Performance-Based Freight Management

and Your Bottom Line

2

Freight

58% Inventory

30%

Admin

4% Warehouse

8%

Why Challenge Freight Costs?

Freight

58% Inventory

30%

Admin

4% Warehouse

8%

Why Challenge Freight Costs?

Because

the Upside is Huge!

What Impacts Freight Costs?

Over 750 Different Charges!

Discount, What Discount?

Prices increase on average

every six months.

Current Pricing Methods

Established in 1936.

2010 University of Tennessee Study

Closer Look

at Why Change

is Needed

2010 University of Tennessee Study

Many shippers are unaware of

additional accessorial charges stated

in the carrier’s rules tariff, which are

“incorporated by reference” on the bill

of lading and/or in the pricing

agreement you have with your carrier.

A typical rules tariff can run between

30 pages to over 200 pages per carrier

and are subject-to-change with no

notice to the shipper.

Alternatively, a shipper may require the carrier

to utilize a common rules tariff, such as the

SMC3 190 Rules Tariff, or write their

own rules tariff in conjunction with

the carrier.

1. Pricing models are outdated.

2. Too many constantly changing

pricing variables for any busy

freight manager to stay

informed.

3. Pricing variables change

without you knowing about it.

4. With the strategies and the

right tools, shippers can

minimize impact on profit.

2010 University of Tennessee Study

3PL “Shared

Savings”

?

Traditional

Brokerage

?

?

Wholesale Cost

Savings

Markup

?

True

Gainsharing

Savings

Shared

Costs

Disclosed

Freight Pricing Models

Freight Brokerage with Markup

Traditional

Brokerage

?

?

Wholesale Cost

Savings

Markup

Hidden Markup

Traditional

Brokerage

?

?

Wholesale Cost

Savings

Markup

“Hey! We saved you

10%! Let’s split it!

You still don’t know

what the real costs are.

3PL “Shared

Savings”

? ?

Savings

3PL “Shared

Savings”

?

Gainshare Model

Traditional

Brokerage

?

?

Wholesale Cost

Savings

Markup

?

True

Gainsharing

Savings

Shared

Costs

Disclosed

Gainshare Model

Transparency

Partnership

Pay For

Performance

16

Gainsharing maximizes cost savings while increasing performance.

Proprietary

Rate Base

Contracts

& Legal

Technology

Platform

Consulting &

Operations

Proprietary rate base and buying power

Our contract, not the carriers

Online TMS for easy scheduling/tracking

Weekly auditing, reporting & support

1

3

4

5

Priority Gainshare

Wholesale

Buying Power Millions in freight managed annually 2

Priority Gainshare

Proactive partner

Entire supply chain Minimal operational changes

Empower shipping department

Simplify freight process

Create a profit center

How it Works

Analysis (entire supply chain)

Rate negotiation (our contract) Publish tariff (online TMS)

Freight department one page guide

Weekly auditing and reports

Bill a percent of savings

You Won't Get This From a Shipping Co. or 3PL

Weekly Freight Report Example

20

Example:

One Weekly Report:

$4,440.08 In Savings

21 21

Benefits

Long-term cost reduction

Reduce/Eliminate price increases

Empower shipping department

All Freight Categories

23

The Freight Dept:

More time for

strategic,

profit-producing

work

Why It Works

Why The Carriers

Like Us

25

Average client savings since 1998.

Freight costs down 43%.

Carrier compliance: from 50% to 100%.

Damage claims: Over 2% to less than 1%.

Delivery lead times: 3-5 days to 1-3 days.

27

Lighting Manufacturer

Freight costs down 56%.

Total carriers from178 providers to 6

Damage claims down 400%

Freight is now a profit center

28

Parts Distributor

Freight costs down by 30%

Total carriers from 30 to eight

Middlemen (profit margin) between Mexico and

United States shipments cut from 10 to only three.

Delivery time reduced by 50%.

29

Tape Manufacturer

Thank You

30