How better technology strengthens LTL efficiency and relationships
Authored by SMC³ on May 3, 2022
Over the years, LTL efficiency has changed, not just in how we pursue it, but how we define and measure it. We have more elements to measure, and more sophisticated ways of measuring them.
In an SMC³ LTL202 educational session “LTL Operations from Dock to Stock”, AAA Cooper President & COO, Charlie Prickett, joined LTL transportation executive TJ O’Connor to trade stories of how LTL efficiency has been redefined over their careers and what carriers should be doing to improve LTL efficiency.
What makes LTL efficiency such a big priority?
With experience in national carrier operations, O’Connor emphasized the impact of deregulation and increasing consumer demand on LTL efficiency. For one thing, the physical structure of their networks has changed: Deregulation meant more competition; competition meant lower costs for consumers; lower costs meant decreased revenue. That led to fewer and fewer terminals per carrier and more strategic considerations of region, distance and loads between those terminals.
O’Connor said that consolidation – driven by trickle-down effects of deregulation like concentration of terminals and increasing customer demand – has “necessitated better efficiency” as carriers seek to do more with less. In recent years – particularly since the pinch of the COVID-19 pandemic and the resulting stress on the supply chain – the LTL industry has responded with innovations of its own to handle operations faster and more efficiently, from the purely technical to the broadly strategic.
The tools and relationships LTL carriers can leverage to improve efficiency
Most of the tools LTL professionals have begun using since deregulation were conceived specifically to improve efficiency.
“Technology has facilitated and been a catalyst for efficiency because it allows carriers to do a better job of planning,” O’Connor said. “They’re figuring out what shipments they’re going to get from a customer sometimes days before they actually have it tendered to them.” Technology has made much of LTL more efficient, from planning, routing and P&D to collections and administration:
- APIs are replacing EDI as the fastest way to transfer information between shippers, carriers, 3PLs and TMS providers, ensuring clear and timely communication, fewer missed deadlines and less mix-up.
- Transit-time intelligence tools like SMC³ CarrierConnect® XL allows carriers to add day-of-week scheduling to control pickup, delivery and freight movement for each day of the week.
- Procurement tools like SMC³ Bid$ense® help simplify the RFP process, including a standardized tool for bid analytics and the ability to receive procurement requests and reply in one place.
In the best case, operational technology supports strategic relationships
Of course, even with the many efficiency-enhancing tools available, there’s still a human element to every shipper/carrier engagement. In Prickett’s experience, there have to be “multiple levels of relationships” between a carrier and the shippers they work with:
- Senior-level relationships that determine the strategic direction of an engagement
- Transactional relationships to set and negotiate the granular terms of a deal
- Operational relationships to keep things moving
“What we’ve found is that, for most customers, the relationships that have become mutually beneficial have those three layers of relationships,” Prickett said. “We can dial in on what the customer’s strategies are, and we can translate that for our organization.”
Shippers need information and visibility about their shipments, but they might not understand the basic operational realities of LTL from a carrier’s perspective – the challenges, issues and material realities that can delay shipments and hold back productivity. The added complexity and business of today’s LTL shipping engagements means that the less a shipper knows about LTL, the greater the opportunity for misunderstanding and miscommunication. “One thing that always struck me was the lack of information that a lot of shippers have about their own business,” Prickett added.
To that end, both specialists said it behooves carriers to stay in touch with shippers, explain the operational logistics of LTL to their shippers and even invite them to their terminals once in a while.
“Visiting a dock gives you a much greater appreciation for the complexity of the dock operation,” O’Connor said. “The appreciation to understand that this trailer is going from Pennsylvania to Miami, and it’s a three-day point, and it’s going to leave at this time, and we’ve got to make sure it’s full and properly loaded … that’s how you maximize revenue per trip and reduce cost per trip.”
“Delays at a warehouse aren’t uncommon, but if you quantify it for your relationship, it becomes more tangible and much more productive,” Prickett added. “It’s really part of the trust factor we have. Once they start seeing the world from a little bit different perspective, they become more cooperative, because they want to succeed, and we want them to succeed.”
LTL operations are likely to get more efficient as technology – from the tangible tech inside an LTL truck to the efficiency-increasing systems that plan their operations – moves from responsive to predictive. But as long as transportation remains a person-to-person business, it’s all going to be in service of improving the relationship between supply and demand.
“From my perspective, the primary way to build and maintain relationships is through collaboration and communication,” O’Connor said, including mutual evaluation from shipper to carrier and vice versa. “With the information systems that are available, they become extensions of each other’s organizations.”
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