1. Best Practices Consortium
Supply Chain
Best Practices Consortium
Carrier Sourcing Strategies and
Empty Miles Collaboration
Executive Seminar
Track 3, Session B
September, 2006

2. Scope
This session covers strategies for obtaining carrier capacity when it is needed at a competitive price with service levels at or above a shipper’s requirements.
Modes: Truckload, LTL, ocean, dedicated fleets, air freight and parcel
Process: Bid packages, methodologies and tools
People: Your team’s skills, carrier involvement, third-party assistance

3. How Am I Doing on Rates?
How do my ocean carrier rates compare to other shippers?
We can be overly optimistic when assessing our sourcing successes.

4. Carrier Satisfaction Ratings
Carrier performance, the perception and/or the reality, is not particularly high.

5. Carrier Selection Criteria
Truck
Ocean
Air Freight
Parcel
On time performance
4.6
4.5
4.7
Rates
4.4
Transit times/reliability na
4.8
Financial stability
4.1
4.2
4.3
Capacity availability
3.9
Billing accuracy
3.7
4.0
Status tracking/visibility
3.6
3.8
Field operations responsiveness
3.5
Breadth of lanes offered
Proactive alerts
3.3
Insurance
3.4
Claims experience
Incumbent provider
3.2
Additional services offered
3.1
C-TPAT certification
Safety program
Billing detail/electronic format
Shipments rolled (rebooked)
Pickup and delivery hours
Flexible container release practices
Support for inland destination transit
Quality program
Specialized returns capabilities
Support for inland origin transit
3.0
Note: Importance is ranked on a scale of 1 to 5, with 5 being the most important.
Importance Ranking of Carrier Selection Criteria
Selection Criteria Importance
What are the most important criteria in selecting carriers?

6. Your Expectations What would you like to learn from this session?
Important issues?
What’s working? What’s not working?
What’s changing?
Shared good and bad experiences?
Reasonable performance expectations?

7. Potential Discussion Points
What are the top two or three factors in achieving a successful carrier sourcing outcome?
How do you measure the success of a carrier sourcing event?
How much technology support is required to effectively source carrier capacity? Which tools are the most effective?
How have rising fuel costs impacted your sourcing process, mode selections and fuel surcharge programs?
To what degree should carriers be involved in defining the sourcing process and fine tuning the outcome?

8. Potential Discussion Points (continued)
Are you using or considering capacity collaboration programs with other shippers? How do they work? Are they successful?
How do you determine what freight to include in a bid package? How do you identify opportunities to shift to more efficient and effective modes?
How important should incumbency be in awarding business? Should carrier turnover be limited? Who should you invite to bid?
How do you ensure that the carriers selected provide the best match of capabilities to your requirements?
Should you try to “time” the market (i.e. re-bid when there is excess capacity and rates are low)?

9. Potential Discussion Points (continued)
For ocean freight, when should you work through a global 3PL (i.e. freight forwarder) and when should you deal directly with carriers?
When should you seek outside help in carrier sourcing? What skills are important?
When does a dedicated truck fleet make sense? When should the fleet be outsourced?
How often should freight be re-bid? How many carriers should you invite?
Where do online auctions fit in the sourcing process? Significant? Growing or declining in importance?

10. Important Takeaways
While there are many carrier sourcing takeaways in Benchmarking & Best Practices, some of the more important are:
Bid scope – Include all of the freight that might reasonably be attractive to the participating carriers. Limit assumptions on appropriate mode, geographic scope and other criteria.
Bid package – Include only those requirements that are truly important. Understand the incremental cost of each variable.
Invited carriers – Broaden the invitation list to include strong niche players and highly rated carriers. Limit the total number to encourage “aggressive” responses.
Carrier involvement – Know what is important to carriers. Allow carriers to leverage their efficiencies to your advantage.

11. Important Takeaways (continued)
Relationships – Build trusting relationships with carriers through clear bidding rules, opportunities to ask questions (before and after) and objective awards.
Capacity and risk – Use multiple carriers on key lanes and diverse ocean ports, when not cost prohibitive. Ensure capacity guarantees, load acceptance policies and freight brokerage provide for adequate capacity during peak demand.
Processes and tools – An investment in the right skills, processes and tools is almost always worthwhile.

12. Questions?

13. Benchmarking & Best Practices References
Information on carrier sourcing strategies can be found in the following references:
Analytical Reports
Carrier Sourcing Strategies and Tools
Truck Transportation
Dedicated Fleets
Inbound Orders/International
Ocean Transportation
Executive Seminar Presentations
Effective Sourcing Processes for Logistics Services
Trends in International Supply Chains
Ocean Transportation -- Trends, Capacity, Congestion and Risk
Note: Available for downloading at
Reports and Analyses