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October 15 2018

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October 15 2018 | The Journal of Commerce 39 www.joc.com Inland Distribution Cover Story Special Report should not feel bad about increasing their profit margins. The higher income they receive will still fall short of recovering the decline experienced in the last several years, especially 2016. This supply and demand imbalance offers an opportunity for shippers to assess their shipping practices. They will find their ineffi- Use existing capacity efficiently IN SPITE OF all attempts to improve trucking utilization, about 15 percent of capacity is still wasted. That's often attributable to factors shippers can control or change, such as how they pack and palletize freight. Shippers also waste capacity by keeping drivers waiting to deliver or pick up freight; handling more deliveries and pickups from facilities without a freight dock or with a very tight maneuvering yard; and keeping drivers waiting to obtain confirmation of delivery. ShipMatrix data on billions of parcels and LTL shipments show that even with new dimensional charges, there are still many parcels that are shipped with excessive cube. This problem is not limited to parcel shipments but gets manifested in higher cube in LTL and truckload ship - ments, thereby adding to higher transpor- tation cost. Rate increase alert At least one large trucking company last year alerted its customers to budget for a 10 percent increase in transportation rates in 2018. The company went to great lengths to explain the various factors that were contributing to such a projection. Did shippers receive an explanation from Apple for charging more than $1,000 for its new lox iPhone? When have shippers received any explanation from Microsoft for major increases in prices for its software and hardware products? Shippers would like to see carriers add capacity to avoid rate increases in this tight market. However, when the trucking industry had excess capacity in the past, the shippers were quick to demand lower prices and squeeze carrier margins. In this market, the carriers ciencies are responsible for more cost in absolute dollars than the increase in expen- diture that results from higher rates. JOC Satish Jindel is president of SJ Consulting Group, a consulting firm focused on transportation sector with offices in Pittsburgh, Pennsylvania, and Jaipur, India.

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