Third-party logistics companies come in many different forms, and for a while there was not much barrier to entry into the marketplace – particularly the less-than-truckload segment.  Until even recently, the following recipe could be utilized to form a 3PL:

Ingredients:

Freight to leverage
Industry knowledge
Growth potential
Technology – in any form

1 – Take one former carrier representative (or industry ancillary service provider), engage one freight account with whom you have long-term relationship and bingo – you have freight to leverage.

2-  Hang a shingle, perhaps obtain a broker’s license, and you are in business.

3 – Call your old carrier buddies (who left and went to other carriers) and start obtaining rates for your newfound freight.  Ask them “Where’s my volume discount?” 

4 – Optional:  To look REALLY smart, you take an old common rate base from the 90’s, perform some “tweaking” to it, and call it your own with a slick name.

5 – Find a way to perform freight payment – either on your own, or outsourced.

6- Lastly, run your clients’ freight through your own books so it looks like your own – puff out your chest and exclaim that you are a multi-million dollar company.  Buy low, sell high.

Voilà!  You have yourself a 3PL.

While admittedly facetious, it is fact that carriers are not particularly fond of 3PL’s – but they figure, “if we don’t give them rates, someone else will.”  And so it went…

As a shipper who may be contemplating utilizing a 3PL, or perhaps evaluating your current 3PL relationship, you may be asking yourself, “What can a 3PL really do for me?”  Let’s examine the common thoughts regarding the outsourcing of your freight today – and explore best practices:

Volume discount – The 3PL will more than likely “have” more freight than you – hence the perception of receiving a volume discount and the likelihood that if you give your freight to the 3PL (that’s right, you are giving your freight volume away) and add it to their other clients’ freight, all will enjoy a greater discount.  The problem is that carriers are currently re-evaluating ALL of their 3PL relationships right now and finding most of them unprofitable, and most are reducing their discounts and cutting off volume pricing.  Best Practice – Carriers can and will provide your company with excellent pricing while eliminating the middleman.  Keep your freight as your freight – have the carrier tariffs in your name by enlisting a 3PL that does not take ownership of your freight as their own, but can negotiate better discounts for you based on their volume and methodology – without taking yours.

Reduced Paperflow – Outsourcing your freight activity should provide you with less paper to review (i.e. carrier bills).  Nothing makes the blood drain from a 3PL’s face faster than when a carrier inadvertently sends a bill directly to their customer, thus lifting the veil on the amount of mark-up on a particular bill.  Best Practice – Enlist a 3PL to automate your methodology, from the initial rate shop, pre-audit, all the way to the freight payment of each freight bill – using rates that are yours, and knowing exactly how much your 3PL is receiving for the service they provide.

Technology – 3PL’s do not create technology – they have to buy it.  They traditionally work off only one ratebase, because they cannot utilize multiple ratebases which are proven to reduce freight costs – and the old ratebases they utilize are not in synch with current network efficiencies of carriers.  Basically, single ratebases are used because of outdated technology.  Best Practice – Ensure that your 3PL has not only technology available for you to rate shop and create bills of lading to actually execute your shipments using your rates, but can provide you with every piece of technology you need for your specific situation and supply chain.  This would include inbound (vendor compliance) capabilities, small parcel, LTL and Truckload, International, Hazardous, real time KPI dashboards, etc. all while being able to integrate it inside your firewall.  Above all, never use only one common ratebase to rate your LTL.  While many still use this old-school practice, it’s a very costly idea – it benefits everyone but you, the shipper.  You will be met with resistance, but persevere.  Current carrier ratebases are developed with their operating efficiencies in mind.  Make sure your technology can handle them and use them – they are free and you WILL get better discounts.  Lastly, make sure your technology can track each shipment vs. your old methodology, which will ensure you “hero status” at your company.

By applying the above, you will essentially:  1) Know that you will be getting better rates, and are 2) Fully-automated and have full disclosure of exactly what you are paying, you can now 3) Relax, because you will have the technology to ensure that you have made the best possible decision and can execute on your freight strategy.

Evolution is inevitable, isn’t it? It makes sense that transportation management systems should evolve as well. While the concept of Moore’s Law does not necessarily apply to TMS advancements in its short lifespan, there are current improvements available that are making shippers stand up and take notice.

The newest improvement has been the ability to add “context” to a shipper’s transportation data through a TMS that is “aware” of the various pieces that make up their supply chain solution.
Context allows the shipper to understand the actual circumstances that led to a particular event in their supply chain:

• Incorrect invoice charge from their carrier—was this caused by the carrier re-weighing their freight, re-classifying their freight, a particular accessorial charge, etc.?

• Why was the shipment late? Was this caused by inclement weather, did the carrier leave the shipment at their terminal, was the consignee not available for delivery, etc.?

• Inbound freight—when was the shipper’s purchase order fulfilled by their vendor? Which carrier is going to be delivering it – and when? Which purchase orders have been fulfilled? Were they fulfilled completely?

Many consider a traditional TMS as simply expensive load planning software, when it can be so much more. While there are quite a few options from different TMS providers available today, it may be time to evaluate a TMS system by how “aware” it is of the entire supply chain. The following advancements in TMS are emerging, allowing TMS to become aware of the entire supply chain:

• Freight Execution – Utilization of single system that can tender shipments via all modes, thus eliminating the need for bolt-on applications for modes (such as small parcel), allowing the shipper to integrate with their host system with one system, ensuring that the same information is being pulled from the host system and is available in the same format for each and every mode. Also, any and all additional documentation required to tender shipments, i.e. small parcel labels, less-than-truckload and/or truckload bills of lading, pallet labels, hazardous and international documentation, etc. should print at the point of shipment at this stage of the game.

• Freight Payment and Pre-Audit – Matching information from the execution tool above to the invoice from the carrier ensures a more thorough audit – by auditing the characteristics of the invoice along with the corresponding charges of each shipment.

• Visibility and Communication – Providing the shipper’s vendors with an execution tool that has the shipper’s business rules, carriers, and their purchase orders pre-loaded. The shipper’s vendors then can tender shipments to the shipper’s carriers based on the PO number, which removes the shipper’s dependency on the carrier to provide shipper with this critical information.

• Dashboards – Most importantly, there is now the capability of tying together all of the aforementioned data into an all-encompassing Dashboard to help shippers effectively manage their company’s freight activity – real time – giving true context by providing visibility to the data that is flowing in from the TMS, the Freight Payment and Pre-audit, from all of their shipping locations. The best dashboards are real-time, and have each component listed above literally “aware” of all of these pieces, instantly supplying information that is compiled and incorporated into the shipper’s Key Performance Indicators for logistics – specifically utilizing their own corporate KPI’s and specific business rules. This also enables proper measurement and management of both the Freight Payment and Pre-Audit to match the data that is flowing into it, along with providing visibility to the characteristics of each freight transaction.

What do these advancements really mean to the shipper? This finally allows the shipper to determine the meaning of the events that are occurring in their supply chain in a real-time fashion.

Two examples:

• A shipper provides a program for their customers where they receive free freight on orders for particular products. Until they had the proper context, they were unable to quantify exactly how much freight they were giving away, and were unable to leverage this in their marketing campaign to their customers.

• A shipper was having problems with their vendors fulfilling their PO’s in a timely manner. The freight was being shipped directly to job sites, and the lack of visibility and coordination with the vendor was causing job sites to be shut down because the freight was not showing up when expected – only to find out that it arrived sometimes a few minutes after the job site was vacated.

The evolution of the TMS continues… Darwin maintained that all forms of life are interconnected and related, although nobody is certain that PO visibility, vendor compliancy, or freight auditing were on his mind when considering Natural Selection.

RateLinx software and services significantly improve your transportation process, AND provide you the tools to enhance your decision-making process in an integrated, seamless manner:

ShipLinx Shipping Software

Small Parcel (UPS, FedEx, USPS, Canpar, etc.) / LTL / TL
International / Hazmat Documentation
Fully-integrated with any ERP system
Competitive Bidding Environment for your Truckload carriers

Alternative to Costly 3PL’s

No Hidden Mark-ups
No Carrier “Kick-backs” to 3rd Party
It’s YOUR Freight Volume – Don’t Give It Away!?
Maintain Control – YOU are the BOSS

Freight Payment and Pre-Audit

EDI or Paper Billing
Accuracy Ensured
Catch Billing Errors Up-Front
Prompt Payment to Carriers – No “Sitting on the Float”

Directly-Connected to Carriers

Keep (and Improve) Your Carrier Relationships
Increase Capacity
Utilize RateLinx’ Volume Leverage
Unparalleled Visibility

Utilize RateLinx tools and services to reduce your freight costs, ensure market level discounts on LTL and TL pricing without paying 3PL costs – utilizing YOUR carriers – maintaining YOUR decision-making ability.  Drive compliancy of your freight program within your organization – outbound AND inbound – with the fastest, most robust TMS on the planet, from single site to 1,000’s of sites, integrated in days – not months.

RateLinx – Your Job Is About To Get A Whole Lot Easier

Please email sales@ratelinx.com for more information or to speak with a RateLinx representative about your specific situation.

“How could we have been so misled?” they ponder. “Why is it that we have to keep working around all of these problems?” Notification and calls to their ship builders either fell on silent ears, or promises were made that were not kept.

Their shipping competitors pass them by, pointing and others even laughing. Some even lamented that they made the same mistake themselves. The stories are sad, but consistent; even the most skilled crew – salty veterans of the sea – could not hold these poor clipperships together. And all of the money they spent! Is anyone accounting for the time and labor involved in keeping this thing afloat? Oftentimes, mutiny ensues, and the ships’ captains sometimes end up walking the plank. Little did they know, they held the key – will they ever learn?!? Perhaps they should have bought American…

If you should find that your clipper ship or flag ship is sinking, your lifeboat solution is here. No need to walk the plank, no need to hear from the admiral who is consulting you that you are in trouble, none of that. Stick your chest out and confidently and calmly advise your crew to pack their small parcels, that it’s time to migrate to a faster, more tightly – integrated ship – with an engine system more robust than any, capable of transport across any hazardous ocean or at a rate faster than any ship could ever manage. “Hold it together for one more month lads, for we are moving to the USS ShipLinx!”

Looking to disembark YOUR sinking clippership, while saving face in front of your crew and superiors? Send us a message in a bottle to sales@ratelinx.com. You have options and alternatives, captain. We’ll show you how to set sail and free yourself of a lingering logistics nightmare without giving up any of the booty.

When choosing this year’s Top 100 Logistics IT Providers, Inbound Logistics editors evaluated excellence in solving transportation and logistics challenges. Selections were based on how transformative logistics IT solutions impact all business activities and drive integration across internal processes for shippers, as well as external processes for both their vendors and customers. Using questionnaires, personal interviews, and other research, Inbound Logistics makes their selection. All companies selected reflect leadership by answering Inbound Logistics readers’ needs for simplicity, ROI, and efficient implementation.

“RateLinx was selected because of the sheer breadth of their logistics management and technology solution,” stated Felecia Stratton, Editor of Inbound Logistics. “RateLinx clients are particularly passionate about the RateLinx offering,” Ms. Stratton continued, “which must explain RateLinx’ rapid growth over the last few years. Inbound Logistics is proud to honor RateLinx for innovative solutions empowering logistics and supply chain excellence.”

“It is always nice to be recognized, especially by a publication as venerable as Inbound Logistics,” said Steven Shoemaker, owner of RateLinx.

Inbound Logistics is the pioneering publication of demand-driven logistics practices, also known as supply chain management. IL’s educational mission is to guide businesses to efficiently manage logistics, reduce and speed inventory, and neutralize transportation cost increases by aligning supply to demand and adjusting enterprise functions to support that paradigm shift. More information about demand-driven logistics practices is available at www.inboundlogistics.com.

Managing an RFQ is generally a very time-consuming and tedious task for companies that “go it alone.” Contacting carriers, structuring the RFQ itself, obtaining bids, reviewing bids, and quantifying the results can be an overwhelming task that can take months to endure. And, once completed, it is very important to determine if the bids that were received in this process are at or below market level pricing for a company with similar freight volume – that determines the success of a company’s bid process. This is the inherent problem – how does one know?

Until recently, companies had two choices: They either 1) performed the RFQ process themselves; or 2) utilized a Third-Party Logistics Company (3PL) to manage the RFQ process.

In #1 above, managing the RFQ process internally is extremely time-consuming, and in the end, the company is limited by their own market knowledge. It is difficult to measure the success of the bid before the program is actually implemented.

In #2 above, using a 3PL will greatly reduce the time consuming process – and will leverage market knowledge of the 3PL, but the problem exists of not truly knowing why the particular carriers were chosen – was it to meet the needs of the shipper, or the 3PL? Also, the problem of not fully knowing the actual true market level pricing exists as well.

Utilizing the RateLinx Solution:

Benefit 1 – ANALYSIS – As with anything, it is difficult to establish direction to one’s destination without knowing where one is actually starting. Establishing the starting point is precisely what a RateLinx Analysis does, and is the first step to determining the direction. By having RateLinx input historical shipping information and data, one’s overseas freight characteristics are accurately captured in the RateLinx Analysis, the results of which are important to move to the next step – the Strategy.

Benefit 2 – STRATEGY – The Strategy is based on the freight characteristics determined in the above Analysis, through the use of RateLinx’ Normalization process. It is extremely difficult to compare different rate bases due to the inherent biases that each carrier applies to their own rates. These biases, both for the shipper and against the shipper, are then used to determine which carriers are the best fit to haul the shipper’s freight. Once these biases are removed through the statistical normalization process, RateLinx is able to rank the carriers based on which carriers will provide the pricing that is at or below market discount levels – it is very clear.

Benefit 3 – EXECUTION — Execution is actually obtaining and securing the market level pricing from the carriers that were determined by RateLinx’ Normalization Engine as the best fit(s) for the shipper’s freight. This entails facilitating and obtaining the necessary tariffs, contracts, etc.– between the shipper and the carrier – in order to move onto the next step in the RateLinx process. Nothing is finalized with the carriers until the Quantification process occurs below.

Benefit 4 – QUANTIFICATION — The most important mechanism in the RateLinx Solution – determines and re-affirms that the pricing obtained is where it needs to be in relation to current market levels. The proposed pricing is entered and modeled against the historical shipment data to determine what the shipper’s actual final freight cost would be, and the final carrier mix is also distinguished and re-affirmed.

IMPLEMENTATION – The final carrier pricing, rules, terms, etc. are then entered into the shipper’s RateLinx Solution (ShipLinx) which enables the shipper to comply with the most optimal freight decision on a transaction by transaction basis – from any and all of the shipper’s shipping locations, thus ensuring that the shipper enjoys maximum benefit derived from the RateLinx process.

We have had a number of requests for meetings from both carriers and prospects while we are there, and are happy to oblige. To set up an appointment, please email nasstracmeeting@ratelinx.com with contact info and proposed time, and we can set up a meeting time/place while there. The RateLinx booth will be set up by the stage, and will be hard to miss. RateLinx clients who are interested in attending may contact their RateLinx sales representative for more information.

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Logistics Software  /  Transportation Management Solutions

Deb Keier, RateLinx’ Senior Vice President of Truckload Operations: “We’ve always viewed ourselves as a facilitator for both our clients and carriers, to not only simplify their workload(s), but also to give visibility to their important transportation issues while providing cost savings, as well as providing new business opportunities to the most cost competitive/highest-quality carriers.”

The following details some of the benefits to our clients and carriers as a result of Deb and her team’s work in 2009:

RateLinx Client – When RateLinx developed our Truckload application, we brought on some of the brightest and the best in the Truckload industry in order to build a state-of-the-art Truckload Program, with the primary goal of upfront ease-of-use and extensive back-end visibility. Through the RateLinx – ShipLinx procurement software, it is easy for our clients to create their shipments, procure the desired carrier at the best rate, bill and audit the invoices, as well as provide an extensive dashboard and reporting suite supplying critical transportation information. By leveraging our total shipment volume and combined transportation spend (currently exceeding $12 billion/yr) to attract a wide variety of high quality/high volume carriers that effectively drive down our clients’ transportation costs, we offer greater capacity and economies of scale. This practice is a win/win for both RateLinx clients and carriers utilized.

Carriers – There are numerous challenges facing today’s truckload carriers – increased costs (fuel, insurance, vehicle maintenance, employee turnover), decreased volumes, increased legislative mandates, reduction in the experienced driver pool – the list goes on and on. RateLinx’ Truckload program personnel understand what TL carriers need, having been in the Truckload industry themselves. As Deb Keier explains, “Give carriers the ability to increase their volume of business, particularly in their “core” geographic areas, and do it without adding a lot of overhead to the process, and carriers will love us.” The love affair has begun.

At RateLinx, we understand that if we continue to satisfy many of the carrier’s needs, the results are reduced costs, and ultimately, increased quality for our clients. Providing TL carriers with increased business opportunities, helping them with backhauls, and reducing their empty miles, while providing them a system that will alert them of potential shipments without having to staff people to sit in front of yet another web procurement screen – was vital to our success. Carriers are telling us that we “nailed it” and that “somebody has finally got it right.” Additionally, we allow our clients to rate the carriers’ performance, on both cost and quality, and we give the carrier a dashboard that allows them to see just how well they’re satisfying our mutual clients’ needs – these are factors that drive down costs and drive up quality.

Why should a truckload shipper utilize the RateLinx Truckload program for their truckload shipments?

• Critical Mass
• Exceptional, easy-to-use system
• Experienced transportation professionals who understand the industry
• Carrier relationships and increased capacity for our clients
• Competitive pricing & freight payment & auditing, yielding increased saving opportunities

All of this while leaving the transportation decision and authority where it belongs – with our client. Unlike a 3PL, we provide our customers and carriers with the tools they need, and systematically help facilitate the procurement process. At RateLinx, your truckload carrier contracts are between you and the carrier – we are not a 3PL. We simply make the entire process easier, faster and smarter, a process more in tune with today’s transportation industry.

For more information, or to speak to Deb Keier and her team directly about your specific truckload shipping needs, please email Deb at deb.keier@ratelinx.com or call 262-565-6150 ext 119.

According to our prospects, clients, and especially carriers, it is becoming clear that there is an ongoing “flight process” for U.S. shippers from utilizing third-party logistics companies (3PL’s), and companies are looking for a 3PL alternative. While some group RateLinx in this “3PL category” (which is unfortunate since we are NOT a 3PL), the common theme that is materializing is that companies that utilize 3PL’s are figuring out that once they made their commitment to a 3PL, they gave up a business asset – their own carrier rates (along with carrier choices, control, leverage, relationships, etc.). Make no mistake, these companies no longer have rates with carriers. Their 3PL does. The moment they signed the agreement, it was over. Companies are realizing that they are paying too much to “borrow” these discounts, custom rate bases, etc., plain and simple. It looks like that party may be ending soon, and carriers and shippers alike are becoming wiser.

Third-party logistics (3PL) companies offer a wide variety of services – from warehousing, to consolidation services, customs brokerage, cargo management, distribution services, etc. Companies that utilize 3PL’s obviously have specific needs, and 3PL’s may offer these companies needed services and these companies will contract with the 3PL’s because they feel that they a) are not as well-suited to handle on their own, or b) they were told/sold by the 3PL that it makes financial sense to outsource these services, or both.

Utilizing a 3PL specifically for warehousing services can make a lot of sense right now, especially with the current commercial / industrial real estate market in the U.S., and the general availability of space. However, we are finding from both less-than-truckload carriers and shippers alike that companies outsourcing their freight to a third party in order to enjoy better rates – especially LTL rates – is becoming a business practice that is starting to wane. There are a number of reasons for this.

A fair amount of 3PL’s closed their doors in late 2008 and 2009. While many simply went out of business, there was also a bit of consolidation in the industry as well. Apparently, a new crop of 3PL’s are starting to emerge, according to many LTL carriers – with the same old business model – and they are getting nowhere with the carriers. The fact is that LTL carriers are finding it harder to offer “volume discounts” to 3PL’s, and their appetite for doing so is starting to wane as well. Current market conditions in the LTL industry, with carriers losing millions of dollars and/or teetering toward financial disaster and bankruptcy, is dictating that this is beginning to negatively impact most 3PL’s financial model(s). 3PL’s, in order to increase their profit margins, have few choices… they have to raise their customers’ rates, and/or decrease their costs – their rates with their stable of carriers. Carriers are starting to resist.  And, if a major carrier or two in the industry should exit the marketplace for whatever reason, excess capacity will vanish and the carriers will begin to shed “bad” pricing immediately. First on the chopping block? Third-party logistics company rates.

We have nothing against 3PL’s. Just like everything else, some are better than others (although we have yet to find one with technology that is even remotely close to RateLinx’ technology). We specialize in helping companies unwind from their current 3PL mess in an easy, clear, economical fashion. Our clients are often surprised how easy our process is.

Our industry has discovered in the last few years that the RateLinx offering is unlike no other company’s in the transportation arena, and our growth is indicative that it makes sense for both shippers and carriers alike. It is no secret how we do what we do – except that nobody on the planet can do it but us. Will that change? Who knows, but right now we are enjoying our success and are truly humbled by the companies that employ us. We are blessed to have many carriers bringing us new potential clients – for which we are very grateful – and that is why we strive to never, ever lose a RateLinx client.

Logistics Software