Transportation costs can be difficult to predict, but the way a company pays for transportation management does not have to be. In a traditional managed transportation agreement, a provider may be compensated for based on the freight activity it manages with no assurance of the value that the program will deliver. That means its fees are guaranteed, even when the shipper’s savings are not.
Kenco is approaching transportation management differently. Its outcome-based transportation management model connects Kenco’s compensation to measurable results. Qualified shippers receive guaranteed linehaul savings with a lower platform access point, while Kenco commercially commits a pre-defined savings value. This is a huge differentiator.
We sat down with Mike Pallo, Vice President of Transportation Product at Kenco, for a Q&A about how the model works, how Kenco determines whether a shipper qualifies, and why reducing freight costs should not mean sacrificing capacity or service.
Pallo brings more than 25 years of third-party logistics experience to the conversation. His career has spanned transportation operations, sales, solution design, and product development, including previous roles as Kenco’s Vice President of Transportation Management Sales, Vice President of Supply Chain Solutions, and Director of Operations. That full-lifecycle perspective gives him a clear understanding of what it takes to turn a transportation strategy into measurable operational and financial results for a shipper.
Question: What is outcome-based transportation management?
Pallo: Outcome-based transportation management connects a provider’s compensation to measurable results instead of paying that provider primarily for the amount of activity it manages.
In a traditional arrangement, a shipper may pay a management fee based on its transportation spend or transaction volume. That gives the provider predictable compensation, but it does not always give the shipper a predictable return. Kenco’s model creates stronger alignment. We combine a lower platform retainer with guaranteed freight savings for qualified shippers, and shifts the accountability for delivering savings to Kenco from the shipper.
The important word is accountability. Before the program begins, we establish baseline, savings methodology, scope, and commercial terms with the customer. Both parties have a shared definition of success and a defined way to measure it.
Question: How does Kenco’s transportation model work?
Pallo: We start by looking at the shipper’s historical transportation data. We benchmark its linehaul rates and evaluate the network, shipment activity, service requirements, and operating constraints. That due diligence helps us determine whether we can make a responsible savings commitment.
If the customer qualifies, we agree on a baseline and the rules we will use to document savings. The customer pays a minimal platform retainer for access to Kenco’s transportation team, technology ecosystem, analytics, and execution capabilities. Kenco then assumes the risk for delivering the guaranteed savings.
The structure gives the customer visibility into how value will be measured, and it gives us a direct incentive to continue finding and delivering that value.
Question: How can Kenco take on the risk of guaranteeing transportation savings?
Pallo: The guarantee is based on due diligence, not a blanket promise. We analyze the customer’s historical data and benchmark its rate position before recommending a program. Not every shipper will qualify, and we will not make a savings commitment that the data cannot support.
Our transportation team combines market knowledge, carrier relationships, and technology to understand where a customer may have an opportunity to improve. We know the players, we know the rates, we know service commitments based on the sales channels, and we understand how to build a capacity strategy around the customer’s actual requirements.
That qualification process is what allows Kenco to accept more commercial accountability. We are not guessing what the network can produce. We are establishing a defensible opportunity based on the customer’s data.
Question: How does a company find out whether it qualifies?
Pallo: The first step is to share historical transportation data and participate in a virtual 30-minute discovery session. During that conversation, we learn how the network operates, what service commitments must be protected, where the business is experiencing pressure, and which responsibilities the customer may want Kenco to manage.
We then complete a no-cost, no-obligation assessment of the network, rate position, service requirements, and potential savings. A company does not need to decide whether it is a fit before speaking with us. The assessment is designed to answer that question.
Question: How long does the qualification process take?
Pallo: It typically takes two to three weeks after Kenco receives the necessary data and completes the discovery session. Timing may vary based on the size and complexity of the network, as well as the completeness of the information provided.
We use that time to understand the current state thoroughly. A credible outcome-based model needs a credible baseline, so the assessment must reflect the customer’s actual lanes, modes, rates, volumes, and service requirements.
Question: What does Kenco’s managed transportation program cost?
Pallo: Commercial terms depend on the customer’s network, transportation spend, service requirements, and program scope. We establish those details during qualification rather than applying one price to every shipper.
Typically, our platform retainers are designed to be approximately a quarter of the industry standard for managed transportation services. Qualified savings opportunities may generally range from 3% to 8%, depending on what the assessment supports.
The goal is not to promise the same percentage to every company. It is to establish an achievable savings commitment, reduce the customer’s platform access point, and create a transparent structure in which Kenco earns more when it produces documented value.
Question: What transportation modes can be included?
Pallo: The program can include less-than-truckload, truckload, and intermodal transportation. The final scope is designed collaboratively around the customer’s operation.
Some companies may want Kenco to manage multiple modes across a broad network. Others may want support with one mode, a defined group of lanes or a specific part of transportation execution. We build engagement around the areas where Kenco can provide the greatest value while supporting the customer’s larger supply chain strategy.
Question: Does the program include a transportation management system?
Pallo: Yes. Customers have access to Kenco’s technology ecosystem, which uses a transportation management system as the execution foundation.
Technology is important, but a TMS alone is not the full solution. The value comes from combining that technology with market intelligence, transportation expertise, carrier strategy, analytics, execution, and continuous improvement. The system helps create visibility and consistency. Our team uses the information it provides to make better decisions and act on opportunities.
Question: Are the savings based on fuel costs or linehaul rates?
Pallo: The program’s primary savings focus is linehaul rates. During qualification, Kenco and the customer document the baseline, the charges included and the methodology that will be used to calculate savings.
That clarity matters because transportation costs can change for many reasons. An agreed methodology helps distinguish the value produced by the program from market changes or cost components outside the defined scope.
Question: Does Kenco use the cheapest carriers to generate savings?
Pallo: No. This is not a cheapest-carrier-at-any-cost approach. We align the customer’s capacity strategy with its delivery requirements and service commitments.
The objective is to secure the right carrier at the right price—one that can provide the capacity, reliability, and performance of the customer’s needs. A lower rate does not create meaningful value if it results in missed appointments, unreliable capacity, damaged customer relationships, or additional operational costs.
We consider service requirements from the beginning. Savings are evaluated as part of the entire transportation outcome, not as an isolated rate exercise.
Question: What happens if Kenco cannot identify savings?
Pallo: Not every shipper will qualify, but there is still value in completing the assessment. If Kenco cannot establish a responsible savings commitment, the shipper receives a no-cost benchmark of its current rate position and has no obligation to proceed.
That information can confirm that the organization’s existing rates are competitive and that its transportation team is not leaving a meaningful opportunity on the table. If the network does qualify, the customer receives a proposal built around measurable savings. Either way, the shipper gains an informed outside perspective on its current position.
Question: Will managed transportation replace a customer’s internal team?
Pallo: Not necessarily. The scope is flexible, and Kenco can complement an existing transportation team instead of replacing it.
For example, we may manage selected modes, daily execution, carrier development, analytics, exception management, or other agreed responsibilities. The customer may retain strategic decisions, key carrier relationships, or responsibilities that are already performing well internally.
The right structure depends on the organization. Our role is to identify where additional expertise, technology, or execution support can create value—not to force every customer into the same operating model.
Question: Who is a good fit for outcome-based transportation management?
Pallo: Strong candidates often have meaningful truckload, LTL, or intermodal spend and enough historical data to establish a reliable baseline. They may be experiencing rapid growth, increasing network complexity, limited internal resources, freight-budget pressure, or dissatisfaction with their current managed transportation approach.
The model can also benefit organizations that want stronger technology, market intelligence, and analytics but do not want to build every transportation capability internally.
Industry alone does not determine fit. A company’s transportation profile, current rates, service requirements, data quality, and operating constraints all matter. That is why we begin with an assessment instead of assuming the same solution will work for every shipper.
Question: What should transportation leaders ask before selecting a managed transportation provider?
Pallo: They should ask how the provider is paid, how savings are defined and verified, which service commitments will be protected, and what happens if the expected value is not delivered.
They should also understand what is included beyond the technology. Who will manage execution? How will carrier performance be evaluated? How will exceptions be handled? What kind of market intelligence and continuous improvement support will the organization receive?
The commercial model should reinforce operational promise. If a provider says it will reduce costs and improve performance, the agreement should make those outcomes visible and meaningful to both parties.