Penske Logistics

Increase Supply Chain Agility by Planning Ahead

Natural disasters, supply chain bottlenecks and infrastructure challenges can all disrupt the movement of goods, and shippers are looking for ways to adapt to unforeseen circumstances, respond to disruptions and increase agility.

“Coming out of the pandemic, everyone in the supply chain is a little bit shell-shocked and thinking about what’s next,” said Amy Ilyes, vice president of logistics engineering for Penske Logistics. “Everyone needs a contingency plan. If you have done some type of planning and examined different scenarios and costs, you know the highest risk areas of your supply chain and can pivot to the most advantageous scenario.”

Contingency Planning

Data, the technology to run what-if scenarios, and supply chain visibility are at the core of an effective contingency plan. When evaluating various scenarios, Penske creates risk scores associated with different regions. “It may be a political risk or the potential for a calamity of some sort. As we look at different alternatives, we think of the risk associated with each of the network designs,” Ilyes said.

As a solution, shippers are looking to shorten their supply chains through nearshoring and adding suppliers to help reduce potential disruptions. “We can run what-if scenarios to see what the impact will be from a supply chain perspective if they nearshore or diversify their supply base,” Ilyes said.

Engineers can simulate supply chain networks using different ports, routes, suppliers, modes of transportation and inventory levels. The models help shippers determine which channels should be served by which locations, optimal supplier base locations, the best ports of entry and the ideal positions of brick-and-mortar warehouses.

The recent Francis Scott Key Bridge collapse in Baltimore, Maryland, the current drought in the Panama Canal and ongoing labor talks at North American ports have highlighted the need to identify backup ports and alternative transportation solutions. Plus, being able to react quickly is becoming even more important as customer expectations continue to rise.

Optimal Distribution Case Study

For example, in 2021, an agriculture, turf and construction equipment manufacturer was seeking solutions to pandemic-induced disruptions. By leveraging route modeling software to analyze historical and forecasted data, a new optimized distribution model was identified for maximum product availability.

A strategic overhaul of the manufacturer’s network engineering improved their lead times and freight costs. Penske managed this by:

Changing the port of entry for specific construction equipment from Savannah to Baltimore
Optimizing freight into multistop truckloads direct to dealers closer to the Baltimore port
Bypassing the national distribution center for equipment, reducing lead times by eight days

Transforming the distribution process also enabled the manufacturer to cost-effectively bring equipment to market faster, boosting their market share as a result. Bypassing the national distribution center serving the northeast market also eliminated eight days of transit time.

No one could have predicted the Francis Scott Key Bridge collapse in 2024 — but because Penske makes it a practice to conduct continued network design evaluations, the manufacturer was able to quickly divert shipments to an alternative in Norfolk, Virginia. This port was identified in a previous engineering study as a cost-effective solution to transitioning away from Savannah and only added one to two days of transit time versus halting distribution altogether at the Port of Baltimore for an extended period.

Having a contingency plan is crucial to be able to pivot in times of uncertainty. In some instances, such as a port closure, business can be halted and even shut down entirely if a backup plan is not quickly enacted.

Diligent contingency planning enabled Penske to provide value to the manufacturer with:

A $5 million cost reduction in transportation by bypassing the national distribution center and shipping more directly
An 8-day lead time improvement to dealers

A market share increase with improved product availability

Now that the Port of Baltimore has reopened, the manufacturer is looking to redirect equipment imports there again.

Visibility

Visibility is also a critical tool that can increase agility. Having a comprehensive view of the supply chain enables shippers to identify suppliers, routes or regions experiencing delays and adjust operations. Visibility can also help companies manage inventory and identify the best locations to use when sourcing products.

“You want to be sure your inventory visibility is at 99.9% so you know that when an order is placed, the goods are in the facility,” Ilyes said.

Information comes from multiple sources throughout the supply chain and knitting it all together can be a challenge. “Shippers may have one provider that does warehousing and one that does transportation,” Ilyes explained, adding that Penske’s ClearChain® technology suite pulls together information to create a real-time, high-level, connected view as well as granular specifics that can inform decision-making.

Transportation Management

To help gain control of the supply chain, more and more companies are interested in managing the transportation into their facility rather than relying on their suppliers to transport goods. “We’ve had a lot of requests to help shippers unbundle the cost of the product on the transportation portion of the contract,” Ilyes said.

Shippers may not even know where their suppliers are shipping from, but Ilyes said there are opportunities to create a supplier compliance program that specifies which distribution center they ship from. “It may be one that is closer, which will give you better service,” Ilyes explained, adding that compliance programs should be audited regularly.

Evaluating the whole network — including sourcing locations, inventory levels, product demand and transportation providers — can help shippers improve the overall engineering of the supply chain, increase efficiency and build resiliency. Ilyes recommends companies review their networks and transportation providers regularly to remain flexible. “You want to be able to make changes quickly based on engineers’ feedback,” she stated.

Supply chain resiliency is a fundamental principle, and to remain competitive, shippers and their logistics providers have to be able to pivot quickly in the face of adversity.

To learn more about Penske’s tools to increase agility, contact us.

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Manufacturing Growth in Mexico Creates New Service Demands

According to the Office of the U.S. Trade Representative, U.S. goods exports to Mexico in 2022, the latest year for which numbers are available, were $324.3 billion, up 17% from 2021 and 50% from 2012. U.S. goods imports from Mexico totaled $454.8 billion in 2022, up 18.9% from 2021 and 64% from 2012.

Nearshoring is on the rise, and a growing number of manufacturers are moving production to Mexico to reduce delivery times, increase agility and take advantage of favorable trade conditions. In addition to new businesses moving into Mexico, companies already doing business there are expanding, increasing demand for cross-border and intra-Mexico transportation solutions and warehousing.

Operating in Mexico

“When people think of Mexico, the first thing they think of is the border. But Mexico is a large country, and there are a lot of kilometers to traverse ,” said Bob Black, vice president of operations at Penske Logistics. “You need to have an understanding of the country, the infrastructure and regulatory requirements. It’s also invaluable to have people who are knowledgeable about operating in Mexico, have lived there and understand the culture.”

Black said it is essential for logistics providers in Mexico to thoroughly understand the labor, government, city and state requirements because they can be unique. “There are new regulatory requirements on the patrol of goods that we’re seeing now, and we anticipate more coming as Mexico matures,” he explained, adding that the existing government has prioritized labor reform.

Knowledge of the country also aids in change management and agility. “Understanding where resources are, quickly determining short-term solutions, such as warehousing or parking, and anticipating what could come next based on historical issues or experience creates an advantage,” Black said.

Mexico recently experienced heat waves that created power challenges, and the power grid is becoming strained due to growth. “We’re seeing manufacturing facilities that have had to shut down for certain periods,” Black said. “Cities in Mexico are moving as fast as they can to upgrade their infrastructure, but these are things that aren’t necessarily top of mind.”

Managing the Border

By moving operations to Mexico, companies can take advantage of Mexico’s shared border with the U.S., which is the world’s largest economy. Mexico also has multiple trade pacts, including the United States–Mexico–Canada Agreement.

Scenario planning and visibility are even more crucial at the border. “The number of U.S.-based companies operating at the border with little to no visibility is shocking. Penske’s mission is to bring visibility to them,” added Black. “It’s very difficult to pivot in the supply chain. We’ve helped partners build solutions and temporary balances for things like strikes, and that’s why it’s important to bridge a gap on the other side.”

Labor Considerations

Lower labor costs in Mexico have also made the country attractive. However, new growth is making the market for talent more competitive. “When considering labor, it is important to be an employer of choice in Mexico through publications and surveys. That also means that you’re properly compensating monetarily, providing benefits and supporting employees emotionally with things like paid holidays,” Black said, adding that as the market grows, wages will have to increase, which has the potential to change the ROI.

In some areas of Mexico, pulling employees from nearby areas may be necessary. “We first try to staff with locals, but we have experienced situations where we provided transportation and brought employees in from outside the city,” Black said.

Optimizing Operations

Growth is also increasing demand for warehousing and industrial space. “Size and market dictate availability. Our customers are asking us to analyze the market and identify suitable facilities,” Black said.

Businesses are also seeking guidance on their existing operations and locations in Mexico. “A lot of companies have experienced natural growth over the past 10 years, so you can see a patchwork of facilities. We can look at it to see if it makes sense to consolidate into larger facilities,” Black added.

Penske’s engineers can create models and run what-if scenarios that analyze transportation network design, warehouse sizes and facility locations. Engineers can also look at the ripple effect network changes can have throughout the supply chain. For example, companies doing business in Mexico are often Tier 1 suppliers. “If they introduce a new model into a Mexico plant, other tiers in the supply chain are impacted as well,” Black said. A large part of Mexico’s industry is automotive manufacturing. New vehicles and model changes can require Tier 1 suppliers to ensure their supply chain is prepared to support the production needs of these manufacturing operations.

Most companies doing business in Mexico are multinational, which means decision-makers are often located abroad, adding to the complexity of their operations. “You have to know where the final decision-maker is and know and understand the local operations so you can meet their needs,” explained Don Klug, vice president of sales for Penske Logistics.

Serving Customers

Penske has provided freight management, warehousing and brokerage solutions in Mexico for over 20 years and is a registered service provider. With thousands of team members located throughout the country, Penske can provide engineered solutions, execution and day-to-day management of any company’s supply chain requirements in different verticals.

“We have built a solid team that understands the requirements, intricacies and challenges of operating in Mexico,” Black said. “We are excited about the anticipated growth in Mexico in the coming years and the growth of our footprint in the market.”

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How AI Is Transforming Supply Chain Management

The power of artificial intelligence is advancing at a rapid pace, and the technology is transforming industries, including the supply chain. With its ability to process vast amounts of data, identify and learn from patterns, and improve decision-making, AI, along with machine learning, optimizes processes, increases efficiency and mitigates risk.

Six Practical Ways AI Is Improving Supply Chain Processes

Many critical tasks in the supply chain rely on redundant, labor-intensive processes, but technology is changing that. Here are six practical ways AI and ML are changing the supply chain.

1. Route Optimization

AI and ML can analyze historical data, traffic patterns and external factors — such as traffic, weather, and shipper or receiver delivery constraints — to optimize route planning and scheduling. More efficient routing can reduce fuel consumption, improve delivery times and cut costs.

2. Demand Forecasting

One of the key challenges in supply chain management is predicting demand accurately. AI utilizes algorithms and machine learning models to analyze historical data, market trends and external factors to provide more accurate demand forecasts. The results enable businesses to optimize inventory levels, reduce overstock or stockouts, and accurately predict transportation needs.

3. Information Sharing

Data is critical in the supply chain, and stakeholders rely on each other for essential information. AI can collect and digitize information from disparate sources, such as bills of lading, contracts and emails. Digitizing and centralizing information speeds the flow of data, reduces the risk of human error and improves decision-making.

4. Yard Automation

Yard checks, which provide detailed information on which equipment is in the yard and where it is located, have historically been a time-consuming manual process that is only as current as the last update. However, advanced trailer sensors can eliminate the need for someone to conduct manual yard checks and provide real-time information on equipment. Additionally, information can be shared with drivers so they can find the right trailer quickly to avoid wasting precious hours of service.

5. Warehouse Automation

In the warehouse, AI can improve picking, packing and sorting tasks, significantly reducing labor costs and improving order fulfillment accuracy. Smart cameras and sensors can identify and locate items on shelves and guide employees or robots to pick orders more efficiently. AI algorithms can also optimize picker routing, reducing travel time.

6. Streamlined Freight Bill Audit and Payment

AI can automatically extract relevant information from freight bills, such as shipping details and rates, reducing manual data entry and minimizing errors. It can also validate the data against predefined rules to identify discrepancies and ensure accuracy. AI-powered analytics can provide real-time visibility into freight and payment processes.

The Role of Humans

While AI is improving supply chain processes, Andy Moses, senior vice president of sales and solutions at Penske Logistics, said the seamless movement of goods will still rely on the work of humans to oversee the technology, combine its findings with their expertise and make critical decisions.

“The merger of human and machine is going to do great things for the business community,” he said. “Machine learning and artificial intelligence will help you think faster and see your different options faster. Then you apply the human expertise and experience to take full advantage of the information and make it useful.”

To learn more about how to transform your supply chain, contact us.

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Emerging Technologies Are Shaping the Future of the Supply Chain

Technology is advancing at a rapid pace, and supply chain leaders are investing in emerging tech solutions to improve business operations, optimize processes and enhance sustainability. As a result, supply chain models are undergoing a profound transformation, and logistics providers and shippers agree that several technologies are not only changing operations today but also hold significant potential for their organizations.

The 2024 Annual Third-Party Logistics Study found that nearly all respondents — 87% of shippers and 94% of 3PLs — believe emerging technology adoption is critical to their company's future growth and success. They are also aligned on their top reasons for investing in technology — improving process efficiency and productivity, reducing operational costs and improving visibility.

Predictive Analytics

Predictive analytics bring a sophisticated, data-driven approach to the supply chain, allowing supply chain leaders to shift from historically manual processes to automate and inform core supply chain functions. Analytics are improving processes and decision-making related to inventory management, demand forecasting, network optimization, efficiency, risk mitigation and resilience.

In the Annual Third-Party Logistics Study, 74% of 3PLs said predictive analytics has the most significant potential for their organization. Andy Moses, senior vice president of sales and solutions for Penske Logistics, said the technology helps 3PLs mitigate supply chain disruptions, which is essential to their work.

“Shippers are looking for 3PLs to perform at a high level every day, particularly how they perform on out-of-the-ordinary days when there are disruptions in the supply chain or volume surges,” Moses said. “Predictive analytics that help a 3PL get out ahead of those are invaluable.”

Warehouse Automation

3PLs also value the potential of warehouse automation, robots, wearables and mobile technology. Within the warehouse, technology can help boost quality, productivity and safety and plays a valuable role in maximizing labor, which has taken on greater importance as the number of warehousing jobs in the U.S. has increased. More importantly, technology can enhance the overall labor experience, handling repetitive or dangerous tasks while increasing safety and creating more flexibility in the workplace.

Warehouse technology has become more accessible as costs have decreased. At the same time, labor costs have increased, making it easier for companies to justify the investment. Additionally, more technology suppliers offer automation solutions via a robot-as-a-service (RaaS) costing platform.

Specific warehouse technologies that are proving useful include:

Autonomous mobile robots that automate the movement
Storage and retrieval of goods in a warehouse
Wearables, such as headsets and smart glasses that direct employees to pick locations
Radio frequency scanners that can be positioned throughout the warehouse to direct employees and ensure accuracy when stocking and selecting products

Supply Chain Control Towers

3PLs and shippers taking part in the 2024 Annual Third-Party Logistics Study aligned closely on the role of supply chain control towers. Of these participants, 44% of shippers and 48% of 3PLs listed them as one of the most important emerging technologies.

Shippers often have disparate purchasing, warehousing and transportation systems. Control towers unify all systems on a single platform, providing an in-depth view of the full supply chain rather than its parts so shippers and 3PLs can collaborate more effectively.

Control towers also play a critical role in the use of machine learning and artificial intelligence. Having comprehensive, connected data will help ML and AI predict workflows, improve decision-making, anticipate potential disruptions and offer solutions. “AI is going to transform a lot of things in trucking, fleet maintenance and logistics,” Moses said. “The merger of man and machine is going to do great things for the business community.”

The Need for Collaboration

The 2024 Annual Third-Party Logistics Study also found that logistics providers are investing more heavily in technology than shippers and have more scale to support heavier investments in technology. However, they work closely with their customers to determine their needs and introduce the most effective solutions.

Moses said 3PLs see technology play out across multiple industry verticals and can help shippers understand the possibilities and configure technology to meet specific needs. The Annual Third-Party Logistics Study found that 83% of shippers and 79% of 3PLs said they’re already working together on tech solutions or plan to going forward.

To learn more about how technology can drive down prices, optimize entire networks and automate decision-making, contact us.

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Data Integrity Drives Operational Excellence in the Supply Chain

In a supply chain, every decision depends on data, so data integrity is critical. Accurate and timely data ensures supply chain partners hit their targets, comply with internal processes, make informed decisions and streamline processes while controlling costs.

“Accurate and timely data allows you to make educated and smart decisions about your business. If the data is inaccurate, it portrays a different truth than the reality. In some cases, this can have a dramatic impact on results,” said Vishwa Ram, vice president of data science and analytics at Penske Logistics.

The Importance of Data Quality and Monitoring Tools

In the 2024 Annual Third-Party Logistics Study, more than half of respondents — 57% of shippers and 52% of third-party logistics providers — said they’ve experienced issues with data quality. Managing data is especially important for logistics providers, who often draw on their customers’ data but are significantly impacted if it’s incorrect.

The report found that third-party logistics (3PL) providers are more likely than shippers to leverage data monitoring tools, use IT staff to check and resolve data quality concerns and have built-in data monitoring capabilities that automatically detect and notify stakeholders of data quality issues.

Potential Setbacks in Data Quality

Without accurate and transparent data, a business can experience any of the following, which creates more work to resolve.

Lack of Trust

Errors and missing or inaccurate data all harm data integrity, and one of the most obvious identifiers of bad data is a lack of trust. “If you do not have confidence in the data and information generated from the system of record to make business decisions, then you probably have a data integrity issue,” said Rowland Myers, vice president of DCC strategy and support services at Penske Logistics.

Human Error

Penske Logistics has established key measurements to ensure data accuracy and has several methods to verify data, depending on the source. Myers said the validation process starts at the beginning. “From an accuracy standpoint, we can confirm that it was put into the source system correctly,” he explained, adding that some of the biggest challenges center around areas where human touchpoints are needed. “If a driver has to punch a data point into the phone, there is an opportunity for error.”

For example, if a driver needs to hit a button on their phone when they arrive at a location but fails to do so until well after their arrival time, it creates inaccurate information. “If something shows it is out of tolerance, it will flag it, and we can find out what happened. In some cases, the solution is better training to create habits that drive accuracy and timeliness,” Myers said.

Ram said machine data capture is always more accurate than human data capture. “We’ve done a number of things to turn as much of our data capture as possible into machine capture, but we’re always going to have humans involved, so we do have to focus on the human element,” he added.

Missing Data Elements

With information transmitted via electronic data interchange (EDI), Penske has created automatic message processing and business rules. “We look for missing data elements and flag those,” Ram said. “In some cases, we go back to the customer. In others, we are reviewing what the data should be.”

Missing data — a misalignment between what is needed and what is available — can be a process error or a case of something not being captured. “For example, if a customer doesn't provide data, it is hard for us to give them an accurate analysis on the cube of their trailer,” Myers said. “We may have to go back and understand the requirements to start tracking additional information, or we can quickly show how to improve the data through process rigor or additional training.”

Automation can also improve data timeliness, which is critical in supply chains. “If you don’t get it in real time, it loses its impact,” Myers said. “In our business, on time is one of the most sought-after compliance metrics to make sure we’re getting products from A to B. If we don’t have the timely data, you don’t have the visibility to give the customer information.”

Delay in Product Movement

More importantly, real-time data allows logistics providers to mitigate risk and keep products moving. “We want to be proactive and let the data predict an issue before it happens,” Myers said.

It isn’t enough to just capture information. It must also be transmitted to everyone who needs it. “If somebody is sitting in LA traffic and is going to be late in Denver, capturing that information in real time, sharing it to our various systems and sending a message to a customer isn’t something that is trivial,” Ram stated. “Even though we as a society have come to expect these things, it still remains a complex endeavor. We have invested millions of dollars in the right systems, architecture and analytics to make it all happen.”

Data Integration Barriers

There are countless data points in today’s operating environment, which is why architecture is critical. “We have to funnel that information into a single place accessible to all parties to get the single source of truth,” Ram said. “We have broken many of the integration barriers and integrated with a lot of vendors and technology providers over the years.”

According to the 2024 Annual Third-Party Logistics Study, integration barriers are among the top challenges shippers and 3PLs face when sharing data. “A lot of our customers have had those challenges, and one of the reasons they come to us is because we have expertise in integrations,” Ram said.

The amount of data generated within the supply chain continues to increase, and future success depends on having the right platform to absorb all data sources, including streaming data, which is also on the rise. “Getting streaming data is not easy if we’re not architected correctly. That is how we’re making systems future-proof,” Ram said.

The Future of Data Integrity

As technology changes, it will be necessary for systems to identify which data is human-generated and which data points are generated by artificial intelligence. “We also have a lot of data in an unstructured format. Being able to capture that and generate meaningful insights from it is a huge undertaking. From a technical standpoint, that is different from what we’re used to,” Ram said. “The key lies in developing an overarching strategy to integrate our processes and technical capabilities to unlock business value.”

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Increase Visibility on Brokered Loads

Near real-time load tracking and freight visibility ensure shippers know where their freight is at all times. However, providing visibility can be a challenge in freight brokerage. Brokers aggregate capacity from carriers of all sizes; those carriers operate different systems and have different tech-related capabilities.

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Six Factors To Consider When Choosing a Freight Broker

Freight brokers play a critical role in connecting shippers with available capacity, but finding the right freight broker can be challenging. Over a thousand brokers are in the market, ranging from multi-billion-dollar corporations to solo operators working from home. The right broker can create a competitive advantage, offering breadth and depth of service, optimized solutions and business insights.

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Three Freight Brokerage Trends To Watch

Technology can be a differentiator among freight brokers, and tech investments continue to advance. Brian Kenney, vice president of brokerage for Penske Logistics, said he is seeing an emphasis on technology that can improve automation, compliance and tracking. Advancements in those three areas can increase efficiency, streamline communication and ensure the secure movement of goods.

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Determining When to Use Contract vs. Spot Freight Solutions

Spot and contract freight play essential roles in the movement of goods, and both options offer different value propositions for shippers. Recently, freight market volatility has challenged both shippers and carriers with fluctuating demand, natural disasters, economic shifts and more, making it difficult to forecast costs accurately.

Additionally, wide swings in trucking capacity have further complicated freight management, requiring shippers to monitor and strategically utilize both spot and contract options. Understanding when to utilize which solution can help shippers maximize freight spending, meet service levels, optimize shipping strategies and mitigate risks during uncertain market conditions.

Understanding Contract and Spot Rates

With contract rates, shippers commit freight to a carrier or logistics provider, and the carrier or logistics provider commits capacity for an agreed-upon rate. Contracts provide the security of price and capacity and make up the majority of freight moves. Contracts tend to last six months or longer.

A spot rate is the one-time, on-demand, transactional price a carrier or provider charges to move freight from point A to point B. Spot rates are based on the current market conditions and can change day to day or even hour by hour. The spot market can be highly volatile. Severe weather or unexpected disruptions can drive prices higher quickly.

Like most things, supply and demand factor into the prices of both contract and spot rates. When trucking capacity is tight, spot rates tend to increase and contract rates experience upward pressure. When capacity loosens, spot rates typically fall and future contract rates decrease. Spot rates, which are instantaneous, are a leading indicator for contract rates, with contract rates tending to lag behind spot rates by about four to six months.

There are times when the spot market provides more competitive pricing than contract rates. Some shippers “channel shift” and move to the spot market to take advantage of lower rates. However, disruptions experienced over the last few years have shown how critical long-term relationships are to the successful movement of goods during challenging times.

Determining the Best Option

Market uncertainty is expected to continue for the foreseeable future, and shippers will want as many channels as possible to move goods.

Contract freight offers guaranteed capacity at a predetermined, agreed-upon price, making it easier to forecast freight expenses. Contracts also provide opportunities to negotiate rates and fuel and accessorial charges, which are typically fixed in the spot market. Entering contracts also allows shippers and their logistics partners to develop strong, reliable relationships that can help ensure access to capacity during peak periods, improve service and uncover additional opportunities for savings. Overall, strong relationships can be critical to long-term success.

The spot market offers shippers flexibility and can provide valuable space when there is a planned or unplanned surge in demand, new shipping lanes develop faster than anticipated, or incumbent carriers reject loads. The spot market may also work best on some lanes, especially if they are inconsistent.

Volatile market conditions often drive freight into the spot market, and brokers can connect shippers with thousands of smaller carriers working primarily in the spot market. Because of the flexibility brokers offer, shippers don’t have to commit to more capacity than they need until they need it. Plus, utilizing all available carriers is critical to the functioning of the entire supply chain ecosystem.

Factors to consider include:

The overall network
The amount of freight to move
The consistency of freight
The level of service/specialization needed
Seasonal surge demand
Anticipated growth
Contingency plan needs

Developing a Strategy

Penske Logistics can work with shippers to evaluate their overall network and identify opportunities to increase efficiency, such as consolidating multiple less-than-truckload shipments into one cross dock. From there, the Penske team can review capacity needs, individual lanes, planned surges, anticipated growth, and current market conditions to help shippers determine the right mix of contract and spot freight for their operations.

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Communication and Planning Ease the Pain of Transitions

Change can be hard, especially in complex operations with multiple moving parts. In transportation and logistics, the stakes can be even higher — ensuring business continuity, maintaining legacy knowledge and business data, and retaining staff are all top priorities when a transition occurs. Penske Logistics has transitioned hundreds of companies to its dedicated contract carriage services and has developed critical best practices to minimize disruptions and maintain continuity.

“One of the most critical things we do is ensure we have a good communications plan,” said Jeff Jackson, president of Penske Logistics. “We have a dedicated project management team that runs the implementations, and we put together robust customer-specific plans that provide full visibility so they can see where we are with the launch and have full transparency.”

One of Penske’s more significant transitions involved 35 sites and 400 drivers and was done in one day. “We sent teams to 35 sites to make the announcements and train and onboard drivers. We had over a 90% stick rate, meaning we kept nine out of 10 drivers,” Jackson said.

Retaining Talent

Employees are critical to a smooth transition. “In most cases, our objective is to retain all the customer’s existing drivers, provided they meet our hiring requirements. Our driver hiring center is engaged early on and provides a white-glove treatment to new drivers. We have a centralized team that does nothing but engage with drivers, which helps with continuity concerns.”

Additionally, Penske has over 11,000 drivers on staff and offers a breadth and depth of talent for any additional needs. “We also have an elite driver program with 100 drivers in various parts of the country and dispatch them for three to four weeks at a time. We can leverage that program to bring drivers in early to fill any gaps,” Jackson said.

As a best practice, Penske errs on the side of caution and tends to over-resource initially, pulling in extra drivers and equipment from its internal resources to reduce the risk of disruptions. “We have a dedicated person with Penske Truck Leasing who works with logistics and will handle the transition. It takes a huge burden off to know we have equipment available, and we’ll have priority when the fleet utilization is high,” Jackson said.

Penske also has a full suite of training videos covering various topics, from leadership to core functionalities. “It is easy for our team to train new staff quickly, which leads to a clean transition early,” Jackson said.

Maintaining Knowledge

It is essential to maintain critical data and information, which include electronic data and employee knowledge, and successful integrations are key. “We like to connect IT to IT, and HR to HR, and have those teams work together directly. They speak the same language and can run testing before the implementation starts,” Jackson said.

Penske Logistics has made extensive investments in technology and has expertise in IT integrations to ensure nothing is lost. “We have integrated with all kinds of TMS and ERP systems,” Jackson said.

On the labor front, Penske wants to understand the current compensation and benefits packages. “We have our own, but we want to know if ours is superior or inferior. We want to keep drivers whole,” Jackson said, adding that Penske’s strategy is not to move wages backward and this makes the compensation process as easy as possible. Plus, some customers fund retention bonuses to incentivize employees to stay.

Emphasizing Communication

A large part of a project’s overall success comes down to communication, starting with the request for proposal. “When companies put an RFP out, they need to have confidence that it represents the real solution. That is a common pitfall,” Jackson said, adding that the best start-ups happen when the customer looks at their processes and data before they come in so they can communicate them clearly. “The more transparent they can be with us, the better we can be. It takes both of us to partner to get the transition done.”

External communication is also important, so the customer’s sales department must understand the reason for the change and the value it will provide. Then they can articulate it to their customers. “Sales cannot be out of the loop. Customer communication is key,” Jackson said. “You have to build trust, and you need to build it quickly.”

With a robust communications plan, access to a wide range of internal and external resources, and extensive experience transitioning companies to dedicated contract services, Penske Logistics possesses the tools and experience to ensure a smooth transition with minimal disruption.

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3PLs Lease More Warehouse Space as Shippers Seek Out Their Services

Third-party logistics providers are now leasing more warehousing space than any other sector amid growing demand for 3PL services. CBRE's 2023 North America Industrial Big Box report found that 3PLs accounted for 41% of all lease transactions at traditional warehouses and distribution centers, with at least 200,000 square feet in 2022, surpassing retailers and wholesalers for the first time on record.

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The Added Value of Dedicated Contract Carriage

Transporting goods is a complex process, and the trucking industry faces a wide range of operating challenges. Shifts in capacity, fluctuating rates, rising insurance and fuel costs, and the ongoing driver shortage create uncertainty for shippers. At the same time, customer service demands and regulatory requirements continue to increase, leaving many shippers looking for a solution that will provide secure capacity, steady rates, and high levels of service, all while mitigating the risks of operating a private fleet.

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Eight Things You Need to Know About the Food Safety Modernization Act

The Food Safety Modernization Act (FSMA) is transforming the nation’s food safety system by implementing best practices and requirements designed to prevent foodborne illnesses in consumers. Many of the FSMA provisions relate directly to the supply chain and keeping food and beverage products safe, fresh and enjoyable.

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New FSMA Requirements to Require More Record Keeping in 2026

The Food and Drug Administration (FDA) has issued new requirements for additional traceability records for certain foods, ranging from nut butters to cut veggies to shrimp, under the Food Safety Modernization Act (FSMA). The requirements, which take effect on Jan. 20, 2026, create new traceability record keeping requirements beyond those in existing regulations for certain foods. All entities in the supply chain will be subject to the Food Traceability Rule.

The FDA said the changes, which require entities to share information with others in the supply chain, will allow for faster identification and rapid removal of potentially contaminated food from the market, resulting in fewer foodborne illnesses and/or deaths.

The list of foods includes some cheeses, eggs, certain vegetables, including cucumbers and leafy greens, some fruits, including melons and tropical tree fruits, fresh-cut fruit and veggies, some fish, nut butters, and ready-to-eat deli salads, such as egg salad, potato salad, pasta salad and seafood salads.

In preparation for the new requirements, which are less than three years away, it’s essential to start evaluating current warehouse management system (WMS) capabilities now to be best prepared for the near future. Since traceability in our food supply chain is essential to providing better service to our customers and end consumers, and a detailed record-keeping system is important for all the foods we handle in our food chain, making updates now will lead to a seamless transition when the new requirements become mandatory.

Key Data Elements and Critical Tracking Events

As part of the rule, those who manufacture, process, pack or hold foods on the Food Traceability List (FTL), must maintain and provide to their supply chain partners specific information — called Key Data Elements (KDEs) — for certain Critical Tracking Events (CTEs), in the food’s supply chain.

For example, if a distribution center (DC) receives the repacked fresh cucumbers from a produce processor, it must keep records on the receiving KDEs of the fresh cucumbers. Since the DC will be shipping the cucumbers to a retail store, it must maintain KDEs related to the shipping of the cucumbers to the next point in the supply chain, the retailer. The DC must also send the KDEs to the retailer.

Records must be kept regarding where the shipping event began and where it ended, meaning where the food was received. Still, the FDA said it is unnecessary to have records of the food's route, including any instances where it may have been moved from one carrier to another. Also, for cross-docking situations where food is arranged for transport from point A to point B but is briefly placed on a loading dock at point X at the DC to be transferred from one truck to another, records don’t need to be kept for point X.

Key Data Elements for those receiving food include:

Traceability lot code for the food
Quantity and unit of measure of the food
Product description for the food
Location description for the immediate previous source (other than a transporter) for the food
Location description for where the food was received
Date the food was received
Location description for the traceability lot code source or the traceability lot code source reference
Reference document type and reference document number

Key Data Elements (to maintain and provide) for those shipping food include:

Traceability lot code for the food
Quantity and unit of measure of the food
Product description for the food
Location description for the immediate subsequent recipient (other than a transporter) for the food
Location description for the location from which the food was shipped
Date the food was shipped
Location description for the traceability lot code source or the traceability lot code source reference
Reference document type and reference document number (maintain only)

Traceability Plan

All parties covered by the rule must create a traceability plan, and several are specific to those holding the food, such as a DC. The plan must include a description of the procedures used to maintain the required records, including the format and location of the records. It also needs to have a description of the procedures used to identify foods on the FTL and a statement identifying a point of contact for questions regarding the traceability plan and records. Traceability plans must be updated as needed to ensure the information reflects current practices and previous traceability plans must be maintained for two years after an update.

The Importance of Equipment, Technology and Training

There are several layers to the FSMA, which was signed into law in early 2011, and several requirements apply to the transportation and storing of food. All parties in the supply chain need to ensure they’re complying with current requirements and prepared to meet upcoming compliance dates.

FSMA includes requirements surrounding vehicles and transportation equipment, which must be “adequately cleanable” to allow the sanitary transport of food and “must be stored in a manner that prevents harborage of pests or becoming contaminated in any other manner that could result in food becoming adulterated.”

The ability to track and trace products is at the heart of several requirements, making the right WMS a vital resource. Tier 1 systems provide information on where products are stored and have embedded algorithms that can find ways to maximize productivity and the movement of product in and out of the warehouse.

It is also important for those transporting and storing food to be current on the latest requirements and best practices. Penske Logistics has earned Cold Carrier Certification, adding to its strategic approach to safety. The certification, which is the first of its kind, recognizes cold trucking carrier companies that comply with the Refrigerated Transportation Best Practices Guide from the Global Cold Chain Alliance, a trade association representing all major industries engaged in temperature-controlled logistics. Additionally, Penske associates undergo regular training to ensure food safety.

Foods on the Traceability List

Foods that will be subject to greater requirements in 2026 include:

Cheeses, other than hard cheeses

Shell eggs

Nut butters

Cucumbers

Herbs (fresh)

Leafy greens (fresh and fresh cut)

Melons

Peppers

Sprouts

Tomatoes

Tropical tree fruits

Fruits (fresh cut)

Vegetables (fresh cut)

Finfish

Smoked finfish

Crustaceans

Molluscan shellfish, bivalves

Ready-to-eat salads

Learn more at:

https://www.fda.gov/food/food-safety-modernization-act-fsma/food-traceability-list

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