Logistics Leadership Insights

There's a lot of the same pattern across manufacturers and distributors lately:

📈 freight costs climbing
💥 service slipping
🥷 accessorials showing up like that party guest nobody invited

So I’m kicking off a short video series on how I approach Transportation Network Optimization. You won't get to see exactly how the sausage is made, but I'll share some strategies I use to help companies achieve real savings and fix the problems nestled in their data.

This first video introduces the situation, while the rest of the series gets into the fun stuff: mode shifting, carrier strategy, scorecards, accessorial control, and a few stories from the field.

If you’ve been feeling the pain in your transportation budget this year, these next few videos are for you.

Shifting modes of transportation is an amazing way to cut costs without constantly brow-beating carriers over rate.

I helped a manufacturer shift modes on outbound freight lanes, resulting in 25% 𝐥𝐨𝐰𝐞𝐫 𝐟𝐫𝐞𝐢𝐠𝐡𝐭 𝐬𝐩𝐞𝐧𝐝, roughly $2M in annual savings.

Parcel volumes dropped from 15% of the total to 3%. LTL volumes were cut in half with FTL volumes doubled. This had the effect of drastically 𝐜𝐮𝐭𝐭𝐢𝐧𝐠 𝐝𝐚𝐦𝐚𝐠𝐞 𝐫𝐚𝐭𝐞𝐬 𝐚𝐭 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐭𝐢𝐦𝐞 𝐚𝐬 𝐨𝐮𝐭𝐛𝐨𝐮𝐧𝐝 𝐟𝐫𝐞𝐢𝐠𝐡𝐭 𝐬𝐩𝐞𝐧𝐝 𝐰𝐚𝐬 𝐩𝐥𝐮𝐦𝐦𝐞𝐭𝐢𝐧𝐠.

In a market where LTL and parcel are more expensive than they were at the peak of COVID and FTL has been flat for 2 1/2 years and counting, manufacturers have an 𝐢𝐦𝐦𝐞𝐧𝐬𝐞 𝐨𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐲 𝐭𝐨 𝐜𝐚𝐩𝐢𝐭𝐚𝐥𝐢𝐳𝐞 on an initiative like this.

All it takes is someone that has experience with this, knows what to look for, and that has the data chops. A current state analysis is an extremely 𝐥𝐨𝐰-𝐫𝐢𝐬𝐤, 𝐥𝐨𝐰-𝐜𝐨𝐬𝐭 way to find out if you're leaving money on the table in your transportation network.

More in the video.

More often than not, I see manufacturers running only one or two carriers. I posted a video series on supply chain resilience, and one of the topics was 𝐜𝐚𝐫𝐫𝐢𝐞𝐫 𝐝𝐢𝐯𝐞𝐫𝐬𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧.

Not only can diversifying your carrier base minimize the risk of a terminal outage, labor shortage, or service failure, but 𝐲𝐨𝐮 𝐜𝐚𝐧 𝐨𝐩𝐭𝐢𝐦𝐢𝐳𝐞 𝐜𝐨𝐬𝐭𝐬 𝐀𝐍𝐃 𝐢𝐦𝐩𝐫𝐨𝐯𝐞 𝐬𝐞𝐫𝐯𝐢𝐜𝐞 𝐥𝐞𝐯𝐞𝐥𝐬 to YOUR customers 𝐚𝐭 𝐭𝐡𝐞 𝐬𝐚𝐦𝐞 𝐭𝐢𝐦𝐞.

When I optimize a transportation network, playing that carrier diversification card means I'm using 𝐝𝐚𝐭𝐚 to pair each lane with the carrier that’s best suited for it, and identifying the best carrier for the lane involves additional tools that I'll speak to later in this video series.

Balancing both price AND performance is how you see 𝐠𝐚𝐢𝐧𝐬 𝐢𝐧 𝐎𝐓𝐈𝐅, 𝐜𝐨𝐬𝐭 𝐬𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲, 𝐚𝐧𝐝 𝐬𝐮𝐩𝐩𝐥𝐲 𝐜𝐡𝐚𝐢𝐧 𝐫𝐞𝐬𝐢𝐥𝐢𝐞𝐧𝐜𝐞.

I 𝐇𝐀𝐓𝐄 accessorial charges. They drain your budget. They dip into your margin. They 𝘢𝘯𝘯𝘰𝘺 everyone that has to see the invoice.

In many ways, they're 100% 𝐰𝐚𝐬𝐭𝐞. A waste of your time reviewing invoices to confirm they were accurate. A waste of your team's time trying to track down what went wrong. A waste of your hard-earned budget.

It doesn't matter if it's sea container 𝘥𝘦𝘮𝘶𝘳𝘳𝘢𝘨𝘦, 𝘥𝘦𝘵𝘦𝘯𝘵𝘪𝘰𝘯 𝘸𝘪𝘵𝘩 𝘱𝘰𝘸𝘦𝘳 at the dock, 𝘳𝘦𝘸𝘦𝘪𝘨𝘩, or 𝘳𝘦𝘥𝘦𝘭𝘪𝘷𝘦𝘳𝘺 charges. I hate them all, and I often feel like it's my life's goal to 𝐞𝐥𝐢𝐦𝐢𝐧𝐚𝐭𝐞 𝐭𝐡𝐞𝐦 𝐚𝐥𝐥.

Am I hitting a nerve here? Because it sure hits mine.

The beauty of accessorials is that they're often 𝐞𝐚𝐬𝐲 𝐭𝐨 𝐟𝐢𝐱, often with some much-needed process development or by implementing a system that you may have needed for a while anyway.

This video discusses some of the things I've seen on accessorial charges and touches on how I approach them in a Transportation Network Optimization project.

Freight damage is a highly misunderstood transportation cost.

I see a lot of focus on claims, packaging improvement initiatives, or discussion about who's liable, and all of this happens after the damage has already occurred.

Reactive rather than Proactive.

In my experience, damage is often upstream of that. It’s connected to how freight is routed, how often it’s handled, and whether the mode actually matches the product.

When you redesign the transportation network to reduce touches and unnecessary transfers, damage rates often improve faster than people might expect, and this can happen sometimes without changing the packaging at all.

I know a lot of these topics I've already touched on, but maybe you can see how a Transportation Network Optimization initiative can do more than just save a few bucks on freight costs.

This video breaks down how I think about freight damage through a network design lens.

Some companies 𝘩𝘢𝘷𝘦 carrier scorecards. Far fewer are 𝘢𝘤𝘵𝘶𝘢𝘭𝘭𝘺 𝘶𝘴𝘪𝘯𝘨 them to drive better outcomes.

𝐓𝐡𝐞 𝐩𝐫𝐨𝐛𝐥𝐞𝐦 𝐮𝐬𝐮𝐚𝐥𝐥𝐲 𝐢𝐬𝐧’𝐭 𝐭𝐡𝐞 𝐝𝐚𝐭𝐚. It’s alignment across the different organizations within the business.

If the chosen KPIs and weightings don’t reflect what the business truly cares about, the scorecard is just 𝐚𝐧𝐨𝐭𝐡𝐞𝐫 𝐮𝐬𝐞𝐥𝐞𝐬𝐬 𝐫𝐞𝐩𝐨𝐫𝐭; noise instead of 𝐚𝐜𝐭𝐢𝐨𝐧𝐚𝐛𝐥𝐞 𝐢𝐧𝐬𝐢𝐠𝐡𝐭𝐬.

For example, a business that manufactures fragile, high-value freight may assign a higher weighting to freight damage than a distributor that ships low-cost consumables.

Carrier scorecards work best when they’re built around intent. I custom-build my client's scorecards asking questions such as:

💡 What matters most to this business?
💡 What, within their logistics network, causes the most headaches?
💡 What carrier attributes are most valuable to this business?

You use a carrier scorecard to drive the desired behaviors out of your carriers, rewarding those that score higher and. . . you know what happens to the ones that don't perform.

When scorecards are designed that way, they stop being a reporting exercise and start driving real decisions, lane by lane, carrier by carrier.

As I always say, 𝒖𝒔𝒊𝒏𝒈 𝒇𝒂𝒄𝒕𝒔 𝒂𝒏𝒅 𝒅𝒂𝒕𝒂 𝒕𝒐 𝒎𝒂𝒌𝒆 𝒈𝒐𝒐𝒅 𝒃𝒖𝒔𝒊𝒏𝒆𝒔𝒔 𝒅𝒆𝒄𝒊𝒔𝒊𝒐𝒏𝒔.