502: Warehousing and Freight with AFS Logistics

Welcome to The New Warehouse Podcast! Today, we are thrilled to have Tom Nightingale, the CEO of AFS Logistics, join us. AFS Logistics is a non-asset-based third-party logistics (3PL) provider with over 40 years of experience. Tom shares his take on warehousing and freight, highlighting the essential relationship between these two elements in the supply chain. Join us for a deep dive into the freight industry’s latest trends. Discover how AFS tailors specialized services to meet the evolving demands of consumer behavior and technological progress.

The Critical Role of Warehousing in Transportation

Tom emphasizes the pivotal role of warehouses, “Warehouses really serve as the critical components of the entire supply chain.” He shares how the role is evolving rapidly due to changes in consumer behavior, necessitating more diverse transportation modes and advanced automation within warehouses. For instance, a warehouse that once handled rail inbound and truckload outbound may now also manage LTL, parcel, and courier services, requiring flexible infrastructure and labor management.

Balancing Transportation Asset Ownership

Owning transportation assets can be a double-edged sword for 3PLs. Tom advises caution: “Transportation asset ownership is pretty expensive… those assets can become an albatross around your neck.” The inherent imbalance in transportation can lead to financial strain when market conditions shift. Tom recommends warehouse operators focus on their core competencies and partner with expert transportation providers rather than investing in their own assets. This approach helps mitigate risks and allows for greater operational flexibility.

Freight Industry Insights

Tom explains how TD Cowen/AFS Freight Index leverages AI and machine learning to provide detailed and predictive insights into various freight market segments. This index provides visibility into the freight market by processing data from the $11 billion worth of freight that AFS Logistics audits and pays annually. This extensive data provides a comprehensive view of various market segments, including parcel, truckload, and less-than-truckload (LTL) shipments. 

He shares his Key Observations:

• Parcel Market Sagging: The index shows that the parcel market demand remains lower than during the pandemic’s peak.
• Cost Management: Parcel providers are reducing costs to manage increased integration and labor expenses.
• Surcharges: An increase in fuel and delivery area surcharges affects a broad population.
• Pricing Environment: Despite decreasing volumes, the parcel express segment continues to see pricing improvements due to strategic cost reductions.
• Flat LTL Market: The index indicates a relatively flat rate trend, with only a slight increase observed from Q1 to Q2.
• Truckload Capacity: The truckload segment shows capacity additions that offset market fluctuations, with large carriers absorbing more business as smaller ones exit.

Companies can leverage warehousing and freight market insights to help them plan and optimize supply chain strategies, manage costs, improve operational efficiency, and stay ahead of market trends.

Key Takeaways on Warehousing and Freight

• Warehouses and freight are critical to the supply chain ecosystem, adapting to diverse modes and consumer demands.
• Owning transportation assets can be risky; focus on core strengths and partner with experts.
• Leveraging external expertise for non-core services enhances operational efficiency and value.

Listen to the episode and leave your thoughts in the comments.

Guest Information

For more information on AFS, click here.

To connect with Tom on LinkedIn, click here.

For more information about Warehousing and Freight, check out the podcasts below. 

495: End-to-end Supply Chain Innovation with Maersk

451: Unlocking 3PL Growth with Joe McIntyre of Twelve48

379: iLogistics USA and the 3PL Business