SDDC Offers Update on Program Efficiency Review , Seeks Industry Feedback

There’s little doubt that SDDC’s “Program Efficiency Review” was the hottest topic at last week’s Personal Property Forum (PPF). The Review is looking at many changes to the current DP3 program, including a possible reduction in the number of TSPs. This topic dominated the pre-PPF industry meeting, as well as many of the conversations held during the SDDC Symposium which preceded the PPF. Many TSPs were anxious to hear more of the details of SDDC’s plans for the Review at the PPF, but they probably came away disappointed.

Lt. Col. Derek Oliver, who presented the update on the Review, discussed the goals and intent of the Review at length, but offered few concrete details about the plans SDDC may consider. His reason for the lack of details was SDDC wanted to seek out feedback and opinions from the industry and others before making too many decisions. Industry often criticizes SDDC for not seeking input before making important decisions. so if the reason that SDDC has no details to offer is that they want to listen to Industry, then it is hard to complain about that approach.

Improving the overall efficiency of the program was  the common reason presented for the Review. It is clear that SDDC views much of the work necessary with the process of qualifying and managing 960 different SCACs to be wasted and inefficient, due to their belief that the number of TSPs who bring capacity to the program to be far less. Lt. Col. Oliver threw out a couple of numbers, such as real capacity may provided by only “a couple hundred” TSPs and that according to the FMCSA website, only 25% of the 960 TSPs have physical assets.

While details were scarce, there were a couple of general options under consideration that were discussed. The first was somehow trying to match the number of assets a TSP has to the number of channels that TSP could service. Another option mentioned was to limit TSPs to only manage a single SCAC code, similar to what is done in the International program today.

Speaking of the International program, the role of the forwarder was also discussed by Lt. Col. Oliver. He stated that he believed forwarders provided a value-added capability, and that “if we can quantify that”, that capability would be considered an asset. He also stated that instead of the term “asset”, perhaps “capability” is a better term for what they are considering.

The increasing  trend of managed authorities, where one entity manages a large number of possibly unrelated SCACs,  was also discussed. Lt. Col. Oliver stated that this trend was something they considered ”counter to the way the system was setup”. He also stated that they considered them to be an additional layer between the customer and the TSP, and seemed to imply that SDDC did not feel they were beneficial to the program.

During the question and answer period, the possibility of reinstating Letter of Intents (LOIs) was discussed extensively. Both TSPs and PPSOs in the room shared their opinions about whether bringing back LOIs would improve the program and solve some of the problems we have seen, with plenty of opinions offered on both sides. Lt. Col. Oliver stated that he also saw a lack of industry consensus on the issue, and said that “for everyone who tells me  ’Bring back LOIs’, there are the same number of people who tell me ‘Don’t bring back LOIs’”.

The timeline for completion of the Review was also not detailed. Lt. Col. Oliver stated that the timeline depended in part upon what changes they decided to make. However, he did say that their hope was to have this done before the next open season, which is scheduled for fall of 2012.

Throughout his presentation, Lt. Col. Oliver repeatedly stated that they are looking for feedback on the potential changes. He stated that industry should not wait to give feedback, and that SDDC was going to engage with industry and was looking for lots of different thoughts and different ideas. It is very likely that he will get plenty of feedback, since there are a lot of TSPs whose future business plans depend upon the outcome of this Review.

If you were at the PPF, what were your thoughts about Lt. Col. Oliver’s presentation on the Program Efficiency Review? If you were unable to attend, what other questions did you have about his update? Please use the comments below to share your opinions and questions.

Related Posts

1. SDDC Announces “Program Efficiency Review” - March 10th, 2011
2. SDDC, JPMO-HHGS Give Updates at NDTA - September 27th, 2010
3. SDDC Posts PPF Agenda, UpdatedTariffs, and TSP Update on Website - November 2nd, 2009