Take thousands of vendors shipping products ranging from paint and brake shoes to motors and railroad ties to hundreds of Conrail receiving locations, some of which were located at out-of-the-way places with no receiving dock.
Add an inbound transportation mix involving Conrail piggyback, more than 150 LTL carriers, and an array of truckload and small package carriers.
Then make all this the responsibility of a one-man traffic operations whose job it was to route material into Conrail from vendors, and from one Conrail location to the others.
No wonder Richard M. Jacobs, then manager traffic for the Pennsylvania based railroad, looked outside Conrail for help.
"One of our big problems was that we really didn't know where all the stuff was coming from, " he recalls. In addition, Conrail's practice of buying "prepay and add" meant that vendors were free to specify the carrier and routing for each shipment. As a result, the company did not have a good handle on its inbound transportation.
On recommendations of an acquaintance at Amtrak, Jacobs contracted Tucker Company Worldwide, a transportation brokerage firm located in Westville, N.J. He was reluctant initially.
"I'd heard lots of horror stories about working with brokers, and was leery about using one at first," Jacobs recalls, "But I decided things couldn't get much worse" - so he began turning over a few truckload shipments to the broker as a test.
The traffic manager monitored the test shipments carefully. As he became more comfortable with the broker's ability to handle the shipments well, Jacobs gradually turned over the management of Conrail's inbound truckload shipments to Tucker.
Soon, inbound loads were handled completely by the broker, which contacted Jacobs only when a problem occurred. "In most cases, a move occurred and I never even knew it until I pulled a report off the computer," Jacobs explains. |
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The change worked very well, Jacobs reports. Tucker's management of inbound truckloads helped the railroad slash the cost of its inbound transportation while boosting service and control substantially.
Under the new process, vendors with shipments over 15,000 lbs. were instructed to call Tucker directly (other than those shipments which went via piggyback). After verifying the receiver's need and determining the optimum method of shipment, the broker would schedule the shipment and order the transportation (which might be a standard tractor-trailer, a flatbed carrier or a heavy-haul carrier with specialized equipment).
In addition to using fewer carriers and negotiating better rates, Tucker was frequently able to consolidate inbound shipments, which contributed to Conrail's cost savings.
"Every day, we'd bird dog the shipments," recalls William Tucker, president of the transportation broker, "trace the load, make sure it was running on schedule, stay in touch with the driver and keep the receiver informed," doing expediting as required.
Several years into the relationship with Tucker, Conrail began accepting transportation bills electronically, via Electronic Data Interchange (EDI) from less-than-truckload (LTL) carriers as well as Tucker's invoices for TL carriers. Jacobs then gathered information on transportation movements for six to eight months, accumulating sufficient data to produce and distribute a comprehensive bid document for TL and LTL movements.
Outsourcing the management of Conrail's inbound transportation saved the railroad a substantial amount of money in freight bill costs as well as in communications and personnel costs while sharply improving control and service. And one-stop-shopping saved Jacobs time and headaches. |
