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Citi Perspectives for the Public Sector - Vol 2, 2013

Improving Federal Government Freight Practices

The scale and complexity of US Federal Government agencies’ shipping requirements makes change challenging. But by taking a more integrated approach and adopting best practice in the supply chain, there are huge opportunities to reduce costs and improve efficiency.

by Courtney Ward
Federal Government, Public Sector, North America

The US Federal Government is the largest shipper in the world. However, in reality it is a group of agencies with varying levels of freight volume, supply chain sophistication, skill sets, and strategic focus on transportation. Individually, these agencies operate in a unique - sometimes antiquated - environment, placing a burden on carriers and other logistics providers.

Many federal agencies admit that resistance to change can prevent progress, such as adopting newly available systems. This resistance fosters an environment that generally lags private sector best practices. Lack of transportation-related education and training are other reasons why some federal agencies have failed to adopt available transportation and freight management systems. Rules, regulations, and protocols - which may prevent waste, fraud and abuse - limit the pool of potential carriers, as not all are able to meet the strict government requirements on employees, vehicles, clearances, or loads. As a result, government agencies can find themselves facing higher costs.

Presenting a consolidated front
The goal for the Federal Government should be to leverage its size and budget to present a consolidated front to carriers. This can lower transport costs and make agencies a more desirable customer for carriers. Such a change requires agencies to look at external best practices and also search within the government to find areas of similar functionality. In some instances - such as freight payment - government agencies already have an advantage. Moreover, their requirements to audit mandates could act as a consolidating force. Combining efforts on a freight payment and auditing system should be used to create a foundation for collaboration and addressing the challenges faced by agencies.

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