Is Temperature Controlled LTL Right for Your Business?.Transportfolio
Whenever your product requires temperature controlled shipping, you’ll automatically add a layer of complexity to the job. Maintaining a cold chain from the beginning to the end requires a combination of collaboration and best practices. But ongoing changes to order size may start affecting your current strategy—if they haven’t already. Across all aspects of logistics, including temperature controlled less than truckload (LTL) shipments, order sizes are shrinking—sometimes rather dramatically.
Why order sizes continue to shrink
In the world of instant gratification, consumers want what they want when they want it, and retailers are doing everything they can to deliver—at a competitive cost. This includes the refrigerated food industry. It’s sort of a domino effect:
Step 1: Consumers want healthy packaged food options
More than ever before, consumers are making thoughtful food choices based on ingredients, source, company story, and perceived health benefits.
They’re also concerned with convenience. On the go packaging for healthy options are spiking in popularity. Millennials and young families have busy schedules but still want to provide a healthy (and fresh) option for their loved ones.
Step 2: New fresh food companies are sprouting up
Because consumers want healthy, convenient, and fresh food, new companies are trying to meet that need. Startup companies are quickly gaining regional and national footholds—in some cases, they are eroding market share of already established brands or even turning into the new establishment. In response, large brands have been quick to gobble up promising new brands in a race to protect established marketplaces.
Step 3: Shippers and retailers are adjusting accordingly
More diversity in the fresh foods marketplace is good for consumers, yet this phenomenon has sent shippers scrambling to capitalize on an evolving marketplace. More product diversity means more competition for shelf space. And as these types of fresh, packaged products have a shorter shelf life than snacks and “convenience foods” of yesterday, retailers don’t want to be stuck with food past its prime—leading many to place smaller orders and avoid the risk of overstocking.
Naturally, these lower order sizes tend to shift what used to be full truckloads to temperature controlled LTL shipments instead. And, often, shippers will see dramatic spikes in per pallet space charges since lower order sizes are generally less attractive to carriers. In order to find savings while providing more selection for customers, retailers are demanding lower inventory levels than ever before.
To manage this, they’re placing smaller orders and adding deliveries. A retailer that used to place a 30-pallet order every week may now require four pallets every day of the week instead. We truly exist in a just-in-time (JIT) environment now.
What you can do about it
Between competition, smaller orders, higher premiums, and JIT expectations, it’s a trying time to be a shipper of refrigerated and frozen foods. Finding the right temperature controlled LTL transportation provider with the right density and expertise in these markets are critical. A great temperature controlled LTL provider should be doing at least these four things:
- Increasing efficiency to distributors
A provider with strong relationships with retailers and that is already regularly shipping through these channels will have the most to offer. Make sure your provider understands retail distribution and all retailer requirements to avoid unnecessary fees and fines from your retail partners.
- Operating consistent sailing schedules
Trying to tender every day of the week and requiring last minute trucks won’t work. And you’ll likely receive expensive fines for missing delivery windows. Create predictability. Even the largest retailer will let you choose what day to deliver on, but they then expect you to consistently deliver on that day and in a predefined window. Regular sailing schedules creates a standard plan that makes consistency easy—tender on this day, ship within this window, and deliver on this day as planned.
- Providing visibility to orders and key performance indicators (KPIs)
Visibility is pretty self-explanatory, yet it’s still a challenge for some providers to deliver. You should know exactly where each of your temperature controlled LTL orders are in transit—whether they’re waiting pickup, in transit, or meeting a delivery window. Just as important is having visibility to KPIs and order level reporting. It’s the only way to create an accurate budget and benchmark for the future.
- Ensuring a fair and consistent rate
This point ties back to the relationships your provider has and consistency they can deliver. A cheap rate that delivers late and results in fees isn’t a fair rate anymore. Your provider should offer a fair rate paired with quality service.
If they aren’t able to provide this level of service, consider finding a provider that can. Have you noticed more temperature controlled LTL shipments in your business? What other challenges have you faced in the refrigerated foods marketplace? What solutions have you found for these challenges?
To learn more about controlling your cold chain, read our white paper: Maintain the Cold Chain: Six Supply Chain Best Practices for Temperature Sensitive Freight.