When it comes to regulation and law that impact shipping today it looks like a bowl of alphabet soup- CSA, HOS, EOBR, IC’s vs. E’s, CBP, FMCSA, the list goes on. You just can’t buy enough vowels to solve this Wheel of Fortune puzzle!

    While you have a sense of control on the known internal variables to your budget- contract pricing, scheduled rate increases, packaging, supplies, program maintenance, planned upgrades, etc.; most have little time or access to current information regarding the unknown external variables that unpredictably determine whether or not you run out of budget before you run out of year.

    If you were told that these external variables could surge freight costs by 15-20% over the next one to two years, would your budget have enough variance to absorb that shock? Would your CFO be gracious enough to understand the circumstances and extend additional budget to cover this shortfall?

    Let’s break these external variables into three categories:
     Regulations & Legislation
     Carrier Operational Challenges
     Predictable Surprises

    Pulling some acronyms out of the soup above let’s briefly consider CSA (Compliance, Safety, Accountability), HOS (Hours of Service), and EOBR (Electronic On-Board Recorders). Yes, these regs apply directly to truckload so what’s the big deal for parcel shippers? Well, when we consider that over 2/3 of overall transportation spend is in trucking, most if not all of you are directly vested in this mode. When we include the line-haul operations of the parcel carriers into the equation, shippers are further impacted.

    Various studies and analysts reports show that each of these regulations will reduce either workforce size or productivity levels. A single event could be managed; however, it’s the collective impact of these and other changes that escalate the likelihood of swelling shipping costs.

    Think of the operational challenges carriers face by adjusting their networks to fit this new and still changing reality. Over the past couple years we have heard them discuss their yield management initiatives. From a shipper perspective we translate that into rate increases or reduced discounts. That’s only half the equation. The other half is how the carriers optimize their network; including making the adjustments to deal with the items in this article as well as more that are not stated here. Ask yourself- when you talk, listen, and yes, sometimes argue with service providers about yield management, do you focus on only half the equation or discuss the whole?

    As we move into predictable surprises the obvious one is the volatility associated with fuel. However, there is one closely tied to the current regulatory environment where many shippers are confused on what to do. That being, how to mitigate the risk associated with vicarious liability.

    This is just the tip of the iceberg. To learn more, Doug Kahl, Executive Consultant Parcel, TranzAct Technologies will address these issues during session PL505, “Forecasting the Impact New Regulations & Legislation Will Have On Your Budget” at The Parcel Forum on October 25th.

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