The ROI of Managed Transportation Just Keeps Getting Better

By Steve Banker

ARC Report Abstract

Most managed transportation arrangements have successfully reduced freight spend for shippers while maintaining or improving service levels. This ARC Insight examines the benefits and risks of these arrangements and points out some of the practices that tend to improve the outcomes.

Most Shippers Benefit from Managed Transportation
ARC Advisory Group recently did a survey in conjunction with DC Velocity and eft (formerly eyefortransport) on the types of solutions and services shippers use to manage their transportation. In total, 119 respondents provided answers for the survey. Most respondents came from North America. Forty-four percent of respondents reported that managed service providers managed more than 20 percent of their freight spend.

A managed transportation arrangement is one in which shippers out-source transportation planning and execution to a service provider. These arrangements typically yield good ROI, which appears to have improved further since we last did this survey two years ago. In our earlier survey, 9 percent of respondents reported more than 12 percent freight savings from these arrangements. However, at that time, 11 percent of respondents reported that the managed transportation arrangement actually increased their freight costs.   In contrast, in this year's survey, 32 percent of respondents reported savings of 12 percent or more! Only 4 percent of respondents reported that the managed transportation arrangement increased their costs.

In one question, ARC asked, "If you were to stop working with your managed service provider and went back to doing things the way you used to before this relationship, how much would your freight costs be raised or lowered in the following year?"

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Keywords: Managed Transportation, ROI, Third-Party Logistics, 3PL, ARC Advisory Group.

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