Trucking shippers and carriers need a new strategic approach to survive in a rapidly changing world
A recent surge in mandatory regulatory compliance, combined with a chronic shortage of drivers due to new government regulation for drivers and truck availability, is pushing up freight costs. With the April 1 enforcement deadline for a federal regulation requiring drivers to electronically log their hours, many truckers are leaving the sector. Instead, they are choosing to work more sociable hours in other industries, such as the booming construction sector, where wages are higher. This is a significant problem given truck freight currently represents approximately 85% of the US market freight spend.
Globally, capacity underutilization, escalating operational costs, driver retention and rising Greenhouse Gas regulations are some of the key challenges fleet managers face.
How should road carriers and shippers respond?
With margins high and the industry close to tipping point, carriers need to act now to enhance shipper relationships. As major shifts continue to take place in consumer, lifestyle, technology and mobility, the entire transportation industry needs to transform itself to harness the power of digitalization. This “Amazon effect” means bulk carriers need to invest in new technologies and business models and develop the agility to respond to changing shipper and client demands. Technological advancement in the industry is providing a platform for stake holders to build service and solution-based revenue models, driving greater transparency between shippers & carriers and supporting ad-hoc and planned freight demands at lower brokerage rates. The key to long-term success is greater collaboration across the end-to-end supply chain.
We can help
Maine Pointe has a wealth of experience helping global shipper and carrier CEOs rapidly optimize distribution networks to release cash, drive out costs and enable growth.
What Maine Pointe Achieves
Redesigning the distribution network to improve customer service for a major North American retailer.
What we did
- Eliminated company-owned trucks
- Restructured the distribution network to create a "concentric circle" service methodology with locally contracted transportation providers
- Reduced standard delivery performance from 1-3 days to same day or next morning service
- Improved transit times from 7-12 days to less than 24 hours
- Sales increased by 6% in year 1 and by 9% in year 2, on average, for all metropolitan areas serviced by the redesigned network
Optimizing truck fleet and rail operations for a multimillion-dollar global organization.
What we did
- Designed and implemented a 'best in class' logistics management operating system (LMOS)
- Designed solutions and supported installation of tools that improved visibility of system-wide logistics operations
- Optimized own truck fleet utilization
- Opened negotiations with Class 1 railroad
- 5% reduction in costs
- $20M additional savings within 1 year
- Improved time-to-market
- ROI 7:1 (truck)
- ROI 3:1 (rail)
Improved pricing strategy and distribution model for a manufacturer of high-performance materials for the construction industry.
What we did
- Over a 9-month period, Maine Pointe helped implement an improved pricing strategy and distribution model. This included the removal of all distribution centers and transitioning to a next day/next truck model
- Shortened lead times
- Consolidated three manufacturing plants into one
- Increased gross margin by 40%
- Increased supply chain velocity from 6-8 weeks to 12-48 hours
- Decreased overtime by 90% and working capital by 50%
- Month-over-month revenue consistently grew at rates greater than 30-40% with annual revenue increasing by over 100%
- Company was acquired for 13x EBITDA
The Maine Pointe team opened our eyes, challenged our thinking and helped us reduce our total North American logistics costs by some 25%."
Herm Canil, EVP Purchasing and Supply Chain PGW Glass LLC