4 Ways 4PLs Cut Your Logistics Costs – No. 3 is Gold!

A Freight Forwarding Option That Transforms Your Supply Chain Game

Low container prices have many executives taking their eye off logistics. They think their supply chain managers and freight forwarders are doing a great job cutting logistics costs.

Sure, it’s nice to pay $1,500 or less per container instead of $20,000. But real savings these days come from inventory service, lead-time reduction and eliminating accessorials (detention and demurrage charges). Those cost reductions can easily total hundreds of thousands or even millions of dollars.

Over the last few years, I’ve come to favor the 4PL model, also called a Guardian service or managed solution. This comprehensive solution essentially sits above your 3PLs and other freight forwarders. The Guardian/4PL manages and executes your entire transportation process under one platform. This model has discovered serious supply chain cost savings for many enterprises and can optimize your supply chain. This model goes beyond logistics cost reduction to improve service levels.

A Better Path to Supply Chain Operations

So, beyond logistics cost reduction, what can the right fit Guardian/4PL do for you?

1. Optimize each lane by cost and service: The Guardian looks at each freight forwarder, each 3PL, everything in your network. The Guardian understands transit time, costs and service and books containers with the correct forwarder for your needs.
2. Understand your entire supply chain: Find savings you never even thought of. Lead times can decline by up to 20% – even more. Accessorials like unexpected detention and demurrage can cost big. I’ve found CFOs who didn’t even know they were paying $1 million worth of detention charges a year.
3. One single point of contact: A single account manager handles all your queries. Import/export problems? Questions about ocean, air or domestic trucking? One call is all you need.
4. Documentation and compliance: Freight forwarding consists of data, product and lots of paperwork. Keep out of trouble with regulatory authorities.

Up until 2019, a Guardian/4PL service could be considered a “nice to have.” Back then, we budgeted our annual transportation spend and signed an annual contract. Today’s world of perpetual disruption requires us to adjust in real time.  –

In such a world, a Guardian/4PL watching over your entire transportation system is a requirement.

Logistics Processes Cannot Lose That Personal Touch

No. 3, as I alluded to in the headline, is the key to better customer satisfaction. A good Guardian/4PL gives your team tools for visibility throughout your transportation system. A great Guardian/4PL will make sure you have one account manager, not just a portal.

Even with all the automation in the background, occasional issues arise. That’s when you want a human being, not a runaround from phone transfers, email exchanges and endless voicemail.

In fact, No. 3 is important in any business relationship. Many see automation and electronic communication as a way to bypass the person-to-person contacts necessary for trust. At Tompkins Ventures, we only choose partners who can provide that personal touch, along with the latest in technology.

Not every freight forwarder – or business, for that matter – provides such service. But we want you to partner with people who become extensions of your team.

The last thing you want to hear when you cannot find your shipment is, “Look at the portal.”

Can You Really Cut Lead Time Dramatically?

Every case is different. But yes, I have seen Guardian/4PLs drop lead times by up to 20% – even more in some cases.

But a Guardian/4PL who understands your entire end-to-end supply chain keeps an eye on every shipment. They can uncover numerous opportunities to save time. These can include adjusting inventory planning/production cycles, consolidation and nimble routing options.

Inventory Planning Cycles

Sometimes companies do not adjust their inventory planning /production cycles. Market conditions change, and sometimes what you are told does not match reality.

For instance, a buyer quoted a 100-day lead time may leave it at that. However, your freight forwarder might have that product in the warehouse in 60 days. And then you let it sit there for 40 days.

Such issues are common with outsourced logistics operations. Sometimes it’s just a matter of adjusting realistic lead times to the type of product in your enterprise resource planning (ERP) system.

Whatever the issue, Guardian/4PL regularly reviews such conditions and adjusts as needed. Your fast movers may have transformed into slow movers, and vice versa. Demand may have changed replenishment or safety stock requirements.

Again, this goes beyond logistics cost reduction to improve service levels.

Consolidation

Consolidation works over the ocean just like on the roadways.

Many shipments are less-than-container loads (LCL). LCL takes far longer than full container load (FCL). They require extra handling and potential for delays and damage.

Many of those LCLs have the same origin and same destination. Combining those LCL into FCL can take weeks out of the total transit time.

The Guardian/4PL model is ideal to optimize and consolidate much of that LCL into FCL.

Nimble routing options

Sure, your freight forwarder has always shipped your containers to Port A. Well, Port A is not the right choice for all occasions.

That warehouse network may have become a bit outdated. If you use only one or two carriers, that limits your ability to adjust.

For example, many companies still rely on the Port of Los Angeles and the Port of Long Beach. However, shipping through the Suez Canal to the U.S. East Coast and rail to the Midwest can make more sense. Obviously, that could change if war in the Middle East expands.

Many other options abound. Ever think of storing goods in Panama to distribute throughout Latin America? Often, ships that arrive in Panama unload, reload and visit other Latin American ports, not even crossing the canal.

The Guardian/4PL model expands your options exponentially. This includes an expanded shipping and carrier base. In today’s world of continued disruption, such optionality is key.

Your Search Is Over

Finding logistics cost reductions and serving customers requires understanding your entire supply chain. The Guardian/4PL model can help.

No more:

• Searching for competitive rates and open lanes.

• Confused communications among vendors and logistics companies across your entire supply chain.

• Fretting over 3PL services that don’t deliver.

• Worrying about the advanced software, applications and technologies that keep logistics going.

Your Guardian/4PL examines all that for you on a continual basis. And you focus on the products, services and customer expectations that are your core competencies.

I would love to discuss how a Guardian/4PL can add value to your supply chain. Reach out and let’s talk.