Article written by John Paul Hampstead
Combining ‘talent and technology’ is key
Last week, GlobalTranz, the Phoenix-based, technology-enabled 3PL, announced that it had added TW Metals as an important new customer of its Managed Transportation Solutions division. GlobalTranz reported $1.5 billion in gross revenue in 2019 and has been a prolific acquirer of both logistics and technology companies, completing 11 deals in the past few years.
TW Metals is a specialty metals distributor serving clients like aircraft original equipment manufacturers (OEMs), high-end motorsports, and oil and gas: Think titanium tubing and aerospace extrusion rather than, say, structural steel.
Managed transportation differs from traditional freight brokerage in that it typically involves the 3PL taking over all of a shipper’s freight, giving it much deeper insight into the customer’s network. These relationships are longer-term than traditional broker-shipper contracts, which allows the 3PL to devote human and technological resources to improving supply chains and exploring multimodal options. Human supply chain experts act in a consultative role on facility operations, scheduling, and supplier and end customer relationships; technology optimizes movements in a mode-agnostic way for metrics like transit time, cost, criticality, etc, that can vary shipment to shipment.
The deal was a significant win for GlobalTranz, whose managed transportation business is the fastest-growing division at the company. TW Metals moves about 50,000 shipments per year, equating to more than 30 million pounds of metal, with shipment sizes ranging from 5 to 20,000 pounds, from 18 distribution locations in the United States. TW Metals also operates in Mexico, Europe and Asia.
The complexity of TW Metals’ transportation needs, the critical nature of its products and the diversity of its customer base make it a good test case for GlobalTranz’s managed transportation platform. Brian Hurst, director of contracts and transportation at TW Metals, said his customers already counted on the company’s expertise in metals, but that it was becoming important to “extend that expertise beyond our doors.”
“We had an existing 3PL, but we felt there were companies available that could offer more of a value add and a better customer experience,” Hurst said. “When we went through the process with six to seven [3PL] vendors over a seven-month period, what differentiated GlobalTranz was the commitment to connecting to our branches. We have 18 distribution locations across the U.S., and the locations need an expert as a backstop, not just to move the freight but to optimize it.”
Ross Spanier, senior vice president of sales at GlobalTranz, said the partnership had a three-year governance structure with regular reviews. In the first year, the focus would be on integrating deeply with TW Metals’ supply chain by sending operations staff to docks and customer locations, and making tactical improvements to how TW Metals ships its product. Later, strategic network design and more sophisticated optimizations, including collaborations among TW Metals, GlobalTranz and TW Metals customers, would follow.
“We put together a solution where we really become an extension of their business,” Spanier said. “We’re their transport and logistics department, and we have skin in the game to meet service and price expectations by putting our plan in place over a three-year span.”
Elevated volatility in transportation markets coupled with higher customer expectations have combined to create a backdrop favorable for 3PLs that can offer managed transportation services. Shippers that want to drive operational excellence in their supply chains as a competitive differentiator are realizing that it can pay to go deep rather than wide with 3PL relationships.
“Managed Transportation is our fastest growing segment of our business at GlobalTranz,” Spanier continued. “We believe it’s because customers are recognizing that they are not experts in transportation and logistics, and therefore look for a partnership to be that extension. At GlobalTranz, we provide the platform – people, process, and technology – that delivers enhanced customer experience, provides the talent and technology, and doesn’t require significant investment upfront.”
Shipping critical, high-value parts directly to point of use
For reasons specific to the specialty metals industry, service and visibility are critical to TW Metals’ logistics needs and to its customers. Hurst said the TW Metals supply chain was about two years long, starting with sophisticated data science modeling of customer needs and forecasting that to raw materials manufacturers. The manufacturing lead time for something like titanium tubing can be 18 months, Hurst said. Once the metal arrives at a TW Metals location, there’s another set of processes that might include cutting, flaring, bending, welding or shaping the metal into a fitting. That can take anywhere from three days to three months.
“By the time it gets ready to go onto a truck, we can be nearly 24 months into the game,” Hurst said. “It’s absolutely important that that last mile of service is managed as efficiently and safely as possible. If you drop a loaf of bread at the grocery store, you can go back and get another one — for us it can be a two-year process.”
Many aerospace manufacturers have automated production lines, Hurst said, and a service failure on a shipment with just a small number of critical components can disrupt the building of aircraft worth hundreds of millions of dollars. Hurst said visibility from electronic tracking was vital to TW Metals and its customers.
The management of damage claims was also crucial when dealing with high-value cargo. A flatbed truckload of carbon steel might be worth $40,000, Hurst said, but a truckload of titanium tubing would be worth $2 million. A truckload of titanium tubes would be a very large, uncommon shipment for TW Metals; an example of some high-value critical freight, Hurst said, was a pallet he had going to Mexico that weighed 1,300 pounds and was worth about $300,000.
How TW Metals differentiates itself with supply chain performance
Optimizing that kind of shipment, whether through less-than-truckload carriers, partial truckload shipments or commingling, will be GlobalTranz’s task. Selecting the right carriers who understand the freight and customer expectations, and who will benefit from being placed into TW Metals’ network in a virtually dedicated role is another place where GlobalTranz will add value, Spanier said.
“We have a diverse and expansive carrier base,” Spanier said. “Some carriers handle niche markets and niche commodities, and you also need to make sure you’re protecting the customer in terms of risk management and insurance. All of that information is housed in our technology platform, which gives us a roster of carriers so we can make those decisions.”
To manage a complex network like TW Metals, though, GlobalTranz doesn’t stop at the electronic filtering of carriers that meet certain criteria, but collaborates with them in a hands-on way to ensure that the partnership works well.
“We go to the carriers and engage in collaboration with the customer,” Spanier said. “They touch and feel the freight, come out and look at it, and see how it needs to be handled. We’re getting much more intimately and strategically involved with the carriers that are going to be handling the lion’s share of the business.”
In a little under a month, GlobalTranz has already helped TW Metals offer superior customer service. Hurst said a commercial aircraft OEM called him with a problem: Four commercial aircraft were stuck on the production line for lack of parts after experiencing a service failure from one of TW Metals’ competitors. A manufacturer in Georgia would have the part available in the next few days, but Hurst needed a way to get it to the aircraft plant.
“A process that would have taken weeks was changed to a 21-hour transit time, and the parts arrived at the production line the day after they came out of extrusion at the mill,” Hurst said. “An aircraft OEM came to me with this problem, and I can give it to GlobalTranz confidently, knowing that they can handle it.”
Original Source: https://www.freightwaves.com/news/tw-metals-deal-highlights-globaltranzs-managed-transportation-capabilities