The importance of pickups and delivery times in goods transportation

At work and at home we see ourselves having to accept habits or customs that we don’t particularly like, yet we end up accepting them as the norm. We could say that pickups and delivery times in goods transportation fall within these customs. It seems that we are obliged to accept a lack of punctuality. However, we have stopped to think about the following: how is it affecting our company? What are the solutions for these drawbacks?

What implications do pickups and delivery times have in goods transportation?

The high workload of shipping companies has delayed the application of improvements in the field of shipping management planning. As a consequence of an increase in the number of incidences, companies are forced to substitute planning for management where the exception is the rule, adding to the high level of stress management suffers. These incidences are usually last minute changes in the number of loads transported, goods which fail to arrive, goods which are not prepared, etc… This translates into delays, schedule changes, increase in the cost of shipments, cancellations, problems in fleet optimisation or in the availability of vehicles, etc.

Unfortunately, there is an incidence which seriously affects the hauliers’s ability of providing an excellent service: the lack of punctuality of collection and delivery times.

How does the lack of punctuality affect transportation times?

  • The person responsible for traffic: in the event of any delay, the person in charge of managing different shipments should reorganise the daily planning of the vehicles. Their goal is to optimise their fleet’s route. They will have to adapt the route to the new timetable, making a new distribution of collections or deliveries. This management is done through continuous emails and calls, which only results in a lot of information getting lost, an increase in stress levels, and the possibility of making mistakes increases exponentially.
  • Driver: it may happen that the origin of an incidence can be affected by a delay in the pickup and delivery by companies due to the goods not being ready, external factors such as traffic, weather, problems with a vehicle or driving and rest times… A delay for the driver will lead to them drive under more stress, which in turn would make them drive faster and perhaps as a consequence more recklessly. This is just because of their good intentions to always arrive on time and do their job with the utmost professionalism.
  • Goods: Every loading or unloading operation or handling carried out under stressful circumstances, increases the probability of an accident occurring. The risk is directly proportional to the level of stress.
  • Company: Finally the most affected by these circumstances caused by a lack of punctuality the freight forwarder or the goods recipient who wishes it to be transported in the time promised. Their business could be seriously damaged for such a delay, it is likely that their operation will suffer from productivity and/or charges for reorganisation. Including production downtime due to a lack of goods. Therefore, as you can see in the previous points, a delay in the collection or delivery times of goods affects all levels and all those involved in the transport sector.

On a day-to-day basis, it seems very complicated to ensure that every shipment arrives on time due to a diverse factors which can affect the normal development of the shipment.

Is it possible to be punctual as a habit and not as an exception?

We believe that the best way to answer to that question is to propose our solution: A great network of very professional drivers and a great operations team.

Incidences arising from a loader’s own business

During the production and handling of goods generate changes in volume, number of goods to be transported, delays, etc. These incidences or changes generate haste and improvisation in a shipment’s management in the freight forwarder’s facilities which increase the probability of imbalances between the vehicle assigned for said load (before the change) and the vehicle suitable for the load (after the change.)

Incidences arising due to unforeseen circumstances

Obviously, when faced with unforeseen factors or force majeure, such as a roadblock or adverse weather conditions, the likelihood of a delay increases, and above all lowers the traffic manager’s ability to solve it. Furthermore, we have causes or typical unforeseen circumstances which arise from day to day problems: breakdowns, drivers having health problems, etc.

Emergency shipping

Sometimes an urgent shipment arises, and there is no planning for it. A client simply asks you for something and you must tend to them. This emergency usually results in a higher cost of transportation.

Conclusions


We know that it is practically impossible to solve all of the problems and incidences which could put at risk the accomplishment of the collection and delivery times of your goods. However, we also know that we provide a solution where the standard (delay) becomes an exception. This same solution also serves for the stress that companies suffer from due to emergency shipments, they believe it impossible or difficult to fulfil “either because of time or price”, which is not the case and in this way they succeed in meeting the needs of their clients without losing their competitiveness.

All this is in part possible due to the digital age and innovation making headway in the logistics and transport industry, in the same way, that not so long ago taking a taxi at midnight meant having to walk for 20 minutes until you come across one.

What is the key to handling peak demand periods for enterprises?

The fourth quarter every year is typically the peak season for transport demand. In anticipation of this transport demand spike, the majority of supply chain managers are already preparing solutions in order to prevent a dramatic increase in their operational costs. As transport demand goes up and supply remains largely unchanged in the fourth quarter, freight rate prices skyrocket. In fact, Capgemini’s supply chain manager points out the fourth quarter last year has recorded the highest freight rates since they started tracking them 11 years ago. In other reports, Goldman Sachs expects transport spot rates to peak during the last quarter of this year again.

Interestingly, the annual demand spike doesn’t only affect specific industries that are characterised by seasonality. Due to a general increase in demand, driven by consumer industries and the impact of e-commerce growth, this effect can be observed in almost any sector. Failure to prepare for demand spikes often results in shippers having to turn to expensive spot markets to cover urgent transportation needs. In fact, according to our data, the markup for spot prices within regional transport can reach up to 15-20% during times of supply shortage. For supply chain managers, this can severely impact their yearly logistics budget, direct key resources away from the operations team and put logistics at risk.

How Enterprises Can Ensure Best Prices During Demand Peaks

Traditional RFPs On Their Own Are Not Enough

Larger shippers, especially enterprises, usually try to prepare for demand peaks by creating a shield of tender-negotiated rates with shippers to protect themselves from market fluctuations. This helps them to maintain some predictability within the highly volatile deal-based freight rate market where prices are determined by offers. Additionally, they often rely on traditional logistics companies and transport providers to guarantee the same service level throughout the whole year.

However, with the general growth of e-commerce, the increasing demand for transport and the shortage of qualified drivers, many traditional logistics providers and transport providers are now failing to maintain load coverage and capacity during peak periods. As a result, 3PLs have to prioritise their contracts according to tender value. This often means dedicating their limited capacity to those that ensure them the highest ROI and rejecting low-value tenders, if the previously agreed contracts allow for this. In fact, this trend is exactly what we observe in markets. For instance, in the busy summer season this year, Outbound Tender Reject Rates (OTRR) jumped to over 25% in the US before eventually starting to fall below 20% in the following weeks. For the upcoming peak season with Black Friday, Cyber Monday, Christmas and Boxing Day, this rate will probably be much higher.

The Outbound Tender Reject Index typically shows sharp increases for the end of the year, but this Summer has been reaching record levels too. Source: SONAR

Ultimately, individual RFPs (requests for proposals) alone can’t adequately prepare large shippers for peak demand: new methods will be needed to fully prepare for high-demand periods.

Routing Guides Are Better, But Don’t Fix The Problem

A possible solution for shippers to deal with demand peaks is to diversify their provider base, to build a solid database of backup providers or to create a larger base of 3PLs with equal shares. In short, the idea is to develop a list of multiple logistics providers with pre-agreed freight rates. This means that whenever a provider fails to handle a load, others can step in and help, even during general demand spikes. Of course, when demand peaks reach their climax and several providers start to drop out, supply chain managers are forced to go through their contact base and scramble to find a provider with capacity. This creates a situation of serious stress for logistics managers and it puts the company at risk of failing to deliver on time or within budget.

Ontruck – Digital Marketplace With 100% Load Coverage

One of the new, and better, ways for supply chain managers to prepare for peak demands is to turn to digital marketplaces for transport services, such as Ontruck, that guarantee high load coverage at the best possible price at any season. Ontruck works with larger shippers such as PG, Alcampo and Decathlon in a tender capacity. Given that these larger enterprises value reliability, service and competitive pricing, Ontruck offers several advantages to these clients.

Firstly, Ontruck guarantees a 100% load coverage rate and high service level for regular routes, in order to take care of day-to-day operations. Secondly, Ontruck gives customers preferential access to its database of best drivers for any spot demand so as to ensure high load coverage and best prices. Thirdly, the digital transportation marketplace provides customers with immediate spot pricing that reflects fair market prices. This removes the need for supply chain managers to send endless emails, make multiple phone calls and go through the daily stress of securing a spot shipment. Instead, logistics managers can immediately place any spot shipment request through the application and Ontruck will confirm within a short time whether it can be fulfilled, all of this ahead of other spot requests that Ontruck matches daily.

To sum up, as a provider for regular routes, Ontruck provides supply chain managers with an excellent partner with high load coverage rates. Not only this, but it also gives them access to a digital marketplace that can be leveraged as a flexible resource to cover spot demand or demand peaks in the most efficient way possible.

Would you like to receive information about how we work? Get in touch with us, the Ontruck team will be happy to help you!

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£6.5 billion is wasted in road freight annually, says Ontruck

CV Show, NEC Birmingham: By taking advantage of online commerce, UK freight carriers and shippers could save as much as £6.5 billion annually.
That is the view of David Jennison, UK managing director of online freight marketplace Ontruck, speaking today at the Commercial Vehicle Show 2018 at Birmingham’s NEC.

Jennison says: “Nowadays, most of us are used to looking online to find the best suppliers, lowest prices or the best tool. However, many business practises in road freight remain tethered to manual, offline processes such as phone or fax. Most matching of shipment to haulier is done this way and routing is typically manual, or left to the haulier to figure out. As a result, at least a third of UK trucks on the road are empty at any one time and the remainder, on average, are only 68% loaded. This means that for over 50% of the time a truck is on the road it is not earning money. Our analysis suggests that a technology driven approach to pricing, shipment matching and routing would drive a 25% improvement in efficiency, resulting in immense savings for UK road freight businesses. This is money that UK businesses can ill afford to waste.”

Ontruck, which has already transformed road freight efficiency in its home market of Spain, is attending the CV Show as part of its UK market growth. The company’s cloud-based booking platform and mobile app connects shippers and carriers quickly and easily, improving price-competitiveness and flexibility for those sending freight and boosting vehicle utilisation and convenience for road hauliers.

The elimination of market inefficiency is central to how Ontruck works, says Jennison. “The key is our routing algorithm, which matches demand with available supply and optimises routes for each journey. Carriers can complete more jobs in a day greatly reducing the number of empty miles. There’s now no need for a carrier to travel 50 miles with an empty truck to pick up a couple of pallets, when we can build them a route that picks up multiple jobs along the way. Our long-term goal is to kill the concept of the empty truck.”

Since launching in the UK last September, Ontruck has completed well over 1,700 shipments and more than 120,000 loaded miles, shipping palletised goods for manufacturers, retailers and freight forwarders via a rapidly growing base of more than 250 carriers.

The flexibility provided by the online marketplace means that road haulage companies can expand their operations, achieve more consistent volumes across the year and make more rewarding journeys. Ontruck’s transparency enables shippers to feel confident, which means they book more loads and create more opportunities for carriers.

“We’re already seeing really positive results from our small-to-medium-sized carriers,” adds Jennison. “Their loading has increased, they are being paid on-time through our simple invoicing system and, importantly, are seeing improvements to their bottom line, allowing them to reinvest and grow their businesses. We have carriers earning 20-40% more with Ontruck than with previous partners.”