Perspectives from Freight Transportation Users US Department of Transportation – Federal Highway Administration

PCE, C. Campbell, 2004, Talking Freight Seminar 2

Consumer Electronics – Overview

• High Value commodities• Profitability challenges due to price erosion,

operating costs, and Customer requirements• Small, Medium and Large boxes utilizes a

multitude of shipping modes• Highly competitive and growing in competition• 5 years ago major Electronics vendors were:

Sony, Philips, Thompson (RCA), Zenith, Sharp, and Panasonic

• Today major Electronics vendors are: Sony, Philips, Thompson, Panasonic, Samsung, APEX, Audiovox, Sharp, and Sanyo.

PCE, C. Campbell, 2004, Talking Freight Seminar 3

Consumer Electronics – Overview

• New Competitors in 2004: Dell, Gateway, and Virgin Companies launch new products in the CE sector.

• Forecasting, Order, and Shipping migration from Monthly Cycle to Weekly cycle

• Customer Requirements– Radio Frequency Identity (RFID)– Vendor Compliance

PCE, C. Campbell, 2004, Talking Freight Seminar 4

Philips - Overview• Philips Consumer Electronics balances Customer

demand and requirements with 300 model variations to ensure timely delivery of our product.

• Product sizes vary from the size of a disposable razor to a 60” projection television.

• The customer mix ranges from small to large companies.

• 3 Outbound Distribution points in the US– Greeneville, TN– Roanoke, TX– Riverside, CA

• Products are manufactured in Europe, Asia, and Mexico.

PCE, C. Campbell, 2004, Talking Freight Seminar 5

• Inbound shipments – Port of Entry (Asia and Europe)– Moving product from Port to Warehouse– US/Mexico Boarder crossing– Third Party Logistics Provider involvement

(3PL)

Philips - Overview

PCE, C. Campbell, 2004, Talking Freight Seminar 6

Philips – Overview Transportation• Restructured the Supply Chain (3PL) • Modes of Transportation

– Air (Next Day, 2nd Day, 3 Day)– Ground (Parcel Ground ie. Fed Ex, UPS)– Less Than Truckload (LTL)– Truckload– Intermodal (Rail)

• Transition from LTL and Ground (150lbs+ shipments)• LTL Expedited service vs. Traditional “Air” service

PCE, C. Campbell, 2004, Talking Freight Seminar 7

Philips – Overview Transportation

• Hours of Service – Challenge in 2004– Multiple Stops (More than one customer on a trailer)– Increased charges from Carriers for Detention and Multi-

Stops– Equipment Demand moves from Moderate to Severe– Driver retention and expansion– Will force more equipment on the road vs. less– Capacity battle transforms to a capacity war– LTL shipments will increase as will costs of operations

(Carriers, Shipper, and Customers)• 2001, 10% of all truckloads shipped by Philips were multi-

stop shipments• 2003, 46% were multi-stop shipments.

PCE, C. Campbell, 2004, Talking Freight Seminar 8

• “Being an attractive fish, in a Big fish pond”– Carrier relationships– Equipment utilization– Equal profitability– Automating Truckload “tender” process

• Rail congestion – Utilization can increase if transit time improved

• Factory Direct– Customer’s Freight Forwarder– Mexico Direct

Philips – Improvement Opportunities

PCE, C. Campbell, 2004, Talking Freight Seminar 9

Transportation Statistics2003 Miles Mode (000's)

Origin State AIR Ground IM LTL TL Grand Total

CA 968 16,387 235 12,256 6,974 36,819

TN 4,332 26,727 79 23,008 10,818 64,965

TX 937 22,357 2,334 56,590 20,428 102,645

Grand Total 6,237 65,471 2,648 91,853 38,220 204,429

2003 Weight Mode (000's)

Origin State AIR Ground IM LTL TL Grand Total

CA 233 1,084 2,312 24,558 113,686 141,873

TN 502 2,276 827 38,483 212,019 254,106

TX 374 1,941 28,103 49,022 236,879 316,317

Grand Total 1,108 5,301 31,242 112,063 562,584 712,297

PCE, C. Campbell, 2004, Talking Freight Seminar 10

Transportation Statistics

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

CA TN TX

AIR

Ground

Sum of Miles

Origin State

Mode

PCE, C. Campbell, 2004, Talking Freight Seminar 11

Transportation Statistics

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

CA TN TX

IM

LTL

TL

Sum of Miles

Origin State

Mode

PCE, C. Campbell, 2004, Talking Freight Seminar 12

Transportation Statistics

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

CA TN TX

AIR

Ground

Sum of Weight

Origin State

Mode

PCE, C. Campbell, 2004, Talking Freight Seminar 13

Transportation Statistics

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

CA TN TX

IM

LTL

TL

Sum of Weight

Origin State

Mode

PCE, C. Campbell, 2004, Talking Freight Seminar 14

Transportation StatisticsAverage Cubic feet utilized (Truckload volume)

1,600

1,800

2,000

2,200

2,400

2,600

2,800

3,000

CLINT 2,549 2,786 2,912 2,487 2,211 2,063 2,412 2,366 2,215 2,043 2,019 2,195 2,339

GVL 1,902 2,006 2,005 2,133 2,087 2,066 2,149 1,948 1,834 2,090 2,068 1,819 2,020

RNK 2,039 2,114 2,108 2,218 2,133 2,199 2,132 2,024 2,048 2,083 2,126 1,941 2,094

RSD 2,093 2,194 2,289 2,478 2,721 2,901 2,789 2,545 2,370 2,602 2,602 2,578 2,571

Ryder TM 1,993 2,089 2,091 2,228 2,207 2,297 2,253 2,079 2,033 2,151 2,187 2,021 2,143

January February March April May June July AugustSeptembe

rOctober November December YTD