Shipper/Carrier Network Strategies

Purpose of Network Strategies Shipper Strategy –Purchase/Manage transportation services to meet customers’ needs Carrier Strategy –Use resources efficiently to provide economical & efficient service to shippers –Maximize return on deployed assets

Aspects of Shippers’ General Strategy Proactive management Improve information flow Limit the number of carriers used Carrier negotiation Contracting Review private trucking

Aspects of Shippers’ Small Shipment Strategy Consolidation Pooling services –Charge shipper lower volume rates from one origin to one destination –Drayage firm used to separate & deliver individual shipments Stopping-in-Transit services Avoid private trucking

Aspects of Shippers’ Bulk Shipment Strategy Contracts –Long-term agreements with carrier in which shipper agrees to provide minimum freight loads Balanced loads for carrier –Loads into and back out of a particular facility Partnership

Traffic Management Performs all the activities necessary in the acquisition and control of transportation services for the firm, including:  Ensuring quality  Obtaining the best price  Developing specifications  Determining transportation supply sources  Negotiations with supply sources  Inspection and assurance of quality  Properly timing shipments  Analyzing the value of alternative methods & sources  Capital analysis  Engaging in make (private transportation) or buy decisions  Analysis of legal & regulatory constraints  General management

Traffic Management: Transport Selection Decision Process 1.Identify transport goals 2.Select the mode of transportation to be used based on:  Service characteristics of each mode  Cost of each mode 3.Select the specific carrier; again based on:  Service characteristics of each carrier  Cost of each carrier

Traffic Management: Factors Impacting Mode/Carrier Selection  Transport Cost Rates charged for main carriage Charges assessed for ancillary services  Transit Time & Transit Time Reliability Transit time impacts level of inventory held & inventory carrying costs Transit time reliability impacts inventory levels (less reliable require more inventory to avoid stockouts)  Accessibility Ability to provide direct service from/to specific locations

Traffic Management: Factors Impacting Mode/Carrier Selection  Capability Ability to provide unique transport services & equipment  Security Damaged or lost shipments have the same impact on inventory & stockout costs as unreliable transit time

Line Aspects of Traffic Management  Shipment Planning Shipping schedules must be coordinated with purchasing, distribution, & production  Carrier Selection Selecting the actual carrier to be used  Ordering Service Working with the carrier firm’s dispatcher to actually schedule the transportation  Expediting/Tracing Keeping track of the shipment progress

Line Aspects of Traffic Management  Preauditing/Rating Determining the proper freight charges for a shipment Doing so prior to carrier billing allows avoidance of carrier over/under charging  Auditing/Paying the Freight Bill Checking the accuracy of the bill & remitting payment  Detention/Demurrage Processes Detention is charge assessed by motor carrier for keeping equipment for un/loading beyond specified period Demurrage is the same, but is for rail carriers

Line Aspects of Traffic Management  Claims Filing claims for loss, damage, or delay of shipments Motor & Rail carriers are responsible for all losses, damages, or cost of delays except when due to: An act of God An act of a public enemy An act of a public authority An act of a shipper Natural deterioration of the goods  Private Car & Truck Fleet Management  Transportation Budget Management

Staff Aspects of Traffic Management  Mode Selection  Monitoring Service Quality  Service/Supply Assurance  Negotiations  Regulatory Matters  Policy Matters  Planning Annual Transportation Requirements  Budgeting  Information Systems  Systems Analysis  Management & Executive Development  Traffic Department Human Resources Management