LTL vs FTL vs Amazon

Warehousing is a constantly changing branch of logistics. A four walls and a roof approach to handling freight has the opportunity to make better and more informed researched decisions to be more profitable than trucking. Dr. John Langley, professor at Pennsylvania State University, said today’s 3PL providers and shippers are becoming more proficient at what they do, individually as well as together, which is improving the quality of their relationships**

“The 3PL industry continues to deliver value, savings and efficiencies by collaborating closely with customers and adjusting to rapidly changing economic conditions, business challenges such as capacity and talent shortages, as well as consumer online shopping needs that demand new and agile supply chain and fulfillment models,” he said. **

Trucking in general isn't keeping up as well. O/O and small companies are more reluctant than ever to get into the monster of LTL and it is stunting their growth. The FTL transportation part is still very reliant on load boards, fax machines, and paper agreements whereas the warehouse and 3pl part are taking orders online and getting them where they need to go in 24hrs or less. I keep reading where trucking is dying, no drivers, no freight. This is an understatement. However no door is closed without a window opening. This move from Warehouses and Amazon in particular to LTL, (piece by piece LTL) will force the industry to keep up. 

I believe this time next year, companies will be forced to consider LTL as a major contributor to base revenues. There will be more regulations for non commercial delivery vehicles, I.E. Shipt, grubhub. As the on demand delivery required by the millennial generation is a force to be reckoned with. 

-J

**http://blog.gopenske.com/logistics/3pl-industry-shows-growth-and-focus-on-relationships-innovation/

What I Have Learned 12 Months Into Transportation and Logistics.

     When someone said the phrase 'Transportation and Logistics' before starting with Wells, I would think of a crusty old man in an '18 wheeler' cutting me off on I-65 southbound in Nashville TN. If you are at all familiar with Music City, I-65 South is no place to be... There is one lane and there are five lanes. It just depends how close to downtown you are. Needless to say I wasn't very fond of one of the most important professions in the world. Wait, the most important? Initial thought is well, a doctor would be most important... right? They keep us alive? How do supplies get to that hospital? A truck. Any way you look at it, without those guys we wouldn't have milk on the shelf, or gas in the car. 

     Yesterday (Sept 23rd 2015) was my one year anniversary of starting my career in transportation. Thinking back over my tiny year in this industry I can name three of my favorite, or most important, or just plane dumb lessons I have learned. 

1. Time is money... Literally

     How many times have we heard the phrase? Initially the thought is 'Well, I'm paid by the hour, so time must be money.' Shortly after taking up shop at my one drawer desk, where I was sharing a stapler (and nearly a pen) with the girl next to me, I started to see that literally when the hands of the clock move money is either being made or spent, EVERY time. I also saw that the side of the fence of which you fell determined if you were getting a lunch that day.
     In transportation, time, specifically how many hours are left in HOS regulations, determines how long the wheels can turn. Traffic determines if you are making the delivery in time to invoice it that day. Lastly, making that delivery time determines whether or not there are enough temps to unload your truck at that warehouse. If not, the driver sits. The wheels don't turn and you are on the wrong side of the fence. You spend $200+ on an idling truck you pay the driver a layover of $100+ (not including the hotel) and you miss your $2000 dollar reload. You could be asked to Cross-dock the freight at $50 per hour or $10 per pallet if you really need the truck... That being said you basically just moved the freight to its initial receiver for for less than $1000 instead of the $1500 you booked it for. Lord knows that the broker isn't going to ask HIS customer for the expense, after all it was YOUR fault you missed the appointment. Fair enough.  
     Lets talk about the good part. The wheels are rolling, there is no traffic or a break down, you make the appointment, the driver faxes in the bills. (Thats right folks, not only does our entire ecosystem rely on diesel but it relies on paper and telephone lines.) With the POD you are able to invoice the load for $1500 bucks paid same day for a 2% reduction. Plus, the driver gets your $2000 reload therefore you don't pay layover, cross-dock, or idle time to the truck. That is the right side of the fence. Time is money. You just have to bank more a minute than you spend a minute. Sounds simple?

2. Space is money...

     A 53ft dry van has 500 sq. ft. Think, most freight is moved 500 sq. ft. at a time. That isn't a lot at all... in the warehousing branch of this whole industry 500sq. ft. can net you maybe $250/ mth of sitting freight, on the flip side that same space can bring you $10,000+/ month when rates are up. Its all in where the space is and how accessable. Remember that word I mentioned earlier? Cross-dock. That word can make you money with stationary space. Almost double than just holding the freight. Still less than delivering it. It is a toss up in my mind whether or not the moving 500sqft is worth more than the 4 walls and a roof 500sqft. Sitting still certainly cost less, but you are capped. So what is the other determining factor?

3. Cheap fuel doesn't mean big profits for small fleets...

     The other determining factor is the fuel factored into the operating costs. Sure, when fuel is $4/gal it hurts but it hurts worse when it is $2/gal. I don't know the statistics but, I would bet a paycheck that more small fleets drop out when fuel is as low as it is now than when it is at its highest. Customers know fuel is low and unless they are familiar with the day-to-day cost of turning wheels, then you can bet that they want their freight moved by santa and his reindeer for free-er than free and with a smile on his face. That being said when I hear that raw fuel is dropping, unlike most who rejoice, I have conditioned myself to shed a tear thinking of the owner-op who is losing it all due to politics and needy customers. Don't get me wrong I am all about customer service, but my philosophy is becoming closer to: I may charge a dollar more than others but your service won't differ when the rate is high as when it is low. I will truly provide, with a smile on my face, knowing that servicing you isn't putting another guy out of business. I will also quote you the same if the fuel is high and when it is low. Is that the best way to do it? Hell, I don't know, I'm only a year in. 

I hope it is obvious that this particular post is purely personal opinion of personal observation.

-J