Importance of Transportation Information - Part 2

From Austin Consulting

Last month, our team made several great points about the importance of gathering good information when approaching any sort of transportation analysis. Data is the backbone of all of our studies. The presence of good information is critical to ensuring we provide the best results. With any project, the more information provided, the better the outcome. If we get data that isn’t up to par or that can’t be provided, then we have to make a lot of assumptions – and we all know what happens when we assume!

Below are some tips on how to set the stage for a successful transportation analysis.

As you gather your data, consider shipment method, contracts, special rates and freight class identifications. Depending on the quantity of your products, there are several ways to ship them: less-than-truckload (LTL), full truckload, intermodal and rail. Maximizing the space available on a truck is key to keep costs down and allowing for the most accurate analysis. Maxing out space and volume of a trailer is key to getting the most out of your freight dollars.

In terms of LTL shipping, knowing the correct freight class is key in getting the best future rate. Some products have a specific National Motor Freight Classification (NMFC) number that corresponds to a specific class. Several of these NMFC numbers are density-based, meaning you will need to know the skid’s density in order to determine the correct class. With LTL, each carrier runs on efficiency, so they are looking to max out the total weight carried for their line-haul operations. For these carriers, typically the more dense the freight is, the more attractive the price is. Ensuring that the provided freight (inbound and outbound) is classed properly will help you find the most accurate favorable area.

With that in mind, what does good data look like when it comes to a transportation analysis?

  1. As much shipment information as you can possibly provide, including: origin and destination information (city, state, and zip code), the weight of each shipment, the number of times that shipment is sent out annually, the type of product that is shipped, and any special charges associated with a shipment.
  2. Shipments broken down by mode of transportation. Different types of carriers (truckload, LTL, intermodal, etc.) all price things differently. If we know what carrier was used, we can accurately compare that pricing to other carriers.
  3. The correct cost paid for each shipment – this is the most important piece of data!

Once this information is gathered, we compare that data to industry averages and also compare your costs to other potential trial cities. We can then publish that information any way you desire (cost per pound, cost per mile, total costs, etc.). If we don’t have accurate data, you won’t get accurate results.

When you think about this concept, it isn’t far off from society as a whole today. Whether you know it or not, data is constantly being compiled and analyzed to determine any number of outcomes – from sending targeted coupons based on the purchases you make, to credit card companies calling to confirm charges that are out of the norm.

Whether your freight spending is thousands of dollars or millions of dollars, providing the most information will help determine the optimal results from the analysis. We hope to not only provide you with the best location available, but also with plenty of knowledge on how to optimize your current transportation network.

Read "Importance of Transportation Information - Part 1"