The freight market has settled into a sustained downturn that’s testing even the most established players. Spot rates have tumbled, while contract rates face relentless downward pressure, forcing logistics service providers (LSPs) to fundamentally rethink their business models.
In the face of these headwinds, today’s market leaders are carving out competitive advantages through a potent mix of technology integration and value-added services. As these LSPs transform themselves from traditional intermediaries into indispensable supply chain partners, what specific strategies are separating the winners from those merely treading water in this challenging environment?
Advanced technology and analytics is changing the perspective of what efficiency truly means. Emerging leaders are looking deeper into the supply chain to not only optimise traditional outlets of cost, but enrich deeper corners of the supply chain too.
An Incomplete Solution Stack
For major outsource opportunities, Third-Party Logistics (3PLs) offer a combination of inbound/outbound management, freight pay and audit, track and trace and, potentially, a TMS or WMS application. Together, and with the assistance of an optimising software, LSPs must hope that their package of the same key elements as all of the other candidates can somehow beat out the competition. Even if you win, it’s a losing battle when you consider carrier rate inflation and general rate increases (GRIs) that continue to plague the longevity of rate tariffs.
What is missing? A leading cost factor emerging in today’s supply chain environment has to do with the scarcity of equipment and detention charges. These are unplanned and uncontrollable by the 3PL as they still rely on either an outsourced warehouse operator or a customer to responsibly handle each piece of equipment. The average cost for inefficient handling of equipment annually at each site can run into the hundreds of thousands, offering a new lever for 3PLs to pull for shipper savings – but a lever that few use.
Add a Yard Management System (YMS) to the Mix
End-to-end visibility needs to be truly end-to-end to mean anything these days — and that includes the yard. While a WMS or TMS may offer surface-level tracking of trailers and dock assignments, to generate actual value and actionable intelligence, next-generation YMSs need to be added to the mix.
New YMS platforms offer an application-style user interface to take the guesswork out of rooting out inefficiency. Where cost used to be a trailing indicator for how the yard is managed, harnessing AI and machine learning in the yard can generate a proactive approach to cost with quantifiable savings. When added to the rest of your KPI metrics, you can build a highly compelling story of value for your customers throughout their relationship with you.
Alongside better cost management, an advanced YMS can help your customers conquer disruption. With SKU-level visibility in the yard, inventory can be quickly retrieved for a PO cut or a production line shutdown, avoiding customer penalties and an upset shipper.
How Much More Business Would You Win with Up To $200K In Additional Savings?
Disruption is here to stay, and LSPs need to become more creative than ever to not only win business but retain it. Shuffling the carrier mix and studying shipping patterns alone is not a viable solution to contend with a rising wave of complex headwinds and pressures that supply chains are facing today.
Intelligent YMS applications offer real-world, reliable control for shippers and can be easily added to any outsource deal as a leading savings initiative. With full integration with WMS, TMS and RTTVP platforms, it seamlessly exchanges information for deeper insights and analysis across the entire supply chain while putting you at the front of consideration for shippers.
Author: Tyler Nickel, Director, Product Marketing, FourKites
