7 days a week and now you cut off your orders.
LTL and parcel carriers are looking at furloughs to deal with the rapid volume changes.
Some of these are to be expected with the rapid changes in our global economy. How long and how deep they go is mostly up to the manufacturing and retail inventory positions. Let’s hope we see a return to normalcy in early 2023.
Market Changes – November 2022
Dang…. how the world turns!!!!
Watching the rapid changes in the markets and people moving around. Companies letting people go… people changing jobs… markets rising and crashing within weeks.
I have two thoughts for everybody…..
1. Stay Calm.
This too shall pass. I know that is easy to say if I’m not in the middle of churn but please keep a long view of the world. We are experiencing nothing we haven’t seem many times before. If you let it things are better at the end of the journey.
2. Stay Loyal
Remember your friends who stuck with you. That can be an employer who kept you on. It can be a coworker who helped you out. It can be a service provider who stayed with you in the worst of times. Loyalty is a lost value in troubled times. It should be a value repaid.
Let’s keep helping each other out.
Parcel Spend Thoughts – September 2022
Happy fall days network….
I’ve been thinking about my now unique career. I spent most of it on the shipper side managing global networks with hundreds, if not thousands, of relationships. I now am on the provider side selling solutions that really can help customers.
I think back on how I might have acted differently in any number of situations. And ones where I would not have changed how I acted. 🙂 When I retire for good I’ll have more to say on all those.
One area I wish I would have been more open to, but avoided like the plague, were solutions on managing parcel spend. Real analysis on contract rates and real technology to help me manage it. If I could make suggestion to shippers is to at least listen to the message.
From the chair I sit in now, and looking back at my past, I know I missed opportunities. Call it pride or arrogance that blind spot will always leave me wondering what improvements I might have been able to make in managing parcel spend.
I liked the people I dealt with but never trusted the parcel carriers intentions. Still don’t. They are so good with technology and data I started out every conversation behind them trying to catch up.
Get the analysis done. Review the technology. Just doing the review makes you better with one more tool in your belt.
Being Perfect – August 2022
From the movie Friday Night Lights
Coach Gary Gaines: Being perfect is not about that scoreboard out there. It’s not about winning. It’s about you and your relationship with yourself, your family and your friends. Being perfect is about being able to look your friends in the eye and know that you didn’t let them down because you told them the truth. And that truth is you did everything you could. There wasn’t one more thing you could’ve done. Can you live in that moment as best you can, with clear eyes, and love in your heart, with joy in your heart? If you can do that gentleman – you’re perfect!
Deep Dive Spend – July 2022
Have you done a very deep dive on your freight spend recently. Are you doing an invoice by invoice review? Are you absolutely positive you know what is happening in your network?
With carriers constantly changing rules tariffs, and small parcel providers constantly adding accessorial charges, you need to be on top of them. Every single one of them.
It’s your job. 🙂
Managing Spend – June 2022
Has this logistics market gotten real to you yet? Has it become quite confusing?
I’m guessing the answer to both questions is yes.
No questions rates have gone up. A lot. No mode has been spared that pain. Some customers have been hit harder if they have difficult freight or difficult customers. Or if you aren’t paying close attention to surcharges and accessorial charges your costs have gotten hit even worse.
It’s confusing because you hear news, going both ways, on where costs are headed. I don’t think anybody really knows. Each of your realities is going to be different. Are you good enough to be on top of it? Can you keep calm when everyone is panicking? I hope you are both.
The carries are not “getting rich” right now. I do believe we are going to see a lot of truckload capacity go away soon as the carriers can’t keep paying the costs of fuel the brokers won’t help them recover. Do me a favor…. if your broker is raising your rates because of “fuel” ask for proof they are passing that cost on to the asset carrier hauling your freight. Too many aren’t and they are strangling the very providers you need in the future.
One last favor… as you look to the carriers to help you bring costs down. Are you doing everything better than ever before? Have you improved your internal processes to reduce spend or helped your carriers be more efficient? If you haven’t then why do you think your carries should solve your problems? Now more than ever you need to be sharp on your processes and address your internal opportunities. How you palletize, how you load, eliminating waste, and creating flexibility will save you far more than focusing on a rate.
Stay true to yourself in these troubling times and be more honest than ever. Doing the right things in the right way never gets old.
Spring is coming! March 2022
As we Northerners are prone to do this time of year, I’m sitting here in my office thinking “Why do I live here?” It’s 34 degrees, winds up to 50 mph, and spitting snow. But a nice cup of tea and Pachelbel in the background helps all this.
Why? Because I know spring is coming.
Just like we all know all know “spring” in coming in Supply and Logistics challenges as well. We are living in the “winter” of the change cycle right now and it’s being prolonged by the world issues we can’t control. Carrier rates and leverage because of capacity. Product shortages because of labor at the suppliers. Inflation running rampant because of world political instability. Spring is going to be delayed for quite some time this year for our industry.
I’m going to keep reminding you to focus on the areas you can improve. Double down on being razor sharp on the things you can control. Look for new processes. Look for new suppliers. Improve your use of data. Increase your accountability to others. Express your need for increased accountability of others.
Do something to improve your situation and don’t let the situations control you.
We are almost to end of the first quarter so take stock of what you have done so far this year. Be honest with yourself. Have you really done the best you can? Have you taken care of yourself? What are you going to do next quarter, and have you made a plan?
There are areas in Logistics and Supply Chain you can make a difference. Commit yourself to do those things.
I’m proud of you and I know you can do it!
Self care – March 2022
I feel the need to stress again the need for self-care.
Just when you think it can’t get more difficult life looks at you and says, “Hold my beer!”
Global Supply Chains are still stressed, carrier capacity is critically low (try booking an LTL shipment with a carrier at the last minute and no communication), now add in the Russian criminal invasion of Ukraine and the subsequent energy crisis and topped off with the cyber-attack on Expeditors.
I’m reminded of Stephen Covey and the “7 Habits of Successful People”. There are three circles in your life: 1) Control, 2) Influence, 3) Concern.
– Live in the Circle of Control
– Work in the Circle of Influence
– Be aware of the Circle of Concern. Mostly to avoid it. 🙂
If you haven’t read it, or it has been some time, pick it up as a concept to understand. I think it can you help focus your energy on the things in life you can do something about and not be distracted by things you can’t.
I’m worried about you all. Take care of YOU first and then rest falls in place.
The Value of Data – February 2022
I has hit me hard again this week the value of data.
Not the fluffy big data conversation. Transaction level data that can tell you what is going in your business.
As in what is really going on in your business. Not a dashboard or some analytics tool. Reviewing transactions one by one to look for, and ask, the 5 why questions to.
Call me old school. I still like to muck around in the details and try to learn what the business is actually doing. Your dashboards are great for trend analysis but don’t help you change your business decision making process.
I’m going to give you two strong recommendations.
1. Make sure you have transaction level details scrubbed for logistics spend. If you pay bills through A/P they have to do full data capture for you. If they just send you general ledger transactions when you ask for spend you should look for a Freight Payment and Audit firm.
2. Make sure data is accurate. Invest time in the details and be sure it is correct. Make sure your mode designation is accurate. Make sure your accessorials are broken out. Makes sure fuel surcharges are broken out. Make sure duties and other taxes are broken out. If you don’t know these things you don’t understand your freight.
Is Lean the Cause of Our Shortages? January 2022
The CSCMP Supply Chain Quarterly cover featured the question “Shortages aplenty: Is Lean the problem or the answer?”
I was waiting for this to be addressed! LOL
Too often the C Suite views Lean from the balance sheet only. It is not a single strategy to reduce inventory and too often is used, or measured, as such.
Lean’s purest purpose is the elimination of waste and striving for continuous improvement. As so many have experienced in this pandemic and global supply chain crisis shortages are real and serious.
To blame Lean is to believe that waste is OK. That CYA (you know what this means) is better than continuous improvement.
The wall of shortages that people faced in 2021 are going to be the cliff of Excess and Obsolete write-offs of 2023 if organizations aren’t careful.
Be thoughtful in your Supply Chain planning.
As Rick Harris (Harris Lean Systems) used to say when teaching us… “You might not like the number. That’s irrelevant. It’s the number.” Remember that when setting your inventory targets… either higher or lower than you are comfortable with.
What do you think?
Truckload Partnerships – January 2022
It’s a snowy day here in Minnesota so I’m looking out the window and pondering things.
Was chatting with a friend this morning and I must have groaned when he said he was running a truckload bid right now. He quickly added he was running the event to lock in capacity… not rate related.
Later I was thinking how much the environment has changed in 24 months. Over the last few decades, we have treated transportation services more and more as a commodity.
Hey… I was part of that so I’m not laying blame anywhere.
Transportation services right now are anything but a commodity. If you insist on treating it as a commodity at least recognize it is a precious metal commodity to be treated with kid gloves.
Your priorities right now are:
2. Acceptable levels of service
Remember this for later.
Remember every provider you have beaten up badly in the last years is now paying you back. Accept it as you earned it.
Remember, as well, every provider who is taking advantage of you and crowing over their captive and expensive capacity.
In the next 12-24 month the priorities are going to flip. Remember to reward those who have been fair and honest with you. Reward those who moved your freight at fair market rates today.
Be a partner and less a commodity manager.
Rate Increases for 2022 – December 2021
It’s beginning to look like Christmas.
No… it’s not the snow in the North or the Hallmark movies.
It’s the rate increase season. It’s going to hurt this year. Bad.
UPS and FedEx have begun the season with rate increases starting early and with UPS a bump in the fuel surcharge rates.
LTL is going to be anywhere from 5% to 10% and watch the growth in accessorial charges. If you ship over length freight you already subject to increases in the hundreds of dollars. If you can ship them at all.
Truckload rates are still bumping up 1%-5% every month and 2022 will be no different.
Ocean Freight. Dumpster Fire… ’nuff said.
You better know what is happening to you down to the penny.
Ted Lasso – November 2021
I’ve enjoyed watching the AppleTV show Ted Lasso. His unnaturally high level of optimism is a bit annoying but his character really cares about people and even won me over.
They added a sports psychologist character named Dr Sharon who said something I really identified with…
“The truth will set you free.. but first it’s going to piss you off.”
I thought about that and how true that really is. In my just over 60 years of wandering this earth I’ve learned a lot of truths that were hard to come by. I didn’t like learning many of them… especially when they involved looking at myself to learn. But each one has made me better.
Look for the truth.. and get ready to sometimes be pissed off about it!
Hang In There! – October 2021
Happy Sunday fellow Supply Chainers….
I just want to say to you all… Hang In There!
I know first hand how hard things are right now. For the first time in my career every part of our physical movement network is challenged and maybe broken. Costs are sky rocketing and the services we depended on have become completely undependable.
Please. Take a breath. Close your eyes. Practice self care. Keep positive self talking to yourself. You didn’t cause this but your organizations are depending on you to deal with it to the best your ability.
My wish for you are mature and reasonable managers. It is their job to challenge you to every day to do better so accept that. I just hope they do that with empathy and understanding.
There are no easy or quick solutions so get ready for the long haul and keep your eyes focused on the future.
You got this!
Ocean Rate Challenges June 2021
Hear ye Hear ye…. the market continues to speak.
If you are an importer and depend on Ocean Freight as part of your Supply Chain you already know the market situation.
Rates are as much as 4 times what they were last year. More in many cases. The slower service has nothing to do with the rates. Suck it up buttercup. As the show said years ago… “Importer… this is your life!”
Do you think you have enough market power to demand rates of last year? You can try it but be careful and be nice in how you approach that. Do not burn a bridge or make threats you can’t back up contractually. The blowback on you can be severe and will follow you for years.
Now.. all the above is no excuse for doing nothing. You should explore the market… you should explore different ports of entry… you should explore transloading… you should explore domestic sources of supply.
Doing nothing is not acceptable and you need to do everything possible to protect your organization. Your employers deserve that.
Just be reasonable and respectful.
Global Supply Chains – May 2021
Been thinking a lot of late on the troubles of Global Supply Chains.
Mostly thinking about the mess that importers are facing.
The unsophisticated importer is screaming at their Freight Forwarder and demanding better support. They don’t understand why their container, buried under tons of other containers, can’t be picked out and handled like a pot of gold.
Then…. it hits the rail systems which, of late, are worse the port congestion issues. Especially if you are in the Midwest you are getting beat up on all fronts.
Terminate your container at the port and transload to an over the road truck. Own the LTL portion of an LCL shipment. Work with your Forwarder on port routings and be open to rate increases. With a flexible and open mind set you can improve service.
Yes.. it does cost more at times. But plant shutdowns for the lack of materials are hitting the best run Supply Chains.
Look at the Chevrolet Corvette Supply Chain. The hottest selling car in the USA has had the plant shut down for lack of parts. Build schedules are affected by parts availability. These are cars that dealers are charging $10k over sticker price on. You think GM isn’t being flexible and creative on Logistics?
Open Mind Thanking – April 2021
I completed the first phase of a client project last week with a recommendation for how to go forward. I have done a few similar projects in the last few years.
What I find interesting in reflecting on it is how very different the projects ended up at this stage.
A few ended up with recommendations to outsource certain parts of their logistics operations (and ended up with different 3PLs) and this last one was to insource. I’m not saddled with selling one solution to everything. I can make different recommendations based on the project so I have that advantage.
My challenge to you all (both shippers and logistics providers) is to remain flexible and open minded. Be open to any solution and to be honest.. focus on the solution to solve a problem and not a solution that needs to be fit to a problem.
I look back on my long career as a shipper and wish I could go back on a few projects and make different choices. I can also say that when I put aside by built in bias to any solution, and opened up my thinking, I did my best work.
Drive for open thinking, explore your options fully, and always have a learning perspective. After almost 40 years in this industry I love to be surprised by learning something new.
New Years Eve – Dec 31, 2020
It’s almost over. In less than 24 hours 2020 will be in our rear view mirrors.
It was a terrible year. Our family suffered loss due to COVID-19. Dealing with two cancers in our family and also of friends. Watching hard working small business owners suffer and close doors. Watching the owners my favorite restaurant battle state mandated closures and keep the doors open. The stale air of no social contact or hugs from grandkids since March.
Again.. it has been a terrible year.
But 2020 did not win! We hung in “together”. We helped businesses not just survive but grow. As an essential industry we helped move products to where they were needed and helped Supply Chains adapt to crisis and instability.
We are ready for 2021 to be a launch pad. We are ready to beat COVID-19. We are ready to rebuild our economy and close our social divides.
It is all about attitude and resiliency.
Happy New Year!!! I’m ready!!!
LTL Challenges – Nov 2020
Are you an LTL shipper?
Oh boy… it’s going to be a bad month followed by a bad February.
Not picking on any one carrier but transit times are suffering already because of volume. I know a few cities where freight is grid locked and not moving. Make sure you are on top of carrier volumes and divert if necessary!
February will seem wrong to you after a bad service month in December but get ready for some stiff increases. If your boss is asking plan for at least 5% inflation and don’t be surprised at double digit increases. And you might not have a choice.
It’s going to seem like a 1-2 punch after the truckload rate inflation this fall but better to be prepared.
If your boss huffs and puffs and tells you to not accept the increases they are welcome to call me. I don’t work for them and will tell them the truth they don’t want to hear.
Market Flips – October 2020
How the tables have flipped huh?
I wrote a post in May to shippers about being thoughtful and judicious on swapping carriers out for rates that weren’t sustainable.
The same comment has to be made to carriers who hold the gavel in their hand for the time being.
You can easily get double digit rate increases right now. If those increases recover you back to the rates prior to COVID then good for you. It was a balanced market then.
Are you shooting past where you were and are thinking “payback is a bi*ch” you are no better than the flip flopper shipper. You can have your day now but there is a target still on you for when things go back to normal.
I’m focused on fair conversations with shippers. We didn’t play rate cut games when things fell apart and we are staying stable when things are good.
#Madgaines has had a number of conversations with carriers, brokers, and shippers about how to have a stable market. Hopefully we get that in our stockings for Christmas this year!
Happy Thanksgiving and stay safe!!!
Integrity – Oct 2020
I wrote this 4 months ago…
“How you act now… your character, your integrity, your actions will have an impact over the next few years. Think in terms of years and not months and you will be a better long term, on either side, than the predators who are in the marketplace right now.”
Where do you stand? Did your actions develop trust with your providers? Did you go chasing rainbows and unicorns thinking you might actually catch one?
It’s easy for me to judge because no matter what you did you were both right and wrong.
Always…. Always…. it is about character and integrity. Oh we try to complicate things with fancy technology, buzz words, and new management styles. In the end you are best when you know the right things to do, do them exceedingly well, and then do them again. With honesty and respect.
I’ll take that any day.
COVID Bids – May 2020
Interesting….. I wrote the below 3 months ago on LinkedIn.
If you have contract rates and have anything other than a standard load be very very careful on carrier changes or rate demands. This situation is temporary (less than a year) and the choices you make now will have consequences, positive and negative, all depending on how you handle this.
I know carriers now are willing to do work today that 6 months ago they turned their nose up at. Guess what? In six months they will walk away from it again. And the carrier you moved away from is fuming and the rates are going to reflect it when you call them up and go “Hey buddy… how is it going?”
I’m curious as to how much of this came true? I have talked to people who made switches and are suffering terribly now. I have also talked to people who made switches are happy.
As a shipper you are always under cost pressure and it is so tempting to chase rates and claim the win. When you do that… “Todays win is tomorrows sin.”
As a carrier you need to better under your customer’s pressure, work with them, and win by helping them win.
Please comment on your own experiences over the last few months with the rate chasing.
Lean Is Not the Problem – Apr 2020
Greetings and continued prayers for your safety. I am as frustrated as anyone with the lack of contact and social options but my health, and that of my family, is paramount to me. I hope you feel the same for yours.
I do have a bit of a rant today. The news people and our President finally learned the word Supply Chain. And they now appreciate the work we do in the Supply Chain world.
What I want to rant a bit about today is the beating that Lean is taking. With the empty shelves in the retail world and the shrinking supply of imported consumer goods more than one person is taking Lean to task for the short inventories. The intent of Lean is to become faster, more agile, more productive, and achieve higher quality levels. That inventory is lowered is a result, not a goal, of achieving a Lean system state.
Globally Supply Chains are drying up because material is not being produced and can’t be transported. That isn’t Lean’s issue. Organizations that have embraced Lean for the power of flexibility and speed will recover faster and be better for it.
I will ask on behalf of your suppliers to please be cooperative and collaborative. Too many doors aren’t going to reopen when this is over and we need to help each other fight our way back out of this.
Dance With the One that “Brung Ya” – Apr 2020
I hope everyone is staying safe and taking serious the avoidance tactics that have been recommended.
I have had a number of conversations with shippers this week on how they are handling this crisis and what they are doing to keep freight moving. I’d like to leave you with this old maxim….. “ dance with the one that brung ya”
A large number of providers are scrambling to fill capacity that suddenly appeared. They are now willing to do work that before they weren’t. Cut rates that before were golden arch status. Unless your current provider decided to hammer you with surcharges and new increases I’d say stay with them. Especially if they have been through thick and thin with you.
They are as worried as you are and pitching away relationships for what I promise is a temporary fix is the saddest thing ever Keep the dialogue going. Help each other where needed. Have each other’s back. Now is when you cement 5 year relationships
Line Drive Trucking Named nVent Carrier of the Year – Mar 2020
LONDON–(BUSINESS WIRE)– nVent Electric plc (NYSE:NVT) (“nVent”), a global leader in electrical connection and protection solutions, today announced its 2019 Carrier of the Year Award recipients for North America. The Carrier of the Year Awards recognize outstanding contract freight carriers that consistently exceed expectations to deliver nVent’s products to its customers.
The 2019 recipients are:
“At nVent, we design, manufacture, market, install and service high performance products and solutions that connect and protect some of the world’s most sensitive equipment, buildings and critical processes,” said Hillary Drake, nVent Transportation Manager. “While product excellence is critical to customer satisfaction, how the product reaches the customer can shape their overall experience. As the last party to handle a product before it reaches our customers, a carrier plays an integral role in the customer experience. All four of our 2019 Carriers of the Year managed the logistics efficiently and professionally so that we could deliver an outstanding customer experience. They are dedicated, knowledgeable partners.”
nVent selected the recipients from its network of over 50 contract freight carriers. The recipients were recognized during the annual nVent Carrier Summit in Minneapolis.
Reshoring question – Mar 2020
We will never know this answer for sure but I’m curious. With this latest global scare of the coronavirus how many companies are ramping up efforts to reshore/nearshore production and suppliers from Asia to North and Central America? The compounding effect of the trade dispute and the fear of the virus have many companies at the end of their patience. Retail customers are soon going to feel the impact of the plant shutdowns in China and it’s about to get real. Never take investment advice from me as I’m not licensed but I’m considering buying into companies who offer asset based air freight charters.
Gentle Reminder – Feb 2020
A gentle reminder to the parcel shippers…. Have you evaluated how the new heavy weight package surcharge has affected you? If yes… good job!!! Have you mode shifted because of it? How has that impacted your overall spend? If no… sigh. Managing parcel spend is deep diving the details.
Be Advised – Jan 2020
For those who are being hit hard with the new heavy weight surcharge from UPS and FedEx…. It’s tempting to mode shift to LTL to save a few dollars. Be very aware of your operating profile with your LTL carriers. Shifting average shipping weight down, and likely a negative impact on your density, will come back to bite you. Talk to your LTL carriers about what it means and how they view it. Be careful of salesperson double speak who look at their quotas being filled versus the pricing people who will set your rates in the future. Consider yourself advised….
Small Parcel Heavy Surcharges – Dec 2019
FreightWaves recently published an article on the new surcharges UPS and FedEx are going to place on parcels greater than 50 pounds. Using their math, it will be approximately the same cost to ship that 50 pound parcel shipment as a LTL minimum charge shipment. I continue to plead with the shipping community to really up your game on sharply negotiating every single detail and aspect of your parcel contract. Please trust me on this… neither UPS or FedEx is a your partner unless you earn it by being treated as an equal. If all you do is sign the agreement they put in front of you then you are just part of the flock. Be careful to not just mode shift to LTL with these small shipments without a plan. Your operating profile with the LTL carriers is not helped with growing your minimum charge shipments. The costing model they almost all use will treat each shipment as a profit center and they can’t make much money on small shipments. It will result in an increase for your entire account to pay for the small shipments they lose money on.
Riders On The Storm – Dec 2019
The most recent CSCMP Quarterly had a really interesting article titled “Riders on the Storm.” Of course my first thought was the Doors singing that but only fellow grey hairs know that song. 🙂 They mentioned in the article a survey where 40% of the respondents said the combination of Analytical Skills, Leadership, and Transportation Expertise is either “rarely available” or “not available” in the marketplace today. My first reaction was disbelief. Then I thought about it. My analytical skills rely on intuition as well. In honesty my Excel skills are sliding towards “ok” based on my work with younger talent. I am very confident in my leadership and transportation expertise so I can see where this is the case. Hiring managers… think of the power of combining a young talent with my experience. How powerful is that? I can guide the talent with where to look, teach them how to look, and learn from how they analyze the data. I’m not in the market for a job so have no agenda but I know of many experienced people stuck in the market looking for work. They can’t get the time of day from recruiters because they aren’t Excel monsters. Think of the win if you give them a shot… 🙂
Small Parcel Rate Increases – November 2019
FedEx recently announced the 2020 rate increase. UPS no doubt will soon follow. It wasn’t too long ago you didn’t know what they were doing until the days before New Years. From a budgeting stand point this helps for planning purposes. If you spend over $10 million annually in small parcel I’m going to ask you some questions you have to be honest with yourself with…
1. Do know for certain you have the best possible contract with the big two? If so… how?
2. When was the last time you had an honest review of your spend analyzed? Not just rates but accessorials and behaviors?
3. Are you tired of people calling you on the phone and tell you how much they can save without ever having seen your contract or spend details?
4. When was the last time a team with buy/sell of small parcel services in excess of $5 billion reviewed your contracts and approach?
You have to answer #1 & #2 yourself. I promise I will never do #3 I am part of #4 You owe it your organization to be as good as you can be. Bringing us in to review and help you is a sign you want the best possible result with your parcel spend.
Target and the new tariffs – Sept 2019
“Target tells suppliers to pick up cost of China trade tariffs” Interesting move by Target. On one hand it’s an abdication of Supply Chain management ownership. Simply telling suppliers they aren’t going to absorb any the increased costs for goods they import is the big hand sweeping away its problems on the back of the little guy. On the other hand the “little guy” they are pushing these costs to aren’t in many cases small at all. Many are large, multinational, corporations who should have been working on this issue a year ago when the sabers first started rattling between the USA and China. When this was about the first lists of targeted products it was about manufacturing company needs for raw materials and components. Now it is touching consumer goods, toys if you will, that the retail customer will feel directly. I support the efforts to level the playing field between China and the rest of the world. For too long we have allowed them to take advantage of us through our greed and desire for low cost labor. We traded fair play for low costs. If I now have to pay a little more for my toys to be sure a fair playing field is in place so be it.
Mexico Border Logistics – Sept 2019
Do you move a lot of shipments over the border between Mexico and the USA? Three things usually happen…. 1. Your pool of trucking providers shrink as many won’t allow their trailers over the border. 2. Your truckload costs often is higher because your pool of carriers shrinks dramatically. 3. The carrier you do use for the border crossing often will complain about tires being switched out, lights missing, and other damages that occur when the trailers are not under their control. Using a transload strategy helps alleviate the above issues. It needs some controls put in place, a bit more coordination, and great communication between the trading partners. Transloading solves the issues named above and helps keep freight flowing with minimal disruption.
Covey and The Circle of Influence – August 2019
There is so much controversy floating around on the possibility of a global recession, trade wars, the Federal Reserve, student loan debt, you name it. The data may be adjusting with these activities but the world is the same today as yesterday when it comes to excellence. Stephen Covey talks about the “Circle of Influence” and the “Circle of Concern”. If you haven’t heard of them I’d recommend a little reading on your part. The concepts feel dated but are still valid today. Focus on expanding your Circle of Influence. Work hard to control the areas in your life that touch you the most. The Circle of Concern is typically negative thoughts that influence you through fear. Replace fear with action and proactive thoughts. Your goal still is excellence. You still need to strive to be the best you can be. You still can learn. Make today the best it can be through courage and action.
“Slow is smooth. Smooth is fast.” – June 2019
Special Forces Operators and NASCAR crew chiefs use this all the time. But what does it mean and how does it apply to you? It really is about not frantically going after things. Wasting time, treasure and talent. Mostly yours. Many challenges lie ahead in our industry, our politics, and our world. Be thoughtful and plan out your steps. Make key decisions when you don’t have to so stress doesn’t influence them. Then execute with the precision of a Navy SEAL or Army Ranger. Drive hard into the corner trusting the tires will hold. There are so many opportunities right now for bold and daring decisions as long as you thought them out before acting.
FedEx walks away from Amazon – May 2019
As logistics industry people by now have heard FedEx is walking away from Amazon Express Delivery business. I wouldn’t call it a surprise but probably more “what took so long?” https://lnkd.in/eJztsBu Amazon has publicly been building its own capabilities for delivery services as well as distribution. They are smart and aggressive. They learned how to best use the US Postal System from the Postal Consolidators and pushed them out when they didn’t need them any longer. What continues to impress me about Amazon is their attitude. They don’t limit themselves in their thinking. There is no “we can’t.” There is only “What next.” Love them or hate them…. we could all use a healthy dose of that.
Change Management – May 2019
Change management… it is about the toughest job in transformation. Forget all the fancy spreadsheets, steering team presentations, and tough contract negotiations.
A couple types of blockers
The 1st blocker has been laying in wait for you. They had no intention of ever following your lead but had to wait to strike when you had the distraction of implementation on your shoulders. They find every tiny flaw, every missed assumption and paint the entire project like that.
The 2nd is the half in the boat person. They smile, pat you on the back, but are busy “not” loosening the rope from the moorings that will let the boat take off. They won’t do anything overtly to make you fail but they are quite busy with holding their grips to the past. They make you question your direction and really wear you out. Much as you would like you can’t move them out of the way organizationally.
What do you do? Take the high road. Believe in yourself and the project and continue to measure objectively the results. A reasonable reaction will always outweigh the negative or destructive actions. As long as you are right in your direction and have covered yourself with facts you will prevail.
I believe in you!
Replenishment Lead Time Variability – May 2019
I just finished a quick project where I was reminded of how Supply Chain variability impacts inventory.
The client was exploring a new line of business and wanted to estimate how much inventory would need to be carried and how big a warehouse potentially would be required.
Using standard calculations for measuring demand variability we defined inventory levels that would be required carried including safety stock, min/max levels, and estimated warehouse size.
We then took the value the client gave as replenishment lead time and played with variability of it. I was concerned it was too short and wanted to make a point.
Adding 5 days of lead time to the standard resulted in a 30% growth of inventory required to support the business.
In these days of turmoil in global supply chains make sure you are taking serious the amount of inventory you need to be carrying to serve your customers well.
It’s easy to do it poorly… it takes some serious work to do it well.
Customs Bond – May 2019
I attended a really good breakfast meeting today put on by the local CSCMP roundtable on the current situation involving the trade negotiations with China and the upcoming USMCA agreement.
One tip I had not thought of. Review your customs bond with your broker to make sure it is appropriate for the current environment and what triggers might make you increase it. If you are subject to increased tariffs your shipments might get held by customs if you don’t have enough room in it to process it.
Import Compliance – May 2019
Global Supply Chain Management has never been easy. It just continues to keep getting harder.
I would urge you to really pay attention to Import Compliance right now. Review your classifications and be sure you are absolutely dialed in on them. The way Duty Rates are changing you need to have them accurate. Remember this as well… you (the importer) are responsible for this information. The Forwarders ARE NOT. Hire somebody in to help if you need to.
Watch LinkedIn for webinars on the current Trade Conflict as well as those explaining the USMCA. Be aware of what is changing so you can make recommendations to your management. Pete Mento of Crane Logistics is a good voice to follow.
Nearshoring and Reshoring manufacturing are taking place as we speak. Make sure you are the voice of reason in trade decisions like this.
Supply Vs Logistics in Sourcing – April 2019
I was reading an interesting story on strategic sourcing practices.
Logistics leaders for years have been managing carriers, contracts, and battling cost versus service decisions. In the last decade Supply Chain leaders have gotten supply teams involved in doing carrier RFPs and driving cost out of the supply chain.
Logistics leaders grit their teeth at involving supply teams because they feel the process is only cost driven and not sustainable in a “customer first” organization.
Supply leaders roll their eyes at the logistics leaders resistance to their involvement and don’t understand it.
Both sides are right.
The logistics teams can learn a lot from the supply teams processes. How many bids have been run with no routing changes at the end? How many carriers refuse to submit bids because they know the logistics team won’t change carriers not matter how they bid?
Supply teams get wrapped up in savings generated and forget to value service and experience. I have been involved in bids where we took 30% of the cost out and yet shut plants down.
There is a compelling reason for the two teams to work together on RFPs and use the best practices from both sides. You can bring tremendous value to the bottom line.
Crossing the Mexican Border – April 2019
So many things touch and impact Supply Chains. They often fly under the executive radars and we end up explaining surprises.
If you cross the border between Mexico and the USA northbound oh boy…. I hope your boss knows what is going on.
CBP has shifted agents to process car and foot traffic and reduced staffing at the commercial crossing operations. What that means is the waiting time has risen dramatically in the last month and no end in sight.
Wait times at the Pharr bridge crossing have gone from 2 long hours to up to 8 interminable hours on a regular basis.
If you cross North from Mexico please pay attention to the time spent at the bridges and what impact it might have on your Supply Chains.
Deming Quote – April 2019
I love the Deming quote in this month edition of Inbound Logistics.
“Without data you’re just a person with an opinion.”
Southern California Shippers – April 2019
Southern California shippers….
Did you get hurt again with the annual round of increases by your carrier? Are you struggling with drayage out of the ports of LA and Long Beach? Are you dealing with double digit increases for short haul truckload? Are you looking for warehouse space?
Do you want somebody who can it all for you? Do you require 99.9% On-Time delivery with no damages?
Do you need an option? Do you just want to vent? 🙂
Freight Payment Provider Concerns – April 2019
The grinding shut down of Freight Payment firm IPS (https://lnkd.in/eQ_5BBD) only goes to again remind shippers (and carriers) of the need to up their game in managing suppliers.
The article states the departed CFO Michael McNett is a convicted felon with larceny in his background. What????
A shipper might not know the background of the executives of its provider but if you are asking them handle large sums you do need to do some due diligence.
In my past as a shipper we used our Internal Audit team to annually go in and audit our Freight Payment provider to be sure we agreed with how they handled our money. I’d urge you to do the same.
If your provider balks at that audit….. hmmmmmmm
End of Quarter Thoughts – March 2019
Good morning leaders….
The end of the first quarter is fast approaching.
Have you realized any of the improvements you targeted with the Operating Plans for this year for your Supply Chain and Logistics operations?
Have you started any of them?
I’ve been where you are. The day-to-day issues overwhelm your teams and it seems like a last week crash effort to show they have been addressed.
I would urge you to reflect on that for an honest assessment. Don’t blame them…. help them.
I’m an experienced industry veteran who has a practical approach to achieving results. I always urge you to engage in an assessment to validate or dial in your viewpoints into action plans. It’s a low cost, low risk, high reward opportunity for you.
Parcel Management – March 2019
Nice article written by Quinn Nelson of enVista Transportation Solutions on managing small parcel
If you don’t have a handle on these metrics you don’t have a handle on small parcel.
* percentage of total spend made up by accessorial charges
* percentage of packages where dimensional weighting was applied
* percentage change in the difference between average billed weight and average actual weight of packages
* percentage of packages affected by a certain charge type
percentage of package shipped to a certain zone
Driver Turnover and Lean – March 2019
The Journal of Commerce recently published driver turnover was way down in the big fleets with the recent pay increases. Turnover at 78% is still huge but down 20% according the article.
The pay gap still is large from what is projected to get the turnover down to a targeted level. The ship won’t be righted overnight but seems to be headed that way.
If the market needs this so be it. I’d rather see this happen than many other industries get pay increases for taking orders. It continues to put pressure on shippers to automate, improve their processes, and be smarter every day about what they do.
The concept of applying Lean is still thought of a manufacturing process to reduce inventory. You can’t be more wrong if that is what you think. You need to get your mind wrapped about is a system to reduce waste. In process, in people, and in spend. Lean processes can be applied in Finance, in Sourcing, and anybody who has been involved in a hiring process knows Human Resources could use a healthy dose of it.
Rate are only a part of Logistics spend results. Your ability to improve or reduce transactions, improve flow (of people and material), and improved utilization of assets has a larger impact.
Technology Selections – March 2019
I was talking yesterday to somebody who used to work for me. He is doing a TMS and SCM system selection process. He is smart, disciplined, and doing a great job discovering even more of the deep secrets of the vendors in the marketplace.
It occurred to me last night as I was considering what shoes to take on vacation to a warm climate (and escape the snowiest winter in Minnesota on record!) the process is really the same. Some choices clearly wrong, some clearly right, and some in between.
Going to Mexico requires shoes entirely different than if I was going to Northern Minnesota to snowmobile. There is some cross over but mostly a entirely different need. What matters is choosing the right shoe (or boot) for the right need.
Choosing a 3PL, TMS, YMS, WMS, and any other 3 letter acronym is exactly the same thing.
My friend doing his search will result in a choice that fits him and his need. One of my clients chose a 3PL that is right for them but wouldn’t fit my other clients. Each have needs specific to them and it’s critical to fit the choice to the need. You can over buy as well as under buy.
Energy Treasure Hunts – February 2019
Have you thought much about energy?
Not your personal energy but what your operations uses for gas, electricity, and water? Have you thought such about it? Do you know what your spend is or do you just accept it as a given?
A Best Practice to follow are Energy Treasure Hunts. They are a structured and disciplined deep dive into your energy usage. Do you know that typical savings are 10%? What is that worth to you?
I have somebody available to spend the week with you.
Dangerous Sourcing Practices – February 2019
I want to follow on to a previous post. The concept of how people can buy is nagging at me.
When you are buying products and services many items come into play. The type of purchase, terms, Incoterms, indemnification, discounts, quality, lead times, payment types options, and on and on.
Too many buyers don’t have documentation for their purchase. If you received a discount for purchase you need a verification of why it was given. Print out the web page where it specified a volume discount or tear the catalog page out.
If the term EXW is used do you really understand the usage? I mean really understand it? Or is it just that the person before used it? Every time I deep dive the terms EXW and FCA the buyer is stunned at what they have done.
Did you even know I was discussing Incoterms when discussing EXW and FCA?
The closing of New England Motor Freight is another example of bad buying practices that can have serious implications. If you ship on LTL carriers they might give you a discount of 80% on the invoice. Do you have a tariff item or contract that says that? If not do you know you can legally be required to pay the discounted portion of the invoice at some point and have NO recourse?
Think of the company that used New England Motor Freight and accepted a 80% discount with no backup. If they spent $10,000 on freight somebody might just come back and demand they pay the balance of $40,000 with no documentation on discounts. The shipper will lose this fight unless they were following sound practices prior to this.
Do you really want to explain the $40,000 expense hit to your boss? How will you deal with your employee coming to you on a Friday night at quarter end with this fun news?
Of course I am marketing my services to you. I can help you be prepared for situations such as these. More than that I’m passionate about doing things like this right. I want you to buy the best service for lowest amount possible and feel safe about your choice. I’m not going to generalize the buyers practices but I am going to challenge you to satisfy yourself as to following minimum best practices.
You are betting your jobs on this you know.
Tough day for Northeastern LTL shippers – February 2019
with the announced shut down of New England Motor Freight (NEMF). You can expect stiff increases from the remaining LTL carriers. If you were a shipper with NEMF you best review your contract quickly and get legal advice on your discounts being protected in this bankruptcy. For real…. I’m not kidding. The lawyers who buy the estate will come looking for you just like the old days. As usual.. the small and medium size shippers are most at risk with the possible lack of effective contracts.
Carrier Limitations of Liability – February, 2019
Was chatting with somebody today on the Limitations of Liability in carrier contracts. Gave me a couple thoughts to share….
– If you don’t state a standard to work from in your contract you are bound by the Bill of Lading statement of limitations. I hope for you the need for claim doesn’t happen becuase you will be disappointed.
– You can negotiate the Limitation or level of coverage. It will impact your costs. You probably can’t have it both ways. Don’t expect the profit margin of your shipment to be covered unless you have a long-lead-time/engineered-to-order product and you contracted for it ahead of time…. and are prepared to pay for it.
Listen…. I know your boss is screaming at you to recover the invoice value for the shipment but unless you contracted that level you have better odds playing the lottery. Sorry… that’s the reality.
Don’t for a second believe the carriers won’t negotiate it. Don’t depend on them to “wink” take care fo you if needed. Be data driven and realistic on what you need coverage for and on. Insurance is an increasingly difficult and expensive buy for the carriers so go with data, go with resolve, and be realistic. Get it in writing.
Have questions? Let’s talk…. Douglas.Bley@LevLogRes.com
Freight Payment Provider Declares Bankruptcy – January, 2019
Yesterday the logistics world was again rocked by a long time partner in the Freight Payment world declaring bankruptcy. The clients who sent them funds to pay the carriers with will have to pay the again but this time direct to the carriers. Why not pay direct the first time? You do have options.
Have questions? Let’s talk…. Douglas.Bley@LevLogRes.com
Best Practices Assessment – December, 2018
One thing I have found always interesting when doing assessments is how everybody is doing “best practices”. You can’t ask a question that doesn’t have a positive answer to what an organization is doing. And then….. you ask for the evidence. Dig deep. A process, no matter how excellent it might be, is nothing without discipline and compliance. People confuse these assessments with a potential beating at the end. What they are trying to do is unearth opportunity and to be candid… it’s usually managements responsibility to help correct it through support and investment. How secure are you that your best practices are always being followed or just when you are looking? Have questions? Let’s talk…. Douglas.Bley@LevLogRes.com
Managed Solutions Expertise – December 2018
Learning is a life long process. I’m not telling you how old I am but you can guess by the color of my hair I’ve been in the Logistics industry for quite some time.
I’ve learned a lot in the this last year. Learned how fast the Logistics 3PL industry has changed its approach in serving clients.
I’ve learned that, while traditional brokerage is alive and well, the managed solutions providers are killing it with services and technology. Menu driven solutions, transparency, and great technology by the drink if you want it.
What have you learned this year? 🙂
Southern CA Logistics December 2018
Carrier management strategies are as abundant as snowflakes in a blizzard. Each one is unique and come together as a whole. The days of a 3-4 core carriers strategy aren’t over but do leave opportunity on the table.
You can find small/micro carriers in regions that do fantastic work at affordable rates. Especially with the explosion in the usage of TMS for rate management. Is Southern California a key market for you and you aren’t sure you have the right strategy? Do you want to see what intra Southern California opportunities you might have for LTL, TL, drayage, and cross dock?
Have questions? Let’s talk…. firstname.lastname@example.org
Using the USPS for Consumer Deliveries – December 2018
Do you sell and ship direct to consumers? Amazon is heavy weight competitor for sure. Do you know what they have done for you? They made shipping via the USPS not just OK… but a non factor. Today nobody cares about the color of the truck that brings the package. They just are tracking if they have received it when promised. Have questions? Let’s talk…. email@example.com
Rate Vs Spend Challenge November 2018
Have you found no answers to the current freight spend challenges yet? Notice I didn’t say “rate” challenge. Freight spend is the combination of many things including rate. Rate seems like the most controllable aspect and that isn’t always true. If your teams are properly managing the rate process you become subject to market swings.
A well-managed rate structure usually runs constantly towards the best rate possible. When the market forces move to a negative affect to shippers they feel it quickly but still usually have the best rates possible. So business leaders are then tasked with the question “Now what do I do if it isn’t my people?”
Process and technology. Choose to fund the TMS and Visibility tools they have been asking for. Be open to changing the service needs you have put to them. Recognize the Lean material flow through Milk Runs can often add costs while providing the benefit of reduced and predictable inventory flow. Improvement to process and technology pay dividends past the next rate cycle. They help mitigate the increases and compound the next cycle of reductions.
Have questions? Let’s talk…. Douglas.Bley@levlogres.com
Global Trade – November 2018
The implications of the Global Trade conversations are starting to hit home for many companies. As duty rates start to move I have a thought for the Finance teams who watch over Logistics and Supply Chain spend.
On most invoices for import freight the duty and taxes are added as a line to the Freight Forwarder invoice. I would urge you to ask to have them separated from the cost of the transportation invoice to a separate invoice.
You need complete clarity for the effects of these duty rates rising and having them buried in the transportation spend doesn’t let you do that. If you believe in Supply Chain Management and TCO you absolutely need to know the impact and if it will change sourcing and production decisions.
Challenging the Transportation team to overcome them won’t help you because they don’t control them. Your Transportation team only processes the invoice that has them on it. A side benefit to breaking duty out is that you can also consider negotiating extended payment terms for the transportation spend. Duty and taxes should be paid quickly to the company paying them upfront for you. Freight payment terms are negotiable.
Have questions? Let’s talk…. Douglas.Bley@levlogres.com
Y=f(X) In Logistics Oct 17, 2018
If you have been trained in Six Sigma process methods you know what that means. The “Y” is the function of all the input “Xs” combined.
In Logistics you can think of it as Y (Freight Spend) = f(x) are the inputs to the shipment. Weight, density, rate, distance, packaging, volume, and speed are all different variables you can assess a value to in calculating your Y. I think the biggest questions is do you know what your Xs are?
Logistics professionals spend a lot of time on the rate X question. Meetings, RFPs, market bids, conferences, and technology are dedicated to improving that X. In my opinion all that time is spent there because so few of the other Xs are in the span of control of the Logistics professional.
Stephen Covey in the time-tested missive “7 Habits of Highly Effective People” discusses at length the “Circle of Influence” and “Area of Concern.” Meaning there are things we control and are the masters of while many other things we are concerned about but accept as they are to focus on our influence.
In the context of traditional Logistics is that quite often the rate X is in the Circle of Influence and all the other cost drivers are in the Area of Concern. You are free to choose to accept the current circle as the only area you control. You are free to sit back and watch others influence your future by continuing to manage the other Xs.
Covey would say proactive people seek to expand their Circle of Influence. I would slightly revise that by saying Leaders seek to expand that. As the market now drives the rate X you need to, as a Logistics leader, seek to control the other Xs. Shipping once per day to a customer, managing the delivery to the expectations of a transit time performance and not the carrier name, improving pallet density, partnering with operations on product availability, partnering with Sales and Customer Service to set agreed upon service standards, measuring at a detail level carrier performance, and other process areas drive change.
More than that they put the control of your future back in your hands. You may feel pressure yet from the upper levels of the organization but an effective change management program let’s them know you are a leader. It also let’s them know where the root cause of not just spend failure is but possibly where customer unhappiness come from.
Be a leader. Be proactive. Be a protagonist and not an antagonist. Communicate change and drive it hard.
Being a Leader – September 2018
I shared this morning a parody on being the expert in the room and the eventual folding the expert did just to go along.
In the Supply Chain world there are so many new technologies available and the buzzwords are fun. They require something though that most of us never get work with. They require robust IT environments with fast and agile data structures. They require a commitment by the organization to embrace the technology and enable it.
I’m going to reach a bit and state that your Logistics and Supply Chain “experts” know the right thing to do. They are intuitive and learn the newest thoughts and strategies to make material flow better and faster.
Do you help them by enabling IT or do you force them to scale impossible heights with no budgets or capabilities? If your ERP is older than your newest intern and you expect global digital flow and the optimization of your Supply Chain then you might need to evaluate your priorities and expectations.
As Leaders be honest, candid, realistic yet challenging, and most of all be enabling. Enable people and enable processes. Enable strategy and recognize limitations. Celebrate people doing the best they can do with the tools you give them.