When you’re on the receiving end of a delivery, you don’t really care how it got to you as long as you get what you ordered and it arrives undamaged and on time. However, if you’re a manufacturer or distributor and are responsible for delivering the right goods to the right place on time, you should have a keen interest in the logistics behind the delivery method.
Selecting the proper freight service
One of the main concerns that manufacturers and distributors have in handling freight is navigating the use of the shipping methods, most notably, full-truck load (FTL) and less-than-truckload (LTL). In most cases, it’s not a matter of choosing one over the other but understanding how each can be used most successfully. Depending on what you are trying to achieve with a particular shipment, one may be better than the other.
FTL is generally thought to be the most economical way to transport goods if you have enough to fill the trailers. It’s also faster because shipments aren’t routed via hubs or other intermittent stops. With products only being handled at pickup and drop off, products are more likely to arrive undamaged. Shipping costs are determined by the mile versus a per-pound charge, which can be more economical.
On the other hand, LTL carriers have a competitive advantage in providing unique transport solutions. At the top of the list is having the flexibility to ship quantities of various sizes to multiple locations. Having this flexibility speaks directly to the needs of the aftermarket, which operates under the auspices of having the right products in the right places at the right time.
LTL can meet most challenges
LTL can provide two parts of the aftermarket distribution equation, which is delivering the right products to the right places. But because of the extra handling, multiple stops and other inherent interruptions, delivering products at the right time can be challenging. Ultimately, late deliveries could mean distributors or resellers losing business if the products are “A” movers and generate a high number of turns. Suffice it to say, there probably aren’t any distributors or resellers who will knowingly lose revenue over slow product transport.
However, these challenges with timely delivery of LTL shipments can be met with other techniques that are designed to hasten delivery and keep costs down. For example, one method is to send freight to cross dock facilities and immediately load it on other trucks. Another is to consolidate multiple shipments from multiple locations in a central location so that they can be picked up by customers.
Short of these methods being used, LTL shippers can build-in time for expected delays if their carriers have a history of delays. Perhaps a more prudent action would be to change carriers for one that will guarantee delivery on a prescribed timetable.
Used correctly, LTL is also economical. In fact, you only pay for what you use. If you only need half a trailer, that’s what you hire instead of hiring a full trailer and only filling it half full. An LTL shipper will find other companies to fill the trailer. That’s not for you to worry about. Bottom line is that you save a tidy sum on each shipment, which over time, adds up to huge cost savings.
Generally speaking, LTL is used by smaller companies that don’t ship in large volume. However, in the aftermarket the size of the company usually doesn’t matter. Most companies — large and small — are shipping large numbers of small shipments making LTL not only a viable method of shipping but the preferred one. Moreover, most of the aftermarket’s shipments weigh between 100-10,000 lbs., which by definition, are handled by LTL carriers.
Here’s an alternative
FTL and/or LTL management is not for the novice. Rather than spend the time, effort and money managing what is arguably one of the most complicated issues in the aftermarket, it may be best to turn to an intermediary with much more knowledge, experience and wherewithal to facilitate, or in some cases, manage parts distribution. More than likely, this would be a third-party logistics provider (3PL). Besides having the most sophisticated logistics software, which is continually updated, they have made the investment in comprehensive distribution infrastructures. Moreover, 3PLs manage labor and handle regulations compliance both domestically and internationally.
For manufacturers who feel overburdened by unreasonable distributors, 3PLs can step in and handle distribution in full or in part. For distributors who are interested in working with manufacturers on a more even keel and value long-term relationships, 3PLs can be integrated to augment their present transport systems.
This may be hard for traditional aftermarketers to swallow but if efficiency, cost savings and transparency are important, then the industry may have to look beyond itself to achieve them.
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