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Supply-Chain | Collaboration | Sustainability

The law of transportation averages

February 10, 2012TidalSevenCollaboration0

Transportation Volume by the Seasons

On average, the law of averages fails every time. Well, almost every time. Shippers tend to want to package their freight volumes into nice neat packages. The truth is that the transportation market will vary. January is slow and September can be robust, especially for those in the retail industry.

However, most shippers tend to either display their respective volumes annually or by monthly average. They will end up calling their carriers in September to ask, “Where is my capacity?” This is the traditional way of thinking. Annual volume equals annual capacity needs, until the fall rolls around.

What if there was an alternative? I can think of two solutions:

  1. Instead of simply sending out an RFP with annual volumes, why not show detailed calendar year data. In other words, list volumes per month from the prior year’s January to December, for each o/d pair. This way, your service providers know what to expect as the calendar year progresses.
  2. Shipper-to-shipper collaborations. They can not only provide year round stability, but also optimal flexibility. By utilizing private and dedicated fleets, a shipper gains the ability to have capacity that can flex with the market. The fleet’s network will remain constant, but its capacity can seasonally rise along with the shipper’s needs.

Unlike a one way carrier, whose service territory can change, a private or dedicated fleet continues to serve stores or end users. Collaboration takes trust, dedication and time, and in many cases is most efficient when coordinated by a neutral party. In either solution, transparency is key and creating strong relationships with your transportation providers is a must.

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