DC Velocity - May 2018

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@Lucas_Systems Lucas Systems www.lucasware.com 724-940-7000

34 DC VELOCITY MAY 2018 www.dcvelocity.com
working collaboratively with our
peers to clear the way for progress.
QAre folks vesting too much in blockchain than the reality of
its evolution calls for?

AThat depends on one’s per- spective. If you like all the
information in one complete
and neat package before deciding
where to invest, I suppose that’s
one way to operate. I believe that
advancements like blockchain tend
to get deployed by industry leaders
in about half the time that you
expect. Said another way, if you
think that blockchain has potential but
that it won’t be realized in three years,
just know that the winners will usually
act, implement, and change the game
in half that time or probably less.

QHave we seen a lengthening in shippers’“dayspaymentoutstand-
ing” (DPO) in recent years? Can you
quantify it?

AWe have seen a trend of extended payment terms among commercial shippers, especially large companies. Given today’s capacity crunch, it’s counterintuitive as to why anyone would consider lengthening payment cycles as an effective strategy because it has obvious operational consequences. Asking carriers to finance a shipper with extended payment terms just doesn’t work well today—shippers will pay for it in rates and capacity.

I have seen survey results from the National Association of Credit Management indicating that some shippers are pushing carriers to accept payment in 90 days and beyond, as compared with the average of about 37 days. Reconcile that with our brokers telling us that paying carriers quickly helps build more durable capacity relationships. On the truckload side, taking 30-day carrier payment cycles down to 24 hours makes a difference to brokers who must compete for capacity.

In any case, DPO trends should be
understood by mode, as ocean freight,
truckload, and parcel have different
payment patterns.

QHave digital tools streamlined the process? AYes, and they will continue to evolve and proliferate for the benefit of all supply chain participants. From automated freight payment systems and carrier payment acceleration platforms that inject capital into the transaction to broader supply chain and trade finance applications, digital tools are helping to streamline the cash-to-cash (C2C) cycle throughout the financial supply chain.