New “Hours of Service” rules went into effect on July 1st. These new rules decrease the amount of time a trucker can drive during a week.
For more information on the impact, The Wall Street Journal wrote a nice article and Dan Gilmore at SupplyChainDigest wrote an interesting article suggesting that the impact may not be as large as forecasted. I also commented on Dan Gilmore’s article in my blog post at SupplyChain Digest.
But, what is true is that the Hours of Service will increase rates. If you are a shipper (or 3PL trying to compete), you need to figure out what you will do. This is where Transportation Analytics come into play. As rates increase, you need to take a look at your shipments to determine if you can reduce costs by shifting modes, building better routes, or shipping fuller trucks.
If you have thousands or even hundreds of thousands of shipments, you need to be able to quickly analyze these shipments to look for savings. That is, you need to figure out which shipments can be consolidated, what kind of impact will mode shifts have, and how will rate increases drive total cost.
You also need to be able to incorporate what kind of impact a change will have to your inventory. For example, if your shipment quantity increases, how much more inventory will you have in the system and how much will this inventory cost.
Finally, a project like this may require you to analyze your customer requirements. Which customers would be willing to change their shipment frequency? Or, which customers would likely change their delivery windows.
You will likely need a variety of tools to help. But, we’ve found that with a little effort, you can mitigate the impact of a rate increase.