Viewpoint: Time to serve up “friendly freight”

Autumn is spreading splashes of color across the hillsides, which means it’s time to share the findings of Logistics Management’s (LM) Annual Study of Logistics and Transportation Trends (Masters of Logistics), the clearest picture available of transportation spending across the modes—and by far the most comprehensive summary of how logistics professionals are managing their operations in light of current business conditions.

Before we get started, the LM staff and research team would like to thank the 443 domestic and global logistics, transportation, and supply chain management professionals who took the time out of their schedules to participate this year. This is a fairly detailed questionnaire, so the fact that we had such a terrific response tells us that the results are well worth the effort in the eyes of our savvy readers.

This year’s participants accounted for an estimated $14.5 billion in domestic transportation expenditures and over $8 billion in international transportation spending. Large companies with annual revenue of more than $3 billion represented 16 percent of the study participants, while medium-sized organizations, with between $500 million and $3 billion in annual revenue, made up 21.2 percent of this year’s respondents—making for a “well-heeled” group.

This marks the 24th year that LM has partnered with Karl Manrodt, Ph.D., of Georgia College and Mary Holcomb, Ph.D., of the University of Tennessee to capture this study. Through this issue, online in our Annual Masters of Logistics webcast (Sept. 24), and in a live session at CSCMP’s Annual Conference (Sept. 27-30), Holcomb and Manrodt’s presentation of these results will continue to help countless logistics professionals re-engineer their operations—and we’d be a less-enlightened profession without their insight and commitment to its evolution.

So, what did we learn from this year’s data? According to Holcomb and Manrodt, the excess transportation capacity during much of the recession enabled shippers to negotiate substantial reductions in transportation rates, ushering in a “cost savings addiction” that they need to break.

“These cost savings became a key contributor to many company’s bottom lines,” says Manrodt. “And after multiple years, shippers, CFOs, and their companies have taken these savings for granted.” According to Holcomb, shippers who have been relying on this freight savings “fix” are about to receive a wake up call.

The new reality, they say, is one of transportation rate increases for the foreseeable future. “This is a situational change that will find many shippers experiencing the pain of withdrawal from their previous, enviable positions,” adds Manrodt.

Not to worry: There is a cure. An important step in the road to recovery is for both shippers and carriers to admit that there’s a problem and invest in building a more strategic partnership.

“The solution should lead to opportunities for both parties,” says Holcomb, “with shippers concentrating on serving up ‘friendly freight’ to a surface transportation system that now holds the position of power.”

A full examination of this year’s findings and the research team’s “three-step cure” unfold on page 26.