This week, John Larkin, managing director of Transportation Equity Research at Stifel, and Ben Cubitt, senior vice president of Consulting and Engineering at Transplace, presented a webinar entitled, “Freight Accessorials – Augmenting Revenue While Covering Rising Costs,” which offered participants some great insight into shippers’ thoughts and actions in 2014.
Below are KSM Transport Advisors’ (KSMTA) solutions to two of the key points made in the presentation:
- Transplace has conducted 22 bids for truckload services on behalf of its customers so far in 2014. Savings accruing to shippers are still averaging 2%-3%, relative to the prior 12-month period. Most of the reductions currently are derived from Transplace’s ability to match freight lanes with carriers most suited to efficiently haul freight in those lanes.
KSMTA has built our Freight Network Engineering practice around this specific point. Our clients’ goal is to maximize the margin generated by the entire freight network, not maximize the margin on each and every load. We believe it is impossible to achieve this level of pricing sophistication without a strong freight network strategy and a toolset; our clients use the TMW IDSC Netwise® product combined with our Freight Network Intelligence Platform and Freight Network Engineering Process to provide pricing sophistication, and most importantly confidence.
- Fuel surcharge programs are “all over the map.”
KSMTA certainly sees this same phenomenon in our client carriers’ data. This trend has required us to shift away from the paradigm of analyzing only linehaul rates when comparing client carrier rates to outside rate indices or when comparing rates internally within a shipper’s network. The result of the trend is that the amounts being paid for linehaul and fuel surcharge (FSC) are effectively reclassified and dollars are shifted from one bucket to another; the end result is that carriers can no longer confidently compare linehaul rates. KSMTA utilizes a new metric linehaul + FSC when comparing rates.
To learn more about our trucking assessments and trucking consulting services, contact KSMTA today.
About the Author
David Roush is president of KSM Transport Advisors, LLC, part of the Katz, Sapper & Miller Network. With 30-plus years of experience, David’s focus includes freight networks, financial management, operational metrics and optimization strategies. Connect with him on LinkedIn.
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Freight Accessorials | Trucking Revenue | Trucking Profitability