M33 Webinar: Prepapring for the Upcoming Capacity Crisis

Industry experts are predicting carrier pricing will rebound this year across both the TL and LTL sectors. Companies that take a proactive approach to this dynamic market will best mitigate the pricing impacts on their supply chain. We held a webinar to educate our clients, prospects and business associates about what industry-leading companies are doing today to better position themselves for the coming crisis. You can watch it here:


If you have any questions or comments about the issues and recommendations in this presentation, please feel free to contact us.

YRC Takes Another Hit

In keeping with the warnings we expressed last month, YRC has reported some more bad news:

YRC Worldwide, the country’s largest less-than-truckload carrier, lost $309 million in the quarter ending June 30 as shippers apparently abandoned the troubled company in large numbers, sending revenue down 45 percent.

The company, which has struck deals in recent weeks with its lenders and the Teamsters union to reduce its costs and debt troubles, saw shipping at its national LTL business fall more than 37 percent and tonnage per day at its regional unit decline 26.4 percent compared to the last year’s second quarter.

Even if you ignored these figures, two factors would indicate that YRC is in its last throes:

1. Bankruptcy is often a self-fulfilling prophecy. Simply because YRC might go under, responsible managers are making contingency plans with other carriers. Those carriers are already eating into YRC's market share, resulting in less revenue.



2. People used to joke that the Detriot automakers were health care companies that made cars on the side. The same could be said of YRC's pension fund. No matter what kinds of deals the company makes with labor, the unavoidable commitments YRC owes to pensioners is unsustainable.

YRC may eventually get their finances in order, but that doesn't mean shippers shouldn't be making contingency plans. Capacity will be tight, and those with existing contracts will lock in the good rates.

Companies Are Getting Creative to Cut Costs

A recent article in Supply Chain Brain underscored what so many companies have experienced lately:

In the midst of a brutal recession, companies think of little else than cutting costs. According to a new report by Archstone Consulting, however, they haven't been thinking enough. The firm's annual Cost Management Survey finds that 57 percent of respondents “have not yet identified sufficient savings opportunities to meet the cost-reduction targets necessitated by the dramatic economic decline in 2009." Last year's survey uncovered "a high rate of success” among organizations looking to cut costs, with an emphasis on achieving incremental savings, Archstone says. Now, with the economic crisis growing more dire, companies are deploying more complex initiatives, such as logistics redesign, shared services and asset rationalization.

Cost-cutting trends like these have been emerging across the country, if not the world, as oraganizations attempt to decrease operating costs. For example, universities are pooling their IT infrastructures, retailers are teaming up for promotions and advertising, and manufacturers are starting to collaborate in their distribution.

We detailed the many benefts of inter-company collaboration last year, specifically referring to the strategy as a way for businesses to shield themselves from market conditions. That advice is proving to be very prescient in light of our lingering economic doldrums.

You can take another look at that piece here: Surviving the Highs and Lows of Transportation

How's Your Risk Management Strategy?

There’s no question that companies will come out of this recession leaner than they were going in, but the competitive advantage will go to those companies that used the economic slowdown to eliminate waste and reduce risk:

The outcomes of inadequate risk management span the gamut from financial losses to a loss of customer goodwill that may well threaten the long-term viability and survival of a firm. Today, with an increasingly unforgiving regulatory environment and legislation such as Sarbanes-Oxley that requires business technology systems to function without error, executives need to be concerned about risk management more than ever before. (Baseline Magazine, 5/5/2009)

Is your company doing everything it can to reduce waste and minimize risk in the distribution process? Is your competitor's?