We recently checked in with SemiCab Chief Community Officer, Jagan Reddy, to pick his brain on the importance of becoming more strategic about transportation, and how becoming more proactive can help companies thrive despite the market’s continuing volatility. This is what he had to say.
The Ukraine war is wreaking havoc on US gas prices. Last week, diesel prices hit their highest mark of all time, ringing in at nearly two full dollars more per gallon than prices in May 2021.
What will all this mean to your annual transportation spend?
Nothing - IF you get more strategic about transportation.
Before you call me crazy, let me explain.
The transportation industry, as it stands, is full of waste. If you can eliminate even a small percentage of that waste, you can dramatically lower your transportation costs.
I’m currently working with an American multinational consumer products company. The way they serve customers and consumers is extremely important to them. These days, customer expectations are driving the need to place distribution centers (DCs) closer to the customer. As such, new distribution networks are popping up every day. This consumer products company recently built a new DC on the east coast to improve delivery timeframes to customers in the surrounding region. One of their customers is located just 18 miles away from the new DC.
When I first met with this consumer products company, I felt confident I could help them improve their efficiency in serving all their customers, especially the one located in their backyard. What we needed to get started was an idea of the projected deliveries to this customer for the week ahead. My client explained that they could not provide this information as they only received notice on what to deliver to this local customer the day before. They receive forecasts for what will be purchased for the month ahead and have an idea on the dollars being spent and overall number of orders, but that information isn’t translated into the number of loads they will need to ship per week.
This type of communication means there’s absolutely no predictability and no ability for both parties to get strategic about shipping. Efficient transportation needs actionable data so the right amount of labor and the correct number of trucks can be readily available when needed.
Here’s what’s happening today:
- Consumer products company receives notice of required deliveries in various windows - some arrive in as little as 24 hours in advance
- Multiple shipments are scheduled to deliver these orders as notifications come in
- In reality, 1 truck could make 4 of the required deliveries - but because the consumer products company didn’t have visibility into all the required shipments for the given day till the day before, multiple trucks have been scheduled to pick up and deliver loads to multiple endpoints
I ask you - given the opportunity - would you like to have 1 truck delivering 4 loads for a total of $1500 or 4 trucks delivering 4 individual loads for a total of $1500 x 4 = $6000.
It’s time for someone to step up and orchestrate collaboration between shippers - carriers - and the customers receiving the goods. And that is what SemiCab is here to do!
It’s not going to happen overnight, but we are currently working with our client and their customers to gain more visibility into predicted shipments across their combined network. We will analyze opportunities to create more efficient delivery routes and secure dedicated capacity (at set rates) to deliver shipments. By combining the ability to predict daily load volumes and a bit of strategic planning, all parties will pay less for more reliable service.
With the aforementioned numbers in mind, if this client is able to combine just 4 shipments a day into 1 for 30 days, they would save $135k per month on transportation. My guess is we will be able to create multiple load improvements saving the client 3 to 4 times that amount per month or $405k-540k which adds up to $4-6M per year! Imagine what they and their customers could save if we had the chance to optimize deliveries across their entire network. That’s our plan.
As you can see, the savings cancel out the cost of rising fuel and then some. Bottomline is, there are many ways to make handling freight more efficiently. One is through multi-enterprise collaboration. The SemiCab platform orchestrates much-needed collaboration to set up shipments and loads in a more predictable manner, giving you the freedom to plan how and when you grow.
If you’re looking to become more strategic about transportation, let’s talk.