Less-Than-Truckload Service Markets
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1 November 2008 Less-Than-Truckload Service Markets A study among logistics professionals Sponsored by: Conducted by: On Behalf of:
2 Introduction In June 2008, logistics professionals were studied to better understand the less-than-truckload (LTL) services market. Specifically, the research evaluates: n Importance attributes when selecting an LTL service provider n Shippers expectations of their current LTL providers n Usage of third party logistics (3PLs) for transportation needs n Best-in-class service providers offerings Summary 1. Shippers have many choices of modes of transportation. Among those who use LTL providers, they also use these other modes: n 81% use truckload n 73% use surface package n 72% use air n 58% use ocean n 37% use intermodal n 29% use rail 2. The most important attributes when selecting an LTL provider are: n freight prices n customer service n billing accuracy n flexibility meeting needs n convenience/ease of use n low claims/incidence of damaged goods. 3. Most shippers say their LTL provider meets their expectations. The areas where carriers tend to exceed expectations are: n positive/helpful drivers n convenience and ease of use n flexibility meeting needs n customer service n low incidence of damaged goods Billing accuracy and freight prices rate high in importance when selecting an LTL provider but did not rate high among carrier performance. 4. One out of three shippers use a 3PL and among these shippers, six out of 10 say their 3PL provider offers warehousing and/or transportation management type services. 5. When asked what sets their preferred carriers/providers apart from all others, many of the reasons cited focus on the partnership-type relationships they have with their carriers. It is those carriers that work with their shippers to develop solutions and solve problems above and beyond the call of duty who have made their mark as exceptional providers.
3 Research Findings PERFORMANCE ATTRIBUTES Almost all shippers are facing similar challenges with rising fuel cost being top of mind as their biggest problem in their transportation and distribution operation. When asked to rate 15 attributes of importance, freight prices rank first with 97% reporting this as very/extremely important. When asked how carriers rate on 15 performance areas, between 70% and 90% say their carrier meets their expectations. Roughly 20% mention their carriers exceed expectations in five areas. Of the five that are mentioned, three of them rank high in importance to the shipper. Billing accuracy and freight prices are two areas where carriers do not receive favorable ratings. One shipper cites their biggest challenge as controlling fuel prices, and finding a balance between standard expected service levels versus paying a premium for a guarantee. Another shipper claims their challenges are many: rising fuel costs, challenges in off-hours support, and billing correctly with third-party payment service. % Rating Extremely/Very Important 100% 80% 97% 94% 92% 91% 90% 60% 40% 20% 89% Carrier Performance Attributes Positive, helpful attitude of drivers 22% Convenience and ease of use 21% Flexibility meeting my needs 20% Customer service 20% Low claims/incidence of damaged goods 19% Carriers Exceed Expectations 0% Freight prices Customer service Billing accuracy Flexibility meeting needs Convenience/ ease of use Low claims/ incidence of damaged goods 3PL USAGE Only one out of three shippers use a third party logistics provider (3PL) for their warehousing and distribution needs. When asked what type of services their 3PL provides, six out of 10 say warehousing and/or transportation management. Roughly a third use 3PL for inventory management. Use 3PL 32% 80% 60% 40% 63% 61% 68% Don't use 3PL 20% 0% Warehousing Transportation Mngt 34% 27% 15% Inventory Mngt Fulfillment Sorting of products
4 SERVICE PROVIDER PERCEPTION Two thirds of shippers agree that their carriers are their partners and often help achieve their supply chain goals. When asked what services they would like to receive, some shippers mention traditional services such as on-time delivery, flexible pricing options, inventory tracking, RFID tagging, billing accuracy, and inventory visibility. Others mention some more specific services such as: n white glove delivery services (dunnage removal,unpacking, consignee notification, ASN) n specialized services for specific products or irregular shapes n handle small ( lbs) shipments n disposal of hazmat materials n weekend coverage n alerts on late deliveries n a minute window for pick up BEST IN CLASS SERVICE PROVIDERS Many shippers believe their carriers are going the extra mile and are providing unique partnership type programs. With rising fuel costs causing many challenges, carriers are stepping up their service levels. Many shippers recognize there is little that can be done about soaring fuel costs. Providing on-time delivery, inventory visibility, professional drivers, and low damage rates are just the norm. It is the carriers that have made the shipper feel as though they are part of their business and shows a willingness to think out of the box for solutions are the ones that are being recognized as exceptional. One shipper says: They have worked hard to understand our business and have learned how they can be part of the solution. Another says: My best carrier goes above and beyond to help try and solve a problem. Another shipper says: My carrier is always there when needed and has even had additional Other comments include: equipment there in two hours. We have had only one late delivery in six years. constant communication of the ETAs on critical deliveries follow-up and solutions for delivery problems willing to do what it takes to get what we need done they go out their way to find solutions to help expedite freight Carriers that understand the challenges of their customers business, have invested time into maintaining strong working relationships, provide the best possible customer service levels, continue with accurate delivery dates and strong communication, are the ones making the mark. 3
5 SURVEY METHODOLOGY The research was conducted on behalf of Con-way Freight by RBInteractive Research Group. This study executed in June 2008 was administered over the Internet among subscribers of Logistics Management magazine. In total, 793 logistics professionals were interviewed for this study. Respondents were qualified for being involved in purchasing LTL services. A profile of those surveyed shows the average size of respondent s distribution center/warehouse network is three buildings. On average, their total square footage of this network is 471,530 square feet. Roughly a third say their scope of their distribution center/network is global and roughly a similar percent say it extends within the U.S. Their average number of employees in their DC/warehouse operation network is 136 employees. They have approximately 11 docks within their network and 13,564 SKUs. Average number of inventory days is 31. ABOUT CON-WAY FREIGHT Con-way Freight provides direct service from the largest single service less-than-truckload (LTL) service center network in North America. More direct delivery points means shorter transit times and more reliable on-time performance. In a business world that puts a premium on speed, economy, and reliability, Con-way ensures our customers success in their race to market. Whether they re shipping across town or across North America, freight shippers have trusted Con-way Freight for nearly 25 years. Direct, reliable, seamless service. Con-way Freight s network of 460 locations operating as part of a unified network provide day-definite shipping services throughout the continental U.S. and Canada, as well as Hawaii, Alaska, Puerto Rico, and Mexico.
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