Transportation as a key supply chain element has become both strategically and tactically a challenge for most companies over the last few years, due to unprecedented energy and fuel costs. Companies are being forced at a strategic level to better understand how to best configure their distribution networks.

Macro trends are emerging from these dramatic changes in rising transportation and logistics costs and these trends will impact how buinesses will have to manage their supply chains in the future.

• - As Transportation is moving closer to being 70% of total logistics costs, centralized distribution systems, depending on a "high miles" network is not optimal
• - Companies need to examine their Distribution Network (Sourcing / Inventory Deployment Points / Customer Ship To's) to determine with high cost transportation what an optimal network may look like, cost and understand potential impact to service changes

Macro Trend #2: Greater Use of 3PL's Infrastructure / Assets to Enable Inventory Deployment Closer to Consumed Use

- Companies will need to use the assets of others (Transportation providers / 3PL's) to enable deployment of inventory closer to its point of use and rely on these external assets to enable lower transportation costs and efficient inventory deployment

Macro Trend #3: Lowest Cost Country Sourcing Strategies Offset by Rise in Transportation Costs (Container Costs)

- The cost of shipping a standard container from East Asia to the U.S. Eastern seaboard has already tripled since 2000 and will double again as oil prices head towards $200 per barrel
- At $200 per barrel, we are back at "tariff" rates not seen since prior to the Kennedy Round GATT negotiations of the mid-1960's
- As oil prices keep rising, pretty soon, those transport costs start cancelling out the East Asian wage advantage - they already have in steel. Soaring transport costs have already more than eroded the wage advantage and suddenly Chinese-made steel is uncompetitive in the U.S. market

Leveraging the transportation service provider marketplace professionally with the right analytical output, format as well as being armed with benchmark rate / volume / class is how we help our clients achieve a successful and cost effective transportation management program.

We typically help our clients answer the following questions

1. How do we compare when we benchmark our current spend, volumes and shipment characteristics to other similar best practice businesses?
2. What is the best process to professionally represent our company to the transportation service provider marketplace to leverage our spend and volume?
3. What negotiation strategies should we deploy to ensure we maintain a high level of quality yet ensure we receive fair market pricing?
4. What technical strategies can we use to offset fuel surcharges and accessorial charges and be able to monitor any impacts on an immediate basis?
5. Which are the carriers that we should be dealing with and who can bring the best informational and performance monitoring tools?