Ask any transportation executive about the rising costs of shipping products and you’ll get the same response, “Costs continue to rise.” We cannot blame those charged with managing logistics for feeling put upon by what really feels like a deliberate, systematic attack on their profit margins. With costs rising due to increases in driver pay, regulatory requirements and infrastructure/equipment issues, supply chain practitioners are under the gun to find offsets or they risk contributing to their respective companies’ eroding profit margins. However, there is good news courtesy of TMS software providers. Here are three ways SaaS TMS offsets these rising costs.
Driver Pay – Transport Topics recently reported a 5.8% increase in driver pay during Q1 of 2014; a result of tightening capacity and short supply of available drivers. According to TT, quarterly driver surveys of more than 350 fleets revealed an average increase in trucking costs of about two cents per mile.
TMS Offset – With the cleansed, organized, transactional data collected by a TMS system and a world-class optimizer tool, a shipping organization can not only ensure the most competitive rates are being enforced for line hauls, but more critically, they can determine the most efficient routing, pickup/delivery scheduling and equipment utilization schemas to shave costs-per-mile (in most cases) in excess of the extra two cent premium currently being spent for every mile shipped.
Regulatory requirements – The much lamented HOS restart rules alone have taken a sizeable bite out of transportation margins earning widespread loathing among shippers. In individual states such as California where regulations governing emissions (like the current cap and trade scheme and mandates for updating truck refrigeration units) add costs to shipping in and out of these locales. Let’s not forget the E-log device mandate adding costs for carriers which must be passed along to shippers via higher rates.
TMS Offset – Accommodating the new HOS restrictions – particularly the restart rule – is a difficult puzzle which is next to impossible to solve without algorithmic assistance. A transportation manager is busy enough with tactical concerns of moving loads day-to-day, and is ill equipped to untie this Gordian knot. However, this type of “Tetris-esque” recalibration of schedules to optimize shipments and minimize the impact of tighter restart rules is absolutely achievable using a TMS and optimizer solution. In fact, there are few arguments in favor of such technologies more persuasive than this.
Infrastructure and Equipment Issues – For many shippers, particularly those leveraging private or dedicated fleet resources as a hedge against capacity shortages, fleet management is a labor intensive chore. Processes such as backhaul management, driver payroll and management, and equipment history logging require a significant amount of time to perform, especially if the processes are manual. For others, the freight yard is an unplanned cost center; an uncontrolled gap between their TMS systems and their WMS tools where time/money is wasted at gate bottlenecks and searching for trailers stacked up waiting to load or unload.
TMS Offset – The state of the art TMS platform delivers robust private fleet management functionality. While several leading TMS products today offer some features in this area, the vast majority are rudimentary at best. However UltraShipTMS delivers a fully mature private fleet management capability, tied into the TMS platform for exceptional control over both common carrier and private/dedicated fleet movements. Many TMS solutions also offer the YMS piece as well, as the industry grows ever more reliant on automation technologies to mine the savings from transportation processes needed to offset rising costs. Plus, a SaaS TMS eliminates nearly all of the infrastructure costs required to deploy an automation solution by leveraging the cloud instead of purchasing servers and other hardware required by non-SaaS solutions.