Opinion: Reducing Shipper Transport Costs

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B>By Robert J. Masters

I>Senior Vice President

anna Distribution Services

Reducing transportation costs is a never-ending task for shippers, whether they move goods by truck, rail, air or sea. An essential, though often neglected, companion to that statement is the phrase “without compromise in service.”

To reduce costs by sacrificing service levels requires no great skill. Lowering costs while maintaining the highest service standards, though, is the mother of all challenges. Meeting this challenge continues to define our $1 trillion per year worldwide surface, air and ocean freight transportation industry.

Before the start of this century, moving cargo was a relatively straightforward matter. About the only decision the traffic manager had to make was using truck or air to ship his company’s products. Today, options available to the shipper are far more numerous and complex. Once-easy transportation decisions have morphed into difficult logistics judgments.

Shall I move goods by pure truck, pure air or a combination? Is overnight worth the cost or should my merchandise by delivered on a deferred, yet time-definite basis? Should I opt for just-in-time deliveries with minimal inventories or should I be more cautious and retain greater amounts of freight in case of a man-made or natural disaster?

Even age-old concepts of geography are shifting. Consider an international shipment bound for Buffalo, N.Y., from China. In the past, that shipment most probably would have arrived at the Port of New York after an ocean voyage and then been trucked the remaining 400 miles to upstate New York.

Today, that shipment might land in Seattle — 2,500 miles from Buffalo — where it would be picked up by truck and driven across the United States.

Why? Because the way domestic traffic is evolving, it probably is cheaper and faster to land at a West Coast port and then finish the journey by truck.

The trucking and air-cargo businesses reflect our deep-rooted restlessness. Shippers change forwarders. Forwarders alter trucking lines and air carriers with the speed of summer lightning. These changes are almost equivalent to a game of musical chairs. But do they result in genuine, improved efficiency, higher productivity or cost savings? My answer to these questions is that splendid Scottish judicial phrase — “not proven.”

We all want lower prices, such as lower ticket prices at the local multiplex. We want to view a $100 million action film for less than the outrageous sum of $11.50. We want lower housing prices — but four bedrooms, three baths and a big backyard are an absolute minimum.

Transportation is no different. Like Voltaire’s Dr. Pangloss, we want the best of all possible worlds: high-quality service at low prices.

an we — forwarders, truckers and air carriers — perform this transportation miracle? I believe we can.

But miracles just don’t happen. Finding the Holy Grail of reduced costs and high service levels requires total commitment to the customer combined with gimlet-eyed attention to every expense over, under and on the company’s books. A miracle calls for never taking a customer for granted.

It means you never are “out to lunch” or “in meetings” when a customer calls.

It means striking a balance between working in an atmosphere of mutual trust and integrity with your trucker or air carrier, but also remaining sufficiently independent to commit freight elsewhere if circumstances dictate such a shift. It calls for no “pledge of allegiance” to any one carrier, but primary loyalty to the customer.

Too often forgotten in this age of computers, advanced supply chain management systems and reliance on electronic transmission of data is the personal touch. Successful forwarders never forget that trucks and planes don’t deliver freight. It’s people. A friendly, human voice on the other end of the telephone with accurate, real-time information about a shipment offers far more aid and comfort to a shipper than a thousand pieces of Internet-generated paper.

Finally, there is a question central to the entire topic of costs and service. Containment of costs and superior levels of service must ultimately rest on the relationship between shipper, forwarder and carrier. Is it one of cooperation and a sense of partnership, or is it adversarial and combative?

Today’s complex logistics environment calls for a genuine spirit of harmony among all participants. Each must have total confidence in the others’ integrity and sense of responsibility. All must ensure the job will be accomplished and the delivery made whatever the obstacles.

Forwarder and carrier must attempt to reach that ultimate goal of creating a transport system suited to the individual shipper.

Our business is not merely moving merchandise between Point A and Point B. What once were simple transportation systems have now evolved into the complicated world of logistics.

Each of us has a serious responsibility to analyze every procedure and seek out every method for controlling costs. Armed with this knowledge, we then are in a position to create an alliance with shippers that will offer efficient service levels combined with realistic pricing.

Manna Distribution is a midsize domestic and international freight forwarder based in Mendota Heights, Minn.

This story appeared in the July 12 print edition of Transport Topics. Subscribe today.

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