Cutting Transportation Cost –
Today’s Greatest Challenge?
by Mike Starling
What Is The Greatest Challenge Shippers Face?
According to the results of Inbound Logistics Magazine’s eighth annual 3PL Market Research Report, 66 percent of shippers and 82 percent of 3PLs said their number-one concern was “Cutting Transportation Costs.” WOW!
The report focused on “how 3PLs and shippers are connecting to confront existing challenges and capitalize on new opportunities.” The list included 11 areas of concern, but the only one that both parties agreed on was their number-one concern—Cutting Transportation Cost!
To give you some idea of the divergence of thought on these matters, here are some of the other concerns listed and their rankings.
SHIPPERS’ TOP THREE CONCERNS:
#1. Cutting Transportation Costs
#2. Improving Customer Service
#3. Expanding to New Markets
3PLS' TOP THREE CONCERNS:
#1. Cutting Transportation Costs
#2. Business Process Improvement
#3. Scaling Inventory to Demand
SHIPPERS’ BOTTOM THREE CONCERNS:
#9. Sustainability
#10. Security & Compliance Issues
#11. Reducing Assets/Infrastructure
3PLS' BOTTOM THREE CONCERNS:
#9. Expanding to New Markets
#10. Sustainability
#11. Vendor Management
Clearly there is a disconnect between the two parties when it comes to “Expanding to New Markets,” which ranked in the top three for shippers, but in the bottom three for 3PLs. Why would 3PLs not be better attuned to the priority of this shipper concern?
The other surprise is that the much-ballyhooed “sustainability” is a low priority for both parties. Neither party seems to see much benefit in investing time, talent, and cash in this area. Rather than invest in “sustainability” in this economy (unless they are forced to by government regulations), shippers are taking a survival-of-the-fittest stance and focusing on the most basic of basics (i.e., cutting costs).
So what is the take-away from this report? Shippers continue to be focused on expense control as it relates to helping company operating cash flow, and Transportation Spend Management continues to be a highly sought-after 3PL service that helps shippers to cut their transportation expenses.
To get the most bang for their buck, shippers would be well-advised to seek out 3PLs with multi-modal experience rather than those that limit their service offerings to a single mode (small package is the prime example). Doing so can pay huge benefits in helping a shipper quickly start realizing freight expense reduction in multiple transportation expense areas. AND doing so can also provide a high probability of exceeding their targeted savings goals in working to alleviating their number-one concern: “Cutting Transportation Costs.”
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