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Three Fundamentals of Transportation Decision Making

Three Fundamentals of Transportation Decision Making

This is the first blog post on the new web presence of Soli DG, Inc. Welcome!

As this is our first posting, a brief introduction is in order: Soli DG, Inc is a professional management and marketing firm focused on maritime transportation and intermodal logistics.  We are passionate about collecting and applying objective data, and using this data to guide our clients towards effective and profitable transportation and logistics solutions.  We see transportation as the arteries of the economy, carrying the lifeblood that sustains business.  Just as congested arteries interrupt blood flow and pose a danger to the entire body, using inefficient transportation modalities slows the economy and stifles business. We believe transportation investment and policy decisions should be driven by these fundamental business principles in order to maintain a healthy flow of goods.

This brings us to the subject of this week's blog: fundamentals.  In transportation and logistics, there are three fundamentals that start the decision-making process: cost, consistency, and transit time.  Shippers want freight to be moved swiftly, cost-effectively, and need to be certain that it will arrive when it is supposed to.  These factors are at the core of any logistics decision.

These three are also interrelated: for example, when a transit time is fast the carrier can charge more (likewise, if it is slow, shippers are not willing to pay as much).  Every shipper is different, and these three factors lie at different priority levels depending on the freight.  For example, the priorities for high-value retail products will likely be transit time and consistency, with cost being a minimal consideration: this particular shipper is willing to pay a premium for service and speed of delivery.  For commodities with lower value, such as wood pulp, cost will be the primary consideration, while consistency & transit time will be of lesser importance.  

While an apprehension of these fundamentals is simple, their applications is often forgotten in the complexity of negotiations and supply chains.  It is our opinion that this lack of focus is extremely detrimental to businesses in the marine logistics industry, and can often lead to poor decisions and investments. 

There are certainly other considerations influenced by corporate guidance or personal preference; they are not indicated here in the interest of parsimony and brevity. If you are a transportation professional and you would like to offer commentary on what we consider to be the fundamentals of logistics, please let me know and I will post your comments. 

In the next blog post we will discuss the act of staying true to these fundamentals to find the appropriate intermodal match for any given supply chain or freight type.

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