David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
It's a tangled web we weave when we practice nationwide distribution. A map showing the transportation routes traced by even a single good-sized company's shipments day in and day out could quickly become an undecipherable maze. Open up additional distribution channels, and the picture gets even more complex. Given all the confusion, what assurances do you have not only that your products moved from origin to destination, but that they did so in the most efficient and reliable way available—time and time again?
That was the dilemma faced by Lifeway Christian Resources. The Nashville-based publisher and book distributor, which is owned by the Southern Baptist Convention, delivers 188 different magazines, along with thousands of books, gifts and other materials, to 124 Christian book stores it owns nationwide. The company also distributes through business-to-business (B2B), business-to-consumer (B2C) and international channels. Its two distribution centers in Nashville handle some 14,000 SKUs, with about 500 new products introduced each year.
Prior to last October, the company generally opted for convenience over cost. It shipped 76 percent of its products via parcel service (which is about the most expensive way to ship short of air express), 12 percent via LTL and 12 percent by other modes, including full truckload. But all that changed in October, when it installed a transportation management system, or TMS, from Irista. Today, the balance has shifted markedly. Lifeway has dropped its small parcel shipments to 55 percent of the total, and it now moves 35 percent via LTL and 10 percent via other modes. The result? During the first three months the software was in use, transportation costs dropped a whopping 14 percent.
Not surprisingly, that translated to a speedy return on investment. "The software package paid for itself in just 15 weeks," reports Randy Brough, the company's supply chain manager. "Our old ERP system was leaving $1.5 million on the table compared to now." He attributes the savings to the TMS's capabilities for carrier selection, rate shopping and load building.
Today, when an order is released, the system looks at customer data programmed into the system and compares the customer's requirements to continuously updated carrier information. At that point, it begins to build loads and routes based on orders being processed. The system also has the ability to consider delivery preferences for each store or receipt point, which enhances the customer services offered. An electronic manifest is automatically sent to the customer.
The TMS also handles international shipments, producing customs and other documents required for global trade. On top of that, the company reports that the Irista TMS software integrates nicely with Lifeway's Vista ERP and SSA Global warehouse management system.
As for the future, Brough says he will soon begin using the TMS for freight auditing. He also expects to push his inbound transportation through the system later this year, which will bring even greater savings.
All-purpose tools
While no one TMS system can do everything—some are domestic specialists, others international, and many target specific business verticals—collectively the systems offer the opportunity to optimize operations, reduce labor and improve customer service. Transportation management systems, developers claim, can help companies select carriers, manage internal fleets, provide route management and create visibility. They can also audit carrier performance, perform manifesting, produce customs and other trade documents, and navigate through the security issues of post 9-11 commerce. And that's just for starters. Think of TMS as the Swiss army knife of supply chain software.
By far, the most important benefit of a TMS system is what it does for the bottom line. "Transportation costs are 5 to 10 percent of total sales, so customers are increasingly looking beyond the four walls to gain efficiencies," says Kara Ashby, senior consultant at Sedlak, a supply chain consulting firm located in Richfield, Ohio. "They are looking to get the fastest possible transportation at the lowest cost."
"The more you spend on transportation, the more compelling a transportation management system can be," adds John Blanchard, director of transportation services for ESYNC, a consulting and engineering firm headquartered in Toledo, Ohio. "Payback on a TMS is usually less than two years, and often between six months and a year."
when does it make sense to look at a TMS?
Your annual transportation expenditures exceed $20 million or account for 7 to 10 percent of all expenditures
You regularly ship via more than one mode of transportation—LTL, parcel or truckload
You have problems with accuracy or on-time deliveries
You have compliance issues or simply wish to improve customer service
You ship to numerous international destinations that require customs and other documentation
You do not fully use your transportation assets
Help with the match game
Not surprisingly, the early adopters of TMS have been companies in the business of transportation, where the benefits are most obvious. Take Schneider National, one of the largest providers of logistics services in the nation. Schneider, based in Green Bay, Wis., relies on homegrown software systems to manage its fleet of 14,000 tractors and 48,000 trailers. It also built its own warehouse management system (WMS), so integration was performed internally.
The systems are also designed to link to Qualcomm satellite tracking systems in the carrier's trucks.
"As a third-party logistics provider, our role is to match the right driver with the right load at the right time and at the right price," says Vava Dimond, vice president of product management. "We have to understand our shippers' needs, our capacity issues, as well as know the load parameters."
Besides using the TMS system for its own fleet, Schneider also contracts with several hundred owner/operators to move freight. It makes use of its TMS to perform planning and optimization. It includes Web-based tools that allow the contracted carriers to update their rates and vital shipping information, as well as bid for jobs.
Among the more recent fleet tasks that the TMS has helped Schneider manage are adjustments based on new hours of service rules. Dimond says the company's systems capture all of the data necessary to comply with the new rules. Those rules, which restrict the number of hours a driver can work at one time, have proved challenging for both carriers and shippers, requiring changes in routing and scheduling that almost demand robust systems to manage.
"The transportation side can be very manual," adds Dimond. "If you can properly capture data and then manage it, you can create significant savings."
No more missed opportunities
Like carriers, third-party logistics companies have looked to TMS to buttress their other IT systems. Third-party service provider Exel, for instance, chose G-Log's GC3 software for fleet management, routing for road and rail, and for freight forwarding applications. This Web-based system processes 6 million shipments each year. Currently, some 45 client companies with 6,000 total users log into Exel's G-Log system.
"Our customers see us as managing their whole supply chain. With our TMS, we can offer savings to our customers through optimizing their transportation," says Martin Neil, vice president of global solutions.
As a global player, Exel finds there's an advantage to having a Web-based system that can be accessed from anywhere. Exel's customers enjoy real-time visibility and event management capabilities worldwide. The system also operates in multiple languages.
Web-based systems such as G-Log's represent a growing trend in the TMS space. Whereas Exel hosts its G-Log software on its own enterprise, many software providers like G-Log also serve as application service providers to give clients "ondemand" access to the software. In this model, the software lives on the software provider's servers instead of tying up the client's hardware and IT staff, as occurs under an enterprise-based model. The on-demand approach has its advantages. It provides a centralized depository for data and offers high-security, multiple backup locations, high bandwidth and continuous product upgrades. This model is well suited to companies that prefer to outsource functions that are not core competencies, such as transportation management. It can also be less costly for businesses not prepared for a full blown implementation.
Another third-party service provider that has put TMS to good use is Coopersville, Mich.-based Foreway Management. Foreway, which operates no equipment of its own, places staff on-site at its customers' facilities to coordinate and then expedite their shipments. Among current clients are Bissell (the vacuum cleaner folks) and a South African paper producer that has warehouses in the Upper Midwest.
A TMS has made a world of difference to Foreway, says CEO Pam Hassevoort. Before the company acquired its system, it used less-sophisticated optimization software that required a great deal of human intervention. "It was just too labor intensive and we were missing many opportunities for savings," she says. "The loads we were building tended to be too large. Our margins were going down even though our volumes were going up."
Hassevoort realized that hiring more staff wouldn't solve the problem; the company needed a better way of building loads. In January, Foreway went live with RedPrairie's TMS suite, which includes modules that provide carrier selection and routing, load tendering, lane assignments, manifesting and performance metrics. It also allows visibility for both clients and shippers.
"Our customers can now do their own track and trace," reports Hassevoort. "Also, we used to have one of our staff people making phone calls to verify that a load was delivered. Now carriers can go into our system and report back to us."
It's not just more efficient; it's cheaper too. Hassevoort projects cost savings of 13 percent on loads tendered to carriers.
The way that shippers and carriers classify loads of less than truckload (LTL) freight to determine delivery rates is set to change in 2025 for the first time in decades, introducing a new approach that is designed to support more standardized practices.
But the transition may take some time. Businesses throughout the logistics sector will be affected by the transition, since the NMFC is a critical tool for setting prices that is used daily by transportation providers, trucking fleets, third party logistics providers (3PLs), and freight brokers.
For example, the current system creates 18 classes of freight that are identified by numbers from 50 to 500, according to a blog post by Nolan Transportation Group (NTG). Lower classed freight costs less to ship, ranging from basic goods that fit on a standard shrink-wrapped 4X4 pallet (class 50) up to highly valuable or delicate items such as bags of gold dust or boxes of ping pong balls (class 500).
In the future, that system will be streamlined by four new features, NMFTA said:
standardized density scale for LTL freight with no handling, stowability, and liability issues,
unique identifiers for freight with special handling, stowability, or liability needs,
condensed and modernized commodity listings, and
improved usability of the ClassIT classification tool.
The new changes look to simplify the classification by grouping similar articles together and assigning most classes based solely on density – the most measurable of the four characteristics, he said. Exceptions will be handled separately, adding one or more of the three remaining characteristics in cases where density alone is not adequate to determine an accurate class.
When the updates roll out in 2025, many shippers will see shifts in the LTL prices they pay to move loads, because the way their freight is classified – and subsequently billed – might change. To cope with those changes, he said it’s important for shippers to review their pricing agreements and be prepared for these adjustments, while carriers should prepare to manage customer relationships through the transition.
“This shift is a big deal for the LTL industry, and it’s going to require a lot of work upfront,” Davis said. “But ultimately, simplifying the classification system should help reduce friction between shippers and carriers. We want to make the process as straightforward as possible, eliminate unnecessary disputes, and make the system more intuitive for everyone. It’s a change that’s long overdue, and while there might be challenges in the short term, I believe it will benefit the industry in the long run.
Business leaders in the manufacturing and transportation sectors will increasingly turn to technology in 2025 to adapt to developments in a tricky economic environment, according to a report from Forrester.
That approach is needed because companies in asset-intensive industries like manufacturing and transportation quickly feel the pain when energy prices rise, raw materials are harder to access, or borrowing money for capital projects becomes more expensive, according to researcher Paul Miller, vice president and principal analyst at Forrester.
And all of those conditions arose in 2024, forcing leaders to focus even more than usual on managing costs and improving efficiency. Forrester’s latest forecast doesn’t anticipate any dramatic improvement in the global macroeconomic situation in 2025, but it does anticipate several ways that companies will adapt.
For 2025, Forrester predicts that:
over 25% of big last-mile service and delivery fleets in Europe will be electric. Across the continent, parcel delivery firms, utility companies, and local governments operating large fleets of small vans over relatively short distances see electrification as an opportunity to manage costs while lowering carbon emissions.
less than 5% of the robots entering factories and warehouses will walk. While industry coverage often focuses on two-legged robots, Forrester says the compelling use cases for those legs are less common — or obvious — than supporters suggest. The report says that those robots have a wow factor, but they may not have the best form factor for addressing industry’s dull, dirty, and dangerous tasks.
carmakers will make significant cuts to their digital divisions, admitting defeat after the industry invested billions of dollars in recent years to build the capability to design the connected and digital features installed in modern vehicles. Instead, the future of mobility will be underpinned by ecosystems of various technology providers, not necessarily reliant on the same large automaker that made the car itself.
Regular online readers of DC Velocity and Supply Chain Xchange have probably noticed something new during the past few weeks. Our team has been working for months to produce shiny new websites that allow you to find the supply chain news and stories you need more easily.
It is always good for a media brand to undergo a refresh every once in a while. We certainly are not alone in retooling our websites; most of you likely go through that rather complex process every few years. But this was more than just your average refresh. We did it to take advantage of the most recent developments in artificial intelligence (AI).
Most of the AI work will take place behind the scenes. We will not, for instance, use AI to generate our stories. Those will still be written by our award-winning editorial team (I realize I’m biased, but I believe them to be the best in the business). Instead, we will be applying AI to things like graphics, search functions, and prioritizing relevant stories to make it easier for you to find the information you need along with related content.
We have also redesigned the websites’ layouts to make it quick and easy to find articles on specific topics. For example, content on DC Velocity’s new site is divided into five categories: material handling, robotics, transportation, technology, and supply chain services. We also offer a robust video section, including case histories, webcasts, and executive interviews, plus our weekly podcasts.
Over on the Supply Chain Xchange site, we have organized articles into categories that align with the traditional five phases of supply chain management: plan, procure, produce, move, and store. Plus, we added a “tech” category just to round it off. You can also find links to our videos, newsletters, podcasts, webcasts, blogs, and much more on the site.
Our mobile-app users will also notice some enhancements. An increasing number of you are receiving your daily supply chain news on your phones and tablets, so we have revamped our sites for optimal performance on those devices. For instance, you’ll find that related stories will appear right after the article you’re reading in case you want to delve further into the topic.
However you view us, you will find snappier headlines, more graphics and illustrations, and sites that are easier to navigate.
I would personally like to thank our management, IT department, and editors for their work in making this transition a reality. In our more than 20 years as a media company, this is our largest expansion into digital yet.
We hope you enjoy the experience.
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In this chart, the red and green bars represent Trucking Conditions Index for 2024. The blue line represents the Trucking Conditions Index for 2023. The index shows that while business conditions for trucking companies improved in August of 2024 versus July of 2024, they are still overall negative.
FTR’s Trucking Conditions Index improved in August to -1.39 from the reading of -5.59 in July. The Bloomington, Indiana-based firm forecasts that its TCI readings will remain mostly negative-to-neutral through the beginning of 2025.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak. Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year,” Avery Vise, FTR’s vice president of trucking, said in a release.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index, a positive score represents good, optimistic conditions, and a negative score shows the opposite.
A coalition of truckers is applauding the latest round of $30 million in federal funding to address what they call a “national truck parking crisis,” created when drivers face an imperative to pull over and stop when they cap out their hours of service, yet can seldom find a safe spot for their vehicle.
According to the White House, a total of 44 projects were selected in this round of funding, including projects that improve safety, mobility, and economic competitiveness, constructing major bridges, expanding port capacity, and redesigning interchanges. The money is the latest in a series of large infrastructure investments that have included nearly $12.8 billion in funding through the INFRA and Mega programs for 140 projects across 42 states, Washington D.C., and Puerto Rico. The money funds: 35 bridge projects, 18 port projects, 20 rail projects, and 85 highway improvement projects.
In a statement, the Owner-Operator Independent Drivers Association (OOIDA) said the federal funds would make a big difference in driver safety and transportation networks.
"Lack of safe truck parking has been a top concern of truckers for decades and as a truck driver, I can tell you firsthand that when truckers don’t have a safe place to park, we are put in a no-win situation. We must either continue to drive while fatigued or out of legal driving time, or park in an undesignated and unsafe location like the side of the road or abandoned lot,” OOIDA President Todd Spencer said in a release. “It forces truck drivers to make a choice between safety and following federal Hours-of-Service rules. OOIDA and the 150,000 small business truckers we represent thank Secretary Buttigieg and the Department for their increased focus on resolving an issue that has plagued our industry for decades.”