Procurement of Truckload Transportation: An Industry Insider's Perspective
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I recently had the pleasure of interviewing George Abernathy, a true legend in the transportation procurement business, for my podcast. George is a Board Member & Strategic Advisor and is the very recent past President of Emerge.
Over the course of our conversation, George provided invaluable insights into this complex industry from someone with over three decades of experience. Here are a few of the many takeaways:
Deregulation Revolutionized the Industry
When the trucking industry was deregulated in 1980, it opened the door for thousands of new carriers to enter the market. This dramatically increased competition and drove down average freight costs. Deregulation created growth and opportunities that are still being reaped.
Procurement of Truckload Has Unique Challenges
Things like bid generation, carrier selection factors, and the "non-binding" nature of contracts make truckload procurement quite different from procuring other goods. George dove deep into these nuanced topics, providing helpful context for outsiders, those who are new to transportation procurement, and even seasoned professionals.
Routing Guides & Waterfall Systems
Carriers are assigned to lanes through a routing guide generated from the bid results. With thousands of carriers and uncertain demand, "waterfalls" allow loads to trickle down the guide if the top carriers can't accept.
Spot Market Volatility
Lanes with low and unpredictable volumes often fall out of routing guides, landing in the volatile spot market. George explained how platforms can better connect these loads directly with interested carriers.
Technology is Enhancing Procurement
While challenges remain, technology has accelerated innovation in transportation procurement best practices. More nimble bidding, strategic carrier relationships, and connectivity are allowing shippers and carriers to achieve mutual success in new ways.
If you listen to the podcast, you will come away with tremendous respect for the complexities of this industry and appreciation for visionaries like George Abernathy who are helping all participants optimize operations through knowledge and technology. It was a privilege to learn from such an esteemed expert.
Resources for this Episode:
https://onlinelibrary.wiley.com/doi/full/10.1111/jbl.12333
Chapters
1. Procurement of Truckload Transportation: An Industry Insider's Perspective (00:00:00)
2. Success in Procuring Truckload Transportation (00:00:10)
3. Trucking Industry Challenges and Opportunities (00:10:19)
4. Contract and Spot Rates in Transportation (00:24:30)
5. Understanding Transportation Procurement and Fuel Surcharges (00:36:59)
6. Podcast Support and Sponsor Acknowledgement (00:47:19)
47 episodes