Defense Transportation

Commercial Practices Offer Improvement Opportunities Gao ID: NSIAD-94-26 November 26, 1993

The Defense Department (DOD) pays commercial shippers more than $500 million annually to transport freight. In response to shrinking budgets, DOD is trying to economize and improve its management of domestic motor freight transportation. This report examines (1) trends in the commercial sector to cut costs and increase efficiencies in transportation, (2) the status of DOD's efforts to improve transportation management, and (3) commercial practices that could be instructive for DOD in achieving greater efficiency and effectiveness in transportation management.

GAO found that: (1) commercial shippers recognize that top management commitment and support is needed to implement transportation management improvement efforts; (2) commercial shippers have initiated actions to reduce costs and increase efficiency including integrating transportation functions within the logistics chain, reducing the number of carriers, focusing on high-performance carriers to promote stability and enhance leverage, utilizing information technology in their decisionmaking, and contracting for certain transportation functions to take advantage of lower costs and flexibility during market swings; (3) DOD ability to effectively manage its transportation operations is limited because of the large number of carriers it uses to move its freight, and redundancy and lack of standardization among its automated systems; (4) funding for the U.S. Transportation Command's oversight of transportation systems development has not been finalized; and (5) although DOD has made progress in reducing the number of carriers it uses and selecting high-quality carriers, it needs to implement strategies similar to those used by the private sector including comparing its transportation processes and costs with those of corporate shippers, promoting efficiency and reducing redundancies by standardizing its automated systems, streamlining transportation management and reducing costs, and enhancing information technology carrier management data collection.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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