Transcript Slide 1
Thomas D. Torcomian President/CEO North American Transportation & Logistics Market Size = $1.3 Trillion Top 50 Companies Combined Do Not Account for 10% of Total Market Share Significant Fragmentation ◦ LEL at $150MM is in the Upper 5% of Company Size 500,000 Carriers Operating in the United States (15 Million Trucks) 220,000 Carriers Operating in Canada 138,000 Carriers Operating in Mexico Confidential 2 Cost Pressures Industry Carrier Rates Continue to Increase Fuel Costs Fluctuations Commodity Prices Continue to Rise Continued Pressure on Meeting Logistics Budget Small & Midsize Shippers Have Little Market Leverage Freight Claims Continue to Increase Claims Settlements Lifecycle Has Increased Corporate Capacity – Staffing is Down Customer Requirements Industry Dynamics Financial Pressures Changing Transportation Strategies Severe Capacity Fluctuation Capacity is Still Leaving the Market; Drivers Are Difficult to Find and Keep. Over 38,000 Carriers Out of Business in Last 10 Years Focus on reducing transportation costs and Financial Burdens Increase on All Carriers improving service levels EPA Requirements HOS Challenges Confidential 3 A Minimum of 55,000 US Carriers are Over FMCSA’s Intervention Threshold Those 55,000 Carriers Face Greater Scrutiny by the Insurance Companies Which Will Effect Their Premiums This Will Affect Costs/Rates and Weak Carriers Will Continue to Leave Market Confidential 4 Once Upon a Time Every Transportation Provider Could Survive With One Major Customer ◦ Small Carriers Rely More on Brokers for Revenue ◦ Those Days are Over and Now Present a Risk to America's Shippers Greater Risk of Adversity ◦ ◦ ◦ ◦ Double Brokering Fraud Theft Fictitious Pick Ups Confidential 5 International Compliance ◦ Known Shipper Agreements ◦ Customs and Duties ◦ Customs Trade Partnership Against Terrorism CT-PAT ◦ Regulation Changes Daily Mexican Carriers ◦ Security Risks ◦ Market Expertise ◦ Border Issues ◦ Visibility Confidential 6 How Well Do Carriers Respond to Lost or Damage Goods Are They Willing to Assist in Reviewing Shippers That Have Repetitive Issues Carriers Will Raise Rates With the Assumption They Will Damage High Value Freight This Places Further Pressure on Carrier Management Confidential 7 Most Carriers are Limited in What Service Offerings They Present to Clients. ◦ Truckload Carriers Typically Do Not Have the All Encompassing Programs ◦ Most Cannot Support a Clients Entire Scope of Transportation Needs Dealing w Carriers on Your Own Requires More Management Negotiation - Compliance Administration- Auditing and Metrics Management ◦ Insurance ◦ Green Initiatives ◦ Clean Truck Regulations Interview Them as You Would an Employee ◦ Seek a Partner Not a Vendor Confidential 8 Documentation Required ◦ Carrier Agreement- State No Brokering or No Pay ◦ Carrier Operating Authority ◦ W9 ◦ Insurance Cert – Must List You as Additional Insured/ Certificate Holder ◦ CSA Rating – Review Quarterly ◦ Haz Mat Certifications ◦ Tracking Tools ◦ Maintenance Policy ◦ Can You Tell a Broker From a Carrier? Confidential 9 Due Diligence ◦ Understand How Your Partner Does Business ◦ Site Visits ◦ 5 & 10 Rule Tractors Must Be 5 Years or Newer Trailers Must Be Newer Than 10 Years ◦ Do Not Do Business Over the Phone ◦ Do Not Book Freight Via the Internet (LTL Excluded) Confidential 10 Synergistic Services- New Distribution Methodologies Carrier Relationships Extend Beyond a Single Shipper Multiple Carrier/Mode Resource Management Depth of Supporting Carriers Proper Mode Application Increase Delivery Performance Transit Requirements Management Accessorial Management Freight Visibility Proactive Track and Trace Functions Claims Reduction Management Packaging Review – Recommendations Root Cause Analysis Shipment Consolidation Synergistic With Mode Assignment Methodologies Shipping/Ordering Pattern Review Compliance Knowledge Confidential 11 How Can I Tell a Good 3PL Apart From a Bad One ◦ How Long Have They Been in Business ◦ Have a Diverse Customer Base ◦ Look for Customer or Industry Concentration ◦ References (Customers and Carriers) ◦ Technology Investment ◦ Commitment to Continuous Improvement ◦ Reporting /Metrics Management ◦ A Good Logistics Partner is Not Interested in Your Job Confidential 12 If You Choose to Do Business With a Broker ◦ Know Who You Are Dealing With There are Many Excellent TL Brokers There are More Bad TL Brokers ◦ Understand Their Policy on Carrier Selection If its Only Via Load Board -Run ◦ Get a Copy of Their Bond ◦ Have an Agreement That States No Double Brokering Confidential 13 Supply Chain Management is Challenging Enough Economic Conditions are a Major Contributor to the Risks Surrounding Transportation Costs Do Your Homework Due Diligence is the Key to Averting Risk Procurement Strategies Work Select Good Partners (Not Vendors) ◦ Make Sure You Define the Value You Seek Continue to Utilize Network Events Such as This One Confidential 14 Buffalo I Dominican I Dallas I Detroit I Houston I Jacksonville I Los Angeles I Mexico City I Miami I New Jersey I Philadelphia I Puerto Rico I Sacramento Confidential 15