“The disruption du jour is fuel. But in my 35 or 40 years in logistics, it’s always something. It was COVID, then tariffs, then non-domiciled CDL changes taking capacity out of the market. There are always external forces. There are always headwinds in this space.”
When NT Logistics CEO Lynn Gravley made that observation in July, diesel had climbed above $5 per gallon. For the week of September 21, the national average reached $6.529, according to the U.S. Energy Information Administration. That was another increase of 24.4 cents in one week and $2.780 from a year earlier.
Fuel may be today’s disruption, but Lynn’s larger point is that transportation networks are continually tested by forces outside a shipper’s control.
The question is not whether another disruption will come. It is whether the network is still designed to respond when it does.
Talk with NT Logistics about reevaluating your transportation network.
A transportation network may have been designed around a particular customer mix, order volume, distribution footprint and cost environment. None of those conditions remain fixed.
Customers are added. Order sizes change. Delivery requirements become more demanding. Facilities open or close. Capacity tightens. Fuel prices rise.
The transportation plan often absorbs each change without being reconsidered as a whole.
A customer requests another delivery each week, so the schedule changes. Sales approves a smaller order minimum to protect the relationship. A route is extended to include a new location. When service begins slipping, another truck is added to relieve the pressure.
Each decision may solve an immediate problem. But what happens six months later, after the customer mix, volume and delivery patterns have changed again?
Does anyone go back and ask whether that extra delivery is still necessary or whether the new location still belongs on that route? Is the additional truck still needed?
Often, the answer is no. The exception simply becomes part of the operating model, and this is how transportation networks degrade.
Higher fuel prices do not create that degradation. They make it more expensive.
Improving the network does not mean pretending that every shipment can become a full truckload.
Food, beverage and consumer packaged goods companies operate within real constraints. A customer may order only four, six or eight pallets. Shelf life may limit how much product can be shipped at once. Receiving schedules and service requirements may restrict when deliveries can arrive.
Consumer demand determines what must move. Freshness and service expectations help determine when it must move.
Those realities cannot simply be optimized away.
As Lynn explained, “We can’t manage demand a lot, but we can smooth it a little. By changing minimums and frequencies just a little bit each way, you drive substantial dollars out of your supply chain.”
The opportunity is not necessarily one dramatic change. It may be a series of practical adjustments that allow the network to serve the same demand more efficiently.
One NT Logistics case study shows what this can look like in practice.
NT analyzed 3,597 shipments over six months for a medical-supply company, examining delivery frequency, shipment density, pallet utilization and regional delivery groupings.
The optimized model moved the same total weight with 29.58% fewer deliveries. Mileage declined from 225,010 to 200,168 during the six-month period. Annualized, the study projected 49,684 fewer miles, an 11.04% reduction.
Demand did not disappear, and the company did not move less product. It found a more efficient way to fulfill that demand through adjusted delivery schedules, shipment consolidation and regionalized deliveries.
At today’s diesel prices, those mileage reductions become even more valuable. Fuel, however, is only part of the benefit. Fewer unnecessary deliveries can also reduce driver time, equipment use, maintenance and the operating complexity surrounding each shipment.
Order minimums and delivery frequencies are often treated as customer-service or sales decisions. They are also transportation decisions.
A lower minimum may create smaller shipments. More frequent deliveries may add stops, miles and driver time. Both can affect trailer utilization, route design, equipment requirements and cost-to-serve.
That does not mean every minimum should increase or every delivery schedule should be reduced. It means the business should understand the transportation effect of those decisions.
A competitive freight rate cannot compensate for an inefficient transportation plan. A company can negotiate a favorable rate and still spend too much if it is running unnecessary deliveries, using the wrong mode or serving customers from the wrong location.
The fuel surcharge is easy to see because it appears directly on the invoice. The decisions multiplying its effect may be spread across sales, operations, procurement, distribution and customer service.
That is why transportation costs cannot be evaluated one rate or one route at a time.
A complete network review may need to consider:
These factors interact. Changing one may improve transportation cost while creating a service or inventory problem somewhere else.
The goal is not simply the lowest freight rate. It is the least landed cost across the entire network.
“To get to least landed cost, many times you have to completely redefine or reevaluate the network,” Lynn said.
Fuel prices will eventually move again. The operating decisions inside the network will remain until someone reevaluates them.
Shippers should be asking:
The disruption du jour may be fuel, but the response should extend beyond the fuel surcharge.
You cannot control every headwind facing the transportation market. You can determine whether your network is prepared to operate through it.
Talk with NT Logistics about reevaluating your transportation network.
7460 Warren Parkway, Suite 301
Frisco, TX 75034
Toll-free: 800.801.5970
Dallas Area: 469.362.5000
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