Building an LTL Consolidation Program
Building an LTL Consolidation Program Keith Mowery Vice President, Transportation & Logistics United States Cold Storage
Transportation Terms From Around The World
“Piggyback”
“Cubing Out the Trailer”
“Consolidation”
Over a Century of Service… • HISTORY • Operating since 1889 • Began with ice manufacturing and distribution • Purchased by Swire Group in 1982
TODAY • National network of 38 facilities in 13 states • Over 260 million cubic feet; 3rd largest PRW in North America. • Fully integrated temperaturecontrolled logistics service
Swire: Global Presence • Established in 1816; Privately held • Multi-national diverse corporation based in the U.K. with operations worldwide • Logistics portfolio includes temperature controlled distribution centers in: USA, Australia, China, Vietnam and Sri Lanka
Growing Partnership with Swire Pacific Cold Storage - China 6 sites: ~250,000 pallets Distribution Coverage for: 40% of China Population 54% of China GDP Yangtze River: Shanghai, Nanjing Close Proximity to Ocean Ports: Guangzhou, Shanghai, Ningbo
USCS Network Overview
What is USCS Logistics?
Multi-Vendor Consolidation (MVC) Multiple shippers share a trailer from the same source location where each pays for their portion of what is on the truck based on an agreed upon formula or fixed rate.
Benefits of using USCS MVC Program: • • • • • • • •
Reduces transportation costs Transportation management relief Defined delivery schedule Improves on-time performance Enhances on-shelf availability Reduces carbon footprint Less Dock Deliveries Business Intelligence
Multi-Vendor Consolidation “MVC” Concepts • Consolidate less than truckload (LTL) freight into high cube shipments at cost effective rates • Coordinate order movement through utilization of well defined sailing schedules • Continuous development of a trusted carrier base • Utilization of a custom built fully integrated Transportation Management System (TMS) • Leverage “Cluster” arrangement of facilities in strategic geographic areas for freight consolidation • Regionalized staff with support from main office (on-going training, system support, program development, legal, contracts, etc.)
• Commitment to growth, skill development and new technology
Carrier Management • Maintain local and national relationships with Core Carriers • Standardized Minimum Requirements Contracts Fuel Surcharge Insurance Operating Authority Satisfactory SMS Scores Adherence to USCS Claims Management expectations Appointment and order tracking compliance Carrier/Driver plant level operational requirements
• • • • • • • •
• Real time Management Tool to Monitor • •
Current Insurance Authorities
• •
Safety Scores Insurance History
Costing Theory USCS hires truckload carriers Convert truckload pricing from carriers to less than truckload pricing for customers Charge customers a per hundred weight price (cost per pound *100) for the space they utilize on a trailer Our costing model combines new customer business (from an order set) with historical shipments to determine “what if” scenarios and how these new orders would affect USCS cost The key is a robust consolidation program with similar customers: rates for new customer are based on how well the potential customer fits with the existing customer base The more orders than can be combined to minimize stops, the more savings customers will see
Consolidation: Parameters Each truck my have up to:
12 stops 2,400 cube 42,000 lbs 30 pallets
Consolidation Example
Customer
Consignee
Location
Weight
Cube
Pallets
1
Walmart
Bedford, PA
12,500
930
12
2
Walmart
Bedford, PA
3,900
270
4
3
Walmart
Bedford, PA
15,700
580
8
4
Walmart
Bedford, PA
3,700
390
4
Total:
35,800lb
2,170 cube 28 plt
Consolidation Example Truck rides with: • 28/30 pallet positions • 35,800 lb /42,000 lb • 2,170 cube /2,400 cube • 1/12 stops Customer 1
2
3
4
LTL vs MVC Charges LTL
$695
$310 $870
$295 = $2,170
MVC
$420
$260
$525
$260 = $1465
$275
$140
$345
$35
= $795
40%
16%
36%
12%
37%
Savings
MVC Program / “Collaborative Shipping” “The ability to participate in the USCS MVC program is critical to our success in maintaining transportation cost control. Their consolidation network is fast, efficient, and always expanding.” Director of Distribution Services, Gorton’s
Program Inception 1978 Steady Program growth Over 1.3 billion lbs. shipped annually Over 100 shippers participate in program 65% frozen vs. 35%refrigerated
“The US Cold consolidation program has provided value to Unilever since the start. I have to admit, I was reluctant to participate in this program at first; however, following a six month audit of the program, the KPIs measured indicated that the program was successful and as such, changed my perception.” Transportation Operations Manager, Unilever
The Right MVC for Your Business • Robust Program with Similar Shippers • Defined Carrier Management Process • Available Supporting Business Intelligence • Aligned Values of Cost and Service • Technologically Progressive • Distribution Structure to Support Your Business
Transportation Terms From Around The World
“Piggyback”
“Cubing Out the Trailer”
“Consolidation”
Over a Century of Service… • HISTORY • Operating since 1889 • Began with ice manufacturing and distribution • Purchased by Swire Group in 1982
TODAY • National network of 38 facilities in 13 states • Over 260 million cubic feet; 3rd largest PRW in North America. • Fully integrated temperaturecontrolled logistics service
Swire: Global Presence • Established in 1816; Privately held • Multi-national diverse corporation based in the U.K. with operations worldwide • Logistics portfolio includes temperature controlled distribution centers in: USA, Australia, China, Vietnam and Sri Lanka
Growing Partnership with Swire Pacific Cold Storage - China 6 sites: ~250,000 pallets Distribution Coverage for: 40% of China Population 54% of China GDP Yangtze River: Shanghai, Nanjing Close Proximity to Ocean Ports: Guangzhou, Shanghai, Ningbo
USCS Network Overview
What is USCS Logistics?
Multi-Vendor Consolidation (MVC) Multiple shippers share a trailer from the same source location where each pays for their portion of what is on the truck based on an agreed upon formula or fixed rate.
Benefits of using USCS MVC Program: • • • • • • • •
Reduces transportation costs Transportation management relief Defined delivery schedule Improves on-time performance Enhances on-shelf availability Reduces carbon footprint Less Dock Deliveries Business Intelligence
Multi-Vendor Consolidation “MVC” Concepts • Consolidate less than truckload (LTL) freight into high cube shipments at cost effective rates • Coordinate order movement through utilization of well defined sailing schedules • Continuous development of a trusted carrier base • Utilization of a custom built fully integrated Transportation Management System (TMS) • Leverage “Cluster” arrangement of facilities in strategic geographic areas for freight consolidation • Regionalized staff with support from main office (on-going training, system support, program development, legal, contracts, etc.)
• Commitment to growth, skill development and new technology
Carrier Management • Maintain local and national relationships with Core Carriers • Standardized Minimum Requirements Contracts Fuel Surcharge Insurance Operating Authority Satisfactory SMS Scores Adherence to USCS Claims Management expectations Appointment and order tracking compliance Carrier/Driver plant level operational requirements
• • • • • • • •
• Real time Management Tool to Monitor • •
Current Insurance Authorities
• •
Safety Scores Insurance History
Costing Theory USCS hires truckload carriers Convert truckload pricing from carriers to less than truckload pricing for customers Charge customers a per hundred weight price (cost per pound *100) for the space they utilize on a trailer Our costing model combines new customer business (from an order set) with historical shipments to determine “what if” scenarios and how these new orders would affect USCS cost The key is a robust consolidation program with similar customers: rates for new customer are based on how well the potential customer fits with the existing customer base The more orders than can be combined to minimize stops, the more savings customers will see
Consolidation: Parameters Each truck my have up to:
12 stops 2,400 cube 42,000 lbs 30 pallets
Consolidation Example
Customer
Consignee
Location
Weight
Cube
Pallets
1
Walmart
Bedford, PA
12,500
930
12
2
Walmart
Bedford, PA
3,900
270
4
3
Walmart
Bedford, PA
15,700
580
8
4
Walmart
Bedford, PA
3,700
390
4
Total:
35,800lb
2,170 cube 28 plt
Consolidation Example Truck rides with: • 28/30 pallet positions • 35,800 lb /42,000 lb • 2,170 cube /2,400 cube • 1/12 stops Customer 1
2
3
4
LTL vs MVC Charges LTL
$695
$310 $870
$295 = $2,170
MVC
$420
$260
$525
$260 = $1465
$275
$140
$345
$35
= $795
40%
16%
36%
12%
37%
Savings
MVC Program / “Collaborative Shipping” “The ability to participate in the USCS MVC program is critical to our success in maintaining transportation cost control. Their consolidation network is fast, efficient, and always expanding.” Director of Distribution Services, Gorton’s
Program Inception 1978 Steady Program growth Over 1.3 billion lbs. shipped annually Over 100 shippers participate in program 65% frozen vs. 35%refrigerated
“The US Cold consolidation program has provided value to Unilever since the start. I have to admit, I was reluctant to participate in this program at first; however, following a six month audit of the program, the KPIs measured indicated that the program was successful and as such, changed my perception.” Transportation Operations Manager, Unilever
The Right MVC for Your Business • Robust Program with Similar Shippers • Defined Carrier Management Process • Available Supporting Business Intelligence • Aligned Values of Cost and Service • Technologically Progressive • Distribution Structure to Support Your Business
