Scpn Presentation Transportation Cost

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Scpn Presentation Transportation Cost

  1. 1. Transportation Cost <ul><ul><li>Logistic Costs — the amount of money associated with the purchase, transport, storage and distribution of goods — are an unavoidable part of the supply chain process. </li></ul></ul><ul><ul><li>Logistic Service – the satisfactory performance of the suppliers it selects for purchasing, transport, storage and distribution – is an equally unavoidable element . </li></ul></ul>Copyright W. Driscoll
  2. 2. Transportation Cost <ul><li>2009 – Easy to reduce cost </li></ul><ul><li>Fuel dropped from $4.70 in 2008 to $2.50/ gallon in 2009 </li></ul><ul><li>Rates dropped dramatically </li></ul><ul><li>Overcapacity in market </li></ul><ul><li>Carrier bankruptcies </li></ul><ul><li>No signification legislative influence </li></ul>Copyright W. Driscoll
  3. 3. Transportation Cost <ul><li>2010 – Challenges ahead </li></ul><ul><li>Economy is improving slowly </li></ul><ul><li>Capacity is tighter </li></ul><ul><li>Rates are a factor for both the shipper and carrier </li></ul><ul><li>Fuel </li></ul><ul><li>New legislation </li></ul>Copyright W. Driscoll
  4. 4. Transportation Cost <ul><li>Market Capacity </li></ul><ul><ul><ul><li>Volume up </li></ul></ul></ul><ul><ul><ul><li>Driver shortage coming </li></ul></ul></ul><ul><ul><ul><li>Carriers out of business </li></ul></ul></ul><ul><ul><ul><li>Fewer new tractors/ trailers purchased </li></ul></ul></ul><ul><ul><ul><li>Specialty equipment less available </li></ul></ul></ul><ul><ul><ul><li>Some lanes already tight </li></ul></ul></ul>Copyright W. Driscoll
  5. 5. Transportation Cost <ul><li>Rates </li></ul><ul><ul><ul><li>Shippers </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Decreasing for 2 years </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Customer service pressure </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Performance related </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Will increase without effort </li></ul></ul></ul></ul></ul><ul><ul><ul><li>Suppliers </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Drivers want higher wages/ more miles </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Volume down since late 2006 </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Will be more selective of lanes </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Must add top-line revenue </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Will increase rates as possible </li></ul></ul></ul></ul></ul>Copyright W. Driscoll
  6. 6. Transportation Cost <ul><li>Fuel </li></ul><ul><ul><ul><li>Increasing as economy returns </li></ul></ul></ul><ul><ul><ul><li>Up from last year </li></ul></ul></ul><ul><ul><ul><li>Projected to increase more remaining 2010 </li></ul></ul></ul>Copyright W. Driscoll
  7. 7. Transportation Cost <ul><li>New Safety Legislation </li></ul><ul><ul><ul><li>CSA 2010 </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Driver reporting </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Driver tickets </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>In cab distractions </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Equipment put out of service </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Carrier safety performance </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>E.O.B.R. </li></ul></ul></ul></ul></ul><ul><ul><ul><li>HOS </li></ul></ul></ul><ul><ul><ul><ul><ul><li>New rule making </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Could impact carrier/ driver service </li></ul></ul></ul></ul></ul>Copyright W. Driscoll
  8. 8. Transportation Cost <ul><li>Inbound Freight </li></ul><ul><li>Usually inbound freight cost is NOT accumulated </li></ul><ul><li>Adds negotiating power </li></ul><ul><li>Improves service </li></ul><ul><li>Keeps vendors from making a profit </li></ul>Copyright W. Driscoll

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