Chain Reaction is Sourcing Journal’s discussion series with industry executives on logistics challenges and solutions. Here, Dr. Chris Caplice, chief scientist at DAT Freight & Analytics, discusses how the transportation company uses its tech to help shippers optimize procurement and navigate market shifts.
Name: Dr. Chris Caplice
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Title: Chief scientist
Company: DAT Freight & Analytics
What is DAT Freight & Analytics?
DAT Freight & Analytics operates the DAT One truckload freight marketplace and DAT iQ data analytics service for freight shippers, brokers and carriers. DAT iQ pricing models are trained on $1 trillion in market transactions submitted by freight shippers and brokers and provide benchmark spot and contract pricing on virtually every trucking lane in North America.
What are the main things brands and retailers could do right now that would immediately improve logistics?
Big swings—optimizing your supply chain network, nearshoring or reshoring parts of your supply chain, warehouse automation—require executive buy-in, capital and a lot of time.
Immediate improvements come from doing a better job handling what you can control today. Two things you can do right now are stop trying to plan for unpredictable events and focus on effects instead and take a balanced approach to transportation procurement. You’ll be less likely to face price and service shocks when you’re unable to cover the load with a primary carrier.
How can companies plan for disruptive supply chain challenges?
Don’t waste time trying to predict specific events. Instead, prepare for their effects.
Events and effects are different. For instance, last year, low water at the Panama Canal led to longer transit times from the Pacific Rim. More than a few companies now have detailed playbooks on what to do next time there’s a drought in Panama.
How should retailers adjust transportation procurement during disruptions?
Transportation requests for proposals (RFP) typically result in carriers being designated as primary and alternate options for specific lanes. When a primary carrier rejects a load, the waterfall process begins. Loads are offered to backup carriers in a predefined order until someone accepts the tender.
As you move deeper into the routing guide, your leverage decreases and costs rise. Studies from MIT FreightLab show rates increase from 8 percent above primary for the first alternate to 35 percent for the tenth alternate. Time is another factor: Offering loads to alternate carriers can add hours to tendering.