freight performance & carrier strategy...from our sponsor company origins and destinations 3....
TRANSCRIPT
FreightPerformance
&CarrierStrategy
CarolineBleggiFrederickZhou
Overview
1.Problem
2.Data
3.Metrics
4.InitialFindings
5.CarrierClusteringFindings
6.ShipperProfiles
7.Implications
1.Problem Determinegroupingsofattributesthatinfluencecarrierstrategyandshipperprofileperformance.
Whyisthisimportant?
Transportationefficiencyisincreasinglybecomingacriticalcomponentofbusinessstrategyforshippers.
Shippersandcarriersinthefreightindustryareseekingtoimprovetheirefficiencyandprofitabilityinthiscompetitivemarket.
2.DataAnalysiswascompletedondatasetspanningJanuary2014– December2016includingTenderLevelandStopLeveldatafromoursponsorcompany
OriginsandDestinations
3.Metrics• OnTimeDelivery(OTD)• OnTimePickUp(OTP)• 1st TenderAcceptanceRate(AR)• PerfectShipment
MetricsoverTime
Measure 2014 2015 2016 OverallOTD 84% 88% 87% 87%
Price/Mile $2.47 $2.28 $2.10 $2.19OTP 78% 80% 79% 80%
1st TenderAR 71% 76% 85% 80%
4.InitialFindings
BinaryLogisticRegressionsOTD,OTP,1st TenderAcceptance,PerfectShipment
HighPerformingProfileRegressionComparison
1st TenderAcceptance OTD OTP PerfectShipment
CarrierType AssetCarrier NotSignificant AssetCarrier AssetCarrier
TenderedOn Weekday NotSignificant Weekday Weekday
ShipperIndustry Manufacturing Paper&Packaging Manufacturing Manufacturing
BidType Non-Spot Spot Spot Non-Spot
LengthofHaul >706miles >723miles NotSignificant >716miles
TenderLeadTime >1.3days NotSignificant NotSignificant >2.4days
PriceAge <152days <151days <152days <148days
5.CarrierClusteringFindings
Hierarchicalclusteringforcarriersbasedon:§ FleetSize(howmanytrucks)§ GeographicCoverage(numberofstatescovered)§ NumberofLanesserved§ NumberofCustomersserved§ IndustryCoverage§ LaneFocus(numberofloadsperlane)§ CustomerFocus(loaddensitypercustomer)§ TotalNumberofLoads
ClusteringforCarrierProfilesConstellationChartConstellationChart
1Leaders
2MajorPlayers
3Laggards
Assetbasedcarriersandnon-assetbasedcarrierswereclustered
separately
DendrogramConstellationChart
ClusteringforCarrierProfiles– Profilingforassetbasedcarriers
BestPerformer(110)- LeaderPerfectShipmentRate76%
q Mid-sizedCarriersq Serverelativelylargenumberof
customersq Lowlaneandcustomerfocus
LowPerformer(182)- LaggardPerfectShipmentRate31%
q Mid-sizedCarriersq Focusonlimitednumberof
customerswithinasingleindustryq Focusoncertainlanesand
geographicalregionsasnichemarkets
Mediocre(103)– MajorPlayerPerfectShipmentRate56.3%
q LargeCarriers(1000+)q Widegeographicalservicecoverageq Servemanycustomersacrossdifferent
industries.
ClusteringforCarrierProfiles– Profilingfornon-assetbasedcarriers
BestPerformer(110)- LeaderPerfectshipmentrate86%
Notice:
q Lanecoveragesmallerfornon-assetcarrierbasethanforassetbasedcarrierbase
q Tomaximizeclusteringeffects,numberofcustomersandnumberoflanesservedreplacedcustomerandlanefocus
LowPerformer(182)- LaggardPerfectshipmentrate43%
Mediocre(103)– MajorPlayersPerfectshipmentrate66%
NonAssetCarrierCharacteristics:
q Leadingcarriersalsoshowfocusintermsofcustomersandlanesq Loadspercarriersfornon-assetleadersismuchsmallerthanfor
theassetbasedcarrierleaders,thiscouldreflectcapacitylimitormorefocusedstrategy
q Themajorplayerclustertakes80%ofthetotalloadsofnon-assetcategory,reflectingamoreconcentratedcapacity
ClusteringforCarrierProfiles– ConsistencyofPerformanceAssetbasedCarriersOTDandAcceptanceRateSpread
Bothassetandnon-assetbasedcarriersshowthesamepattern:q Leader groupismoreconsistentthanLaggardgroupintermsofstandarddeviationof
performanceonbothOTDand1st OrderAcceptance
q ThespreadofLaggardgroupofOTDandARiswideandpolarizedi.e.goodOTDbutpoorARandviceversa
Non-AssetbasedCarriersOTDandAcceptanceRateSpread
1st Hypothesis:Acarrierwillperformbetterifithasmoreconsistentloads
Carrier2Carrier1
PeriodDensity:Loadsperas%oftotalloadsina 2yeartimeframeforacarrier.
ClusteringforCarrierProfiles
Accordingtothehypothesis,Carrier1shouldhavebetterperformancethanCarrier2
Nullhypothesisisrejected forMajorPlayers
WithintheMajorPlayersgrouptherewasastrongnegativecorrelationbetweenStdDeviationofPeriodDensityandPerfectshipment.
Themoreinconsistentloadsareacrossperiods,thelowertheperfectshipmentrateis.
CorrelationAnalysis
ClusteringforCarrierProfiles
2nd Hypothesis:Acarrierwillperformbetterinitshighdensitylanesthanlowdensitylanes
Docarriershavehighandlowdensitylanes?
OnlyasmallnumberofCarriershavelaneswithhighLoaddensity(>3%).Thoseareabout9%ofthetotalLoadsinMajorPlayercluster.
Highdensitylane,9%oftotalloads
LoadConcentration
ClusteringforCarrierProfiles
NullhypothesisisrejectedforMajorPlayers
Cluster3:1.8%oflane-carriercombination,lanedensityat10%with82%perfectshipment,outperformotherswithlowdensity
ClusteringforCarrierProfiles
ShipperPerformance Perfect ShipmentRate LaneDensity
Cluster149% 0.9%
Cluster257% 0.2%
Cluster382% 10%
6.ShipperProfiles
Analysisofshipper’sportfoliosofcarriersviewedbycarrierstrategyandcarrierassetbaseofferedinsightsonstrong-performingportfoliomixestohelpinformfutureroutingguidedecisions.
ShipperPerformanceBreakdownbyPortfolioofCarrierClusters
ShipperPerspective- CarrierDeploymentbyShippersHigh ServiceLevelShippers
ShipperPerspective- CarrierDeploymentbyShippersLow ServiceLevelShippers
ShipperPerspective- CarrierDeploymentConclusion
Insight1:Non-assetcarrierscanbetherightstrategicchoiceforashipper
Thereisnosignificantserviceperformancedifferencefromsolelyfavoringassetbasedcarriers.
ShipperPerformance
PerfectShipment
Rate
ProportionofAssetBasedCarriers
ProportionofNon-AssetBased
Carriers
HighPerformanceProfile1
82% 70% 30%
HighPerformanceProfile2
81% 33% 67%
LowPerformance 46% 79% 21%
ShipperPerspective- CarrierDeploymentConclusion
Insight2:Leadercarriersimproveshipper’soverallservicereceived.
Highperformingshippersusesignificantlymorefocusedcarriers.
ShipperPerformance
PerfectShipment
Rate
ProportionofLeaderCarriers(asset&non-asset)
ProportionofLoadsbyLeaderCarriers(asset&
non-asset)
HighPerformanceProfile1
82% 42% 51%
HighPerformanceProfile2
81% 51% 82%
LowPerformance 46% 5% 7%
ShipperPerspective- CarrierDeploymentConclusion
Insight3:Majorcarriersofferthemostcapacitytothemarket.
AllshippersuseMajorPlayerstocovertheirloadsbutneedtoconsiderwhichMajorPlayersareregionalleaders.
ShipperPerformance
PerfectShipment
Rate
ProportionofMajor Player
Carriers(asset&non-asset)
ProportionofLoadsbyMajorPlayerCarriers(asset&non-
asset)High
PerformanceProfile1
82% 31% 31%
HighPerformanceProfile2
81% 44% 16%
LowPerformance 46% 42% 6%
7.Implications
Differingcarrierstrategiesandrolesresultindifferentserviceperformance.
Somegroupsofattributesworktogethertoimprovefreightperformance.Theseincludelongerleadtimes,consistencyofloadvolume,geographicandlanefocus,youngerpriceages,andcertainmixesoftypesofbothassetandnon-assetcarriers withinashipper’sportfolio.
Diversifiedshipperportfolioswithahigherproportionofmorefocusedcarriers havestrongerperformance.
ImplicationsforCarrierProcurementandDeployment
ThePeckingOrderofcarrierselection:
1. IdentifyLeader(morelaneandcustomerfocused)carriersinthelanesforwhichashipperneedstruckloadserviceandmaximizeleadercarrier’savailablecapacity.Developrelationshipstobuildthisgroup.
2. IdentifycarriersinMajorPlayersgroup,maximizetheircapacityinthelanesinwhichtheyare“regionalleaders.”
3. ComplementtheremainingloadsusingcarriersintheMajorPlayersgroup.
BalanceServiceCapacityandServiceLevel
BroaderResearchImplicationsCarriersareratedonageneralscorecardwhichallowsthemtobenchmarkandgivesshipperssomeguidanceondevelopingtheirroutingguides.However,wefoundcleardistinctionsin
marketplaceroleandsubsequentstrategyforcarriers,whichhaddirectimplicationsfortheirserviceperformance.Suggeststhattheuniform
scorecardsusedtoevaluateshipperperformancemaynotbethemostappropriatewaytoratecarriers.
Whatdoesthismean?
Developingstrategyspecific keyperformancemetricsandcorrespondingscorecardswouldgiveshippersabetterunderstandingofcarrierperformancerelativetotheirspecificmarketneeds.
Thiswouldalsoallowbettervisibilityforshipperstobuildstrategicrelationshipswiththerightcarriersforthem.
Thankyou!
Thisresearchwouldnothavebeenpossiblewithoutthegeneroustimeandhelpfrom…ChrisCapliceSteveRaetzKevinMccarthyGlennKoepkeAndrewWelchGauravKarker
Questions? ?