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Mode Selection: Expense Lever for Cost and Service

Updated: Jun 26, 2023

An important expense lever for cost and service is carrier Mode selection....


Problem:


Companies often employ a “static” guide to determine which mode (Parcel, LTL or Truckload) is selected for a given load. For example, fewer than 10 cartons always travels Parcel. While that method is simple to communicate and execute, it is generally not optimal as LTL rates can significantly from state to state.


We can genuinely say that every client we've worked with has had an opportunity to optimize their carrier selection to reduce transportation costs. Of course, no one intentionally wants to overspend. There is always a very good reason why companies leave money on the table. Often, it's for what appears to be a labor, operational process, or technology barrier. But when you dig into the problem further, there are always clever and subtle ways to get around them.


Real Example:


A national retailer utilized a static carton break to determine if suppliers should ship via Parcel or LTL. Shipments with 18 or fewer cartons always traveled Parcel and shipments greater than 18 cartons traveled LTL. An analysis of the rates determined that while 18 was a good average, that breakpoint differed significantly at a state level. The company adjusted the break for different origin points and saved over a million dollars in the first two years.


What can you do?


- Does your company utilize a static weight or carton “break” to determine shipping mode? 🚛


- Do you have a TMS system that could help make that decision dynamically for each load? 👩‍💻


- If you do not have that capability, can you publish “state by state” instructions in your routing guide? 🌎


We've solved this problem and returned meaningful dollars to the bottom line for our clients and can do the same for you. 💰💰💰



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