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Urban Density, Changes in Technology and Last Mile Delivery: What Can Cities Do?

 

With the rise of e-commerce and technological improvements in transportation, like autonomous vehicles and increasing urban density, we are witnessing a historic transformation in our cities. Future trends in freight movement is a “hot topic” in policy and supply chain circles.

With so many changes ahead,  a key question emerges: Can cities cope?

Daimler recently made headlines with the launch of its “all-electric Fuso ecanter truck” in New York City. The vehicle will be rolled out in other US, European and Japanese cities in the next two years, with UPS as the first commercial partner with the truck. Toyota released a hydrogen-fuelled semi-trailer that currently hauls cargo between the ports of Los Angeles and Long Beach without producing tailpipe emissions. This pilot is part of a longer-range plan by the Port of LA to reduce emissions. Urban planners in Dallas are examining the possibilities for the “hyperloop” in their city, “a futuristic mode of travel that would use levitating pods to shuttle people and goods across hundreds of miles in minutes.” With so many changes ahead,  a key question emerges: Can cities cope? What can cities do to stay on top of change?

Here are five “takeaways” on the topic.

1.   Understanding the Nature of Change is Key

Many predict that the U.S. economy will double in size over the next 30 years. The nation’s population is expected to rise from 326 million in 2017 to 390 million in 2045. More and more, Americans will live in congested urban or suburban sprawls called “megaregions.” Less than 10% of the country’s population will live in rural areas by 2040. This is a stark contrast to the 16% of Americans who lived in the countryside in 2010 and 23% in 1980.

This trend means more “everything”.

The surge in population and economic growth brings with it escalating freight activity. Freight movement across all modes are projected to grow by approximately 42 percent by 2040.This trend means more “everything”. More pressure on roads and transit lines by commuters, more parcels delivered, particularly with the meteoric rise of e-commerce.

One special concern is “the last mile.” The last mile is the final step in the delivery process. The last leg of the delivery process is when an item (or person) moves from distribution facility (or transit point) to end user (home). The length of the distance can vary from a couple of city blocks to 100 miles. This video from the Ryerson City Building Institute clearly shows the effects of the “last mile” on commuters – in this case, in the Greater Toronto Area.

Some of the challenges involved with the last mile are:

  • increased traffic congestion and traffic accidents
  • Noise, intrusion, the loss of open spaces to transport infrastructure projects
  • Environmental and social (public health) impact from local pollutant emissions
  • Illegal parking and resting, idling vehicles
  • Problems experienced by vehicle operators when operating in urban areas
  • Parking and loading/unloading problems including finding road space for unloading; fines, and handling
  • Parcel Theft

2. Cities Must Take Notice

Cities have long been concerned with capacity thresholds for commuting and predicting traffic flow. The new topic of “last mile” in the supply chain must now receive greater notice. We are moving away from discussion on “smart commuting” alone. While still important, traditional topics like carpooling and promoting public transit are giving way to issues such as digitalization and automation (think ride-hailing and autonomous shuttles).

3. Business Concerns Must Factor Into Urban Logistics (alongside Sustainability and Livability Goals)

Furthermore, it must be recognized that economic activity in urban areas depends on the movement and delivery of goods through freight carriers. City and traffic planners must be made aware that urban settings can be inhospitable places for freight deliverers. There must be more public and private sector coordination in freight planning. “Cities can shape markets to focus private sector attention and invest on the needs of cities and the people who live in them by mobilizing infrastructure, talent, and other assets to support the right kinds of AV-based solutions,” was one of the conclusions in “Taming the Autonomous Vehicle: A Primer for Cities (Bloomberg Philanthropies and the Aspen Institute) .

Business goals must be incorporated into the dialogue alongside the goals of community sustainability and livability

How freight distribution processes can be integrated into metropolitan transport, land use, and infrastructure planning is a balancing act.  Business goals must be incorporated into the dialogue alongside the goals of community sustainability and livability. An efficient and future-forward freight system will support and attract new industry for the respective area.

4. A Variety of Solutions Will Likely Be the Answer

Some of the most popular solutions include advances in technology. Transportation technology growth is very exciting, much of it spurred by seeking solutions to urban density, commuting and freight patterns.  Other solutions are more “old-fashioned” or even a return to basics. Mixing traditional and emerging technologies is the way ahead:

  • Use of electric vehicles (EV) –“sustainable mobility”
  • Autonomous vehicles and drones
  • Human-powered delivery vehicles – Cargo-bikes, pedal trucks, and pushcarts
  • Amazon lockers in commercial venues (drop-off points)
  • Vehicle access restrictions based on time and/or size/weight /emission factor/fuel type of vehicle and bus lanes
  • Curbside pickups
  • Load consolidation or co-loading
  • Truck platooning
  • Night-time deliveries, relying on “quiet equipment” and driver training
  • “On-Road Integrated Optimisation and Navigation,” or route optimization, such as introduced by UPS as a big data solution to analyze parcel operators’ daily multi-stops
  • Innovative 3PL solutions like BlueGrace’s proprietary technology, “designed to put the power of easy supply chain management and optimization back in your hands”.

A BlueGrace Case Study In Action

Recently, an e-commerce furniture business in Portland, Oregon found it had outgrown its 3PL’s manual logistic capacity, due to heavy e-commerce volumes. When this company looked to BlueGrace for ways to improve its supply chain, it was discovered that they would benefit from opening another warehouse in the Northeastern area of the US. An alternative distribution solution lowered freight costs and decreased transit days.

For the last mile to be facilitated, there must be easier access to customers and shorter distance between the hub and home.

The idea of re-examining distribution is part of a larger process of change. For instance Amazon, FedEx and UPS are creating/investing in nationwide networks of distribution and fulfillment centers. “Warehouses like these are becoming a way of life for many urbanites,” reports the Wall Street Journal. This trend is already bringing new life to formerly “sleepy towns” like Tracy, California and Kenosha, Wisconsin. For the last mile to be facilitated, there must be easier access to customers and shorter distance between the hub and home.

Make your Last Mile work. Talk with a BlueGrace Logistics expert today!

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You Will Need Expedited Freight After The ELD Mandate Begins

The Electronic Logging Device (ELD) mandate is going to put a serious squeeze on many supply chains, and possibly have a major effect on your business as soon as December 2017. With the devices in place, stricter hours of service regulations will be going into effect. While these are meant to increase the safety and wellbeing of the driver, many are concerned about the interruptions this mandate will cause to scheduled delivery times.

Some Exemptions are Available

While an acclimation period is to be expected, the Federal Motor Carrier Safety Administration is making some exemptions to the ELD ruling in a few cases, the most important being:

Sprinter vans up to 24ft and straight trucks with a gross weight under 10,000 lbs WILL NOT HAVE the ELD regulations and will be able to meet time sensitive deadlines. Why is this exemption important for your freight? We will discuss more below.

So while the FMCSA is insistent on the implementation of the devices across the industry, they’re leaving a smaller, cross section of the trucking industry untouched. This comes with a slight sigh of relief as the rest of the industry continues to resist against the ruling. With the deadline for ELDs drawing closer and companies trying, and failing to repeal the mandate, other avenues for fast and timely deliveries need to be considered.

This is Where Expedited Shipments Can Help

Whatever the reason, a shipper needs to get their goods moved, and they need to get them moved in a hurry.

Unlike most other freight that moves with routine regularity, expedited freight has a nature of its own. Consider the timing aspect of it. The whole idea behind expedited freight is that it should be picked up and moved off quickly. A solution for anything from a shortage of parts to a peak season order. Whatever the reason, a shipper needs to get their goods moved, and they need to get them moved in a hurry.

In addition to the change in time and pace, there’s also the consideration that expedited freight might have some irregularities that aren’t found in normal day to day hauling. For example, the product that needs to be delivered might be going to an urban area. This usually means that ramps and docks aren’t an option, so the driver needs to have access to the right equipment to get the freight loaded or unloaded. There’s also a variance of cargo from one delivery to the next.

the nature of expedited freight is considerably different from standard freight.

In short, the nature of expedited freight is considerably different from standard freight. It needs to be quick, versatile and most importantly, available.

The BlueGrace Expedited Solution

So what do you do when you’re faced with less available hours and capacity? You turn to an expedited freight expert. The days of overpromising and overdriving trucking companies are quickly coming to an end. Instead, working with a broker who has the resources to expedite shipping will be the answer. BlueGrace not only understands the importance of getting your product from A to B quickly, but they also understand that the new regulations are very quickly going to start cramping up the rest of the industry.

BlueGrace is ready to serve customers with our national fleet of non-dock high sprinter van, small/ large straight trucks with liftgates and pallet jacks for inside pick-ups and deliveries. As we mentioned, sprinter vans up to 24ft and straight trucks with a gross weight under 10,000 lbs will not have the ELD regulations and will be able to meet time sensitive deadlines. We will also be able to provide true teams services for sprinter vans and up to 26ft straight trucks. Another added benefit to the hands on approach for expedited is that all shipments are tracked with updates every 2-4 hours depending on day points.

BlueGrace Logistics strives to streamline the expedited process for you.

BlueGrace Logistics strives to streamline the expedited process for you. BlueGrace provides you with a pool of 300+ pre-screened carriers that specialize in expedited shipments and can provide you with a quote in as little as 30 minutes. How’s that for fast?

In an uncertain time, BlueGrace takes the stress out of your freight by giving you the information and technology you need to get the job done. Click here to download our Expedited PDF with more details.

Need An Expedited Quote?

Fill out the form below for your FREE 30 Minute Expedited Quote, or call TOLL-FREE 877.630.7446 to be connected with our Expedited Freight Team immediately.

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ELDs Are Coming Fast! Some Facts & Predictions – Infographic

Countdown to the ELD Mandate – December 16th 2017

It is time to plan for the ELD Mandate as a freight shipper, if you haven’t already. When the electronic logging device mandate takes place, many shippers will be caught off guard with shipments taking longer than expected due to the restrictions put in place on drivers.

We thought it would be beneficial to show some fast facts and predictions about ELDs that we originally published in 2016. What do you think about the new requirements? Are you ready? If you have any questions feel free to contact your BlueGrace Representative today.

Click the image below for a larger version or download the PDF version here and feel free to share.

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Identity Theft is On the Rise, and Cargo Theft Might Not Be Far Behind

Identity theft is among the most insidious forms of crime. Not only can it mean a person loses their livelihood, but for an enterprising criminal it could just be a stepping stone for an even bigger target. What sort of targets would criminals be aiming for after stealing an identity? How about truckloads of cargo.

When you consider the amount of information people post digitally, there is a lot of sensitive data out there, just waiting to be taken. This is especially true when you consider the number of cyber attacks that have happened this year alone. The Equifax leak, for example, can be ruinous when you consider what can be done with a little credit information.  In fact, no one really knows just how extensive the security leak really is nor will we know just how many people have been affected by it. However, for freight companies, any form of identity theft could be catastrophic.

Identity theft is on the rise and cargo theft could see a drastic increase as well.

How Identity Theft Could Mean Cargo Theft

When someone takes control of your identity, they can wreak all sorts of havoc.

It seems like a bit of a leap to go from identity theft to cargo theft. After all, when someone steals your identity, that just means they tap your bank accounts and maybe open a credit line, right? Not exactly. When someone takes control of your identity, they can wreak all sorts of havoc. In terms of cargo theft, the scheme, as laid out by The Associated Press,  goes like this:

Thieves assume the identity of a trucking company, often by reactivating a dormant Department of Transportation carrier number from a government website for as little as $300. That lets them pretend to be a long-established firm with a seemingly good safety record. The fraud often includes paperwork such as insurance policies, fake driver’s licenses, and other documents.

Then the con artists offer low bids to freight brokers who handle shipping for numerous companies. When the truckers show up at a company, everything seems legitimate. But once driven away, the goods are never seen again.

And just like that, cargo is picked up and gone for good.

And just like that, cargo is picked up and gone for good. Here are some other interesting facts pointed out by Adrian Gonzales of Talking Logistics.

  • The average value of cargos stolen by fictitious pickup was $203,744 vs. $174,380 per incident for cargo thefts overall during the study period, a 17 percent differential.
  • The commodities most frequently targeted for fictitious pick-ups are foods and beverages, electronics products and metals.
  • Over half of fictitious pickups occur at the end of a week, on Thursdays and Fridays when the main concern of shippers and brokers is in meeting a delivery date and satisfying the customer.
  • Fifty-five percent of all reported fictitious pick-ups from 2011 through 2013 occurred in California. Significant fictitious pick-up activity has also been reported in Florida, Texas and New Jersey.

Cargo Theft Rates are Falling, but the Cost is Rising

While cargo theft rates have been falling from 2016 to 2017, the value of goods being stolen has been steadily increasing.  Cargo thefts fell for the third consecutive year in terms of reported incidents, but the value of the stolen goods rose 13.3% to $114 million, according to 2016 data from CargoNet.

“There were 1,614 incidents in the United States, including cargo theft, heavy commercial vehicle theft, and supply chain fraud. Thieves stole cargo in 836 cases with an average value of the contents at about $207,000, based on the 554 thefts with an assigned value. It represented a 7.7% decline in cases year-over-year and a 10% drop since 2014. The other 282 cases didn’t include a value for the cargo,” says an article from Transport Topics.

“However, the total value of the stolen cargo, $114 million, is greater than the $100.5 million in 2015 and $94 million in 2014,” they added.

What Happens to Cargo Theft Rates when Identity Theft Rises?

For freight companies, this means there’s going to be a need for even more vigilance than before.

As it stands, we’re still unsure as to how extensive the fallout from the increasing rates of identity theft will be. While cargo thefts have been in decline over the past few years, we might see a rise thanks to the number of vulnerable identities. For freight companies, this means there’s going to be a need for even more vigilance than before.

“Law enforcement has done an outstanding job responding to strategic cargo theft. But it’s like playing whack-a-mole. Not only will the groups pop up in different areas, but cargo thieves will bob and weave away from where the attention is from the police and private industry,” said Scott Cornell, second vice president and crime and theft specialist for Travelers’ Transportation business.

there’s no such thing as being “too careful”.

With the wave of cyber attacks, and now the rise of identity theft, there’s no such thing as being “too careful”. Know who you’re working with, and use a reputable broker to make sure your freight makes it to it’s intended destination.

 

 

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An Optimistic Outlook for the LTL Market

The US less-than-truckload (LTL) market is undergoing a tremendous change. Improving economic conditions as well as manufacturing growth has helped increase demand for LTL shipments. As a result, Stifel analyst David Ross noted that the $35 billion LTL market combined for publicly traded carriers reported tonnage per day increased 4% year-over-year during the second quarter of this year.

Indeed, the overall US economy appears to have awakened after a sluggish start to the year. First quarter GDP rose only 1.4%, a disappointment for sure but second quarter growth certainly made up for it growing at a 3.1% clip thanks in part to strong consumer spending.

E-commerce

E-commerce is taking more of the consumer’s spend. According to the US Commerce Department, second quarter e-commerce as a percent of total retail sales increased to 8.9%, up from 7.4% in second quarter 2016. The rise in e-commerce has sparked new service solutions from LTL carriers particularly as “supply chains become shorter, turn times are quicker and there’s a drive for small, but more frequent shipments”, according to Mr. Ross.

Some truck carriers have introduced last mile delivery services for items such as exercise equipment, mattresses, and furniture.

E-commerce packages have been the primary domain of small parcel carriers FedEx, UPS, USPS and regional small parcel carriers. However, as more consumers become habitual to ordering larger, bulkier items, FedEx and UPS, in particular, have struggled because their small parcel facilities and networks are not designed for such items. As a result, some truck carriers such as JB Hunt, Estes and Werner have introduced last mile delivery services for items such as exercise equipment, mattresses, and furniture. XPO Logistics, the third largest LTL carrier per the Journal of Commerce’s 2017 ranking, has taken it a step further by also offering white glove services such as set up, install, recycle etc. and just recently announced plans to expand their last-mile hubs to 85 within a few years. In addition, it is introducing technology that will allow consumers manage retail home deliveries with advanced, online tools.

Technology

Many shippers are looking for more integrated services, faster delivery and fulfillment and increasingly detailed shipment tracking and information. Also, third-party technology start-ups and TMS providers, such as BlueGrace are offering real-time pricing, booking and tracking solution services targeting both the shipper as well as the LTL carrier who may have available capacity on a particular lane.

Pricing and Labor

Stifel’s quarterly overview of LTL trends indicates that fuel surcharges are returning back close to 2015 highs (but remain far below 2011-2014 levels). Carriers are aiming for 3%-5% rate increases, and while getting some push back, they’re not losing freight over any rate hikes. The pricing environment currently remains healthy but could prove a concern over capacity.

LTL carriers are finding it more difficult to hire the needed labor to meet the increasing demands.

Labor continues to be another concern. LTL carriers are finding it more difficult to hire the needed labor to meet the increasing demands. Those that are hired are demanding higher wages. As an example, YRC was able to get some concessions from the Teamsters to allow them to raise pay above the contract level in certain markets.

ELD

The federal-mandated regulatory requirement, ELD (Electronic Logging Device) is set to go into effect in December. ELD is an electronic hardware that is put on a commercial motor vehicle engine that records driving hours.

It is believed that ELD could benefit LTL carriers at the expense of TL carriers.

It is believed that ELD could benefit LTL carriers at the expense of TL carriers. As such, many industry analysts anticipate pricing to increase as well as tonnage while TL capacity is reduced. As the Vice Chairman and CEO of Old Dominion Freight Line stated earlier this year, “A 1% fallout in truckload could equate to a 10% increase in the LTL arena, with larger LTL shipments.”

Outlook

The Journal of Commerce’s annual LTL ranking showed that total revenue dipped 0.4% from $35.1 billion to $34.9 billion after falling 1% the previous year. However, with US industrial output, consumer confidence and an increase in fuel prices, the top LTL carriers will likely return to expansion and revenue growth for this year.

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The Growing Need For Expedited Freight

Consumer expectations are changing. While this doesn’t come as a shock, the rate at which they are changing is picking up tempo. As eCommerce giants like Amazon and Alibaba continue to push the envelope, consumer expectations change as a result.

Today, the market has an expectation of “buy it now, wear it now.” While online shopping used to be a novelty, now it is the norm. With the advent of Amazon Prime offering a two day delivery for most products, people simply aren’t content to wait. While that’s great for consumers, it creates a significant shift in the way we look at logistics.

Disruptive Factors to Logistics

There are many speculations on what the most disruptive factors in logistics are. Some will point at ports, mega ships, and increased regulations. Others will say it’s the shortage of qualified drivers that are causing the most issues. CEO of FedEx Ground, Henry Maier, says it’s the next person to place an order through Amazon Prime. The “unparalleled and unprecedented growth” of e-commerce has created a “landscape of continuous change” that is rewriting the transportation playbook, Maier said.

Shippers need to be able to respond quickly to meet customer demand.

FedEx isn’t the only company that’s feeling the shift. “Think about the way things used to be on the parcel side,” Jack Holmes, president of UPS Freight, said. “Our business used to run right up to Christmas and then get very soft for six weeks. Now that (post-holiday) period is one of the most challenging for us.” Shippers need to be able to respond quickly to meet customer demand which means they need carriers that can meet their needs. That expectation and demand are only going to continue to grow as time goes on.

More About The Challenges

shippers need to not only be smarter about how they handle logistics, but they need to be smarter about how they handle their customers as well.

More than simply responding quickly, shippers need access to carriers that can suit their needs. Having trucks with lift gates, for example, is necessary for urban and suburban deliveries. Not only does this mean quicker deliveries but also a better service. Service, after all, is key in today’s market. Not only do consumers expect near instantaneous deliveries, but they have many platforms to express dissatisfaction should a shipper fail to perform. Therefore, shippers need to not only be smarter about how they handle logistics, but they need to be smarter about how they handle their customers as well.

The Growing Need for Expedited Freight

The holiday and the post-holiday season can become the most frantic for shippers and carriers alike. As holiday shoppers go on a spending spree, delivery times tighten as does available capacity. As a shipper, it’s important to have access to a reliable network of expedited carriers. Getting your products where they need to be, when they need to be there. So what do you do when you’re in a bind and need to have something shipped yesterday? Call BlueGrace Logistics.

 Why BlueGrace?

BlueGrace is an award-winning, full-service Third Party Logistics (3PL) provider that helps businesses manage their freight spend through industry-leading technology with a large network of established carriers to customers across the country. Sure, lots of firms may claim that, but what really sets us apart is our passion for supporting your success in this complex $750 Billion U.S. freight industry.

Our expedited freight services are second to none.

Our expedited freight services are second to none. We offer 30-minute quotes on price and capacity directly, from over 300 pre-screened, local expedite carriers nationwide. With over 10,000 pieces of equipment from Sprinter vans and semis, to domestic air, we can handle any type of freight. Each shipment is tracked by Macropoint, so you always know where your freight is located.

 

 

 

 

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How Shippers Should Already Be Prepared For The Holiday Season

Do you smell the pumpkin spice in the air? If you close your eyes, do you hear the faint jingling of bells in the distance to be? That’s because the holiday season is approaching. And, it’s approaching fast.  The busiest time for all, logistics companies, retail stores as well as shippers.

This is the season that can make or break shippers.

This is the season that can make or break shippers. If they are properly prepared, they can take advantage of having their items on the shelves faster for consumers to buy and reap the financial benefits. However, if they aren’t prepared, they could find themselves in a world of stress trying to find carriers to move their freight. – So, what can shippers do to prepare?

Plan For Unexpected Events

Remember while planning for the holiday season that it’s an incredibly busy time filled with unforeseen events. More people will be on the roads to visit their friends and family, and with more people on the road, more wrecks occur. More wrecks, more traffic jams, may cause your freight to be delayed.

Also, the holiday season usually packs a cold punch with winter storms creating dangerous conditions for drivers that could even keep them off the road for a few days. Be sure to track the weather before scheduling shipments around winter storms.

Things get hectic around the holiday season, making it more necessary to keep your documents accurate.

Things get hectic around the holiday season, making it more necessary to keep your documents accurate. One common mistake we experience time over time is the misclassification of freight. Minimize these errors by using a density calculator.

Compete With Larger Shippers

WalMart and Amazon are two of the biggest powerhouses in the world during the holiday season and can make it difficult for smaller shippers to offer competitive rates. Often times carriers can be lured away to make deliveries for these larger shippers on a seasonal basis.

We’ve seen this way too often. To be able to compete with larger shippers and keep their products moving, small and medium-size companies will have to offer and pay higher rates for carriers. If this story rings a bell, consider partnering with a 3PL. More often than not, 3PLs can provide better service and competitive rates.

Carriers enjoy working with 3PLs because they consistently engage with them by offering year-round agreements to keep their trucks rolling.

They can do so as they have an extensive network of carriers. Carriers enjoy working with them because 3PLs consistently engage with them by offering year-round agreements to keep their trucks rolling. Plus, the fact that they move such a high volume of freight that gives them a stronger buying power, which results in highly competitive freight rates.

Reflect On The Past

Think back to last year. Did your entire operation run smoothly with only a few minor hiccups or were you pulling your hair out? Make changes to improve your business from the inside out by locating the problems and finding solutions for them.

Did you have enough manpower to handle packaging and loading extra freight? You may need to implement an all hands on deck policy for the holiday months or hire a few seasonal employees. The key here is to hire good employees to keep your operations running smoothly. Also, consider a preseason training program for new and veteran employees to boost efficiency and minimize mistakes.

Did you have enough office staff to handle all of your paperwork in a timely manner? If not, consider getting a few extra secretaries or finding a way to automate processing all of this information digitally to cut costs and save time. Programs like Quickbooks could really help you transform your office.

Also, check out our latest technologies to see how to improve tracking, addressing, and product listing. By automating your services to become more efficient, you will be able to cut down on document processing time, costly accounting mistakes, and build more productive relationships with carriers.

Are You Ready? The Holidays Are Coming

Prepare your business now for the holiday madness!

 

 

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What Is The Current Status Of Trucking Capacity?

A sudden increase in freight demand throughout the United States might put shippers in a difficult position for capacity and price later this autumn.

According to the American Trucking Association’s’ (ATA’s) Truck volume leaped 7.1 percent in August from July, and 8.2 percent year over year, the ATA said Tuesday. ATA revised July’s tonnage index, increasing it from 0.1 to 0.5 percent.

Tonnage Gets An Added Boost

“Tonnage was stronger than most other economic indicators in August and more than I would have expected,” said ATA Chief Economist Bob Costello. “However, prep work for the hurricanes and better port volumes likely gave tonnage an added boost during the month.

“I suspect that short-term service disruptions from when the storms made landfall, as well as the normal ebb and flow of freight, could make September weaker and tonnage will smooth out to more moderate gains, on average,” he said.

Some of that 7.1 percent surge, however, may just be a seasonal adjustment.

Some of that 7.1 percent surge, however, may just be a seasonal adjustment. August is often a light month for tonnage as freight demand typically doesn’t start picking up till the fall. With such an increase taking place in August, ahead of schedule, that will push the seasonally adjusted index higher for the month. With the huge 10.5 percent uptick from July to August for unadjusted tonnage, that means that more, heavier freight was being shipped across the U.S. during August.

While this is good news for carrier, it could mean a rough season ahead for shippers. This increase in tonnage will likely mean tightened capacity for the fall. Additionally, shippers could be facing the biggest rate increase since 2014. 3PLs have been noting for months that capacity has been tightening as the economy improved.

The Effect of Disasters on Trucking

The devastation left in the wake of hurricanes Harvey and Irma is also having a significant impact on the trucking industry. Combined, the hurricanes have done almost $300 billion in damage, which has lowered U.S. economic growth by 0.8 percent in the third quarter.

Considering the damage alone, it’s no surprise that reconstruction demand will be taking the lion’s share of the trucking capacity that would normally be used to serve more general needs.

“Hurricane Harvey will ‘strongly affect’ over 7% of U.S. trucking during the next two weeks, with some portion of that fraction out of operation entirely, according to an analysis by freight research firm FTR Transportation Intelligence,” says Fleet Owner.

While the disruption was more or less contained around the epicenter of the damage, there is an effect that is going to be felt across the country.

“Due to the already tight nature of the truck environment, that means that loads could be left on the docks, according to Noël Perry, one of FTR’s partners. And though the largest ripple effects of Hurricane Harvey will be “regionalized” where freight shipments are concerned, transportation managers across the entire U.S. “will be scrambling,” he added.”

“Look for spot prices to jump over the next several weeks with very strong effects in Texas and the South Central region,” Perry said in a statement. “Spot pricing was already up strong, in double-digit territory. Market participants could easily add five percentage points to those numbers.”

The State of Capacity

As far as the current state of trucking capacity goes, shippers will have to deal with a considerable constriction as the industry contends with the natural disasters and the reconstruction effort. With a considerable jump in demand from July to August and the “peak” season starting early, shippers will also have to contend with the largest rate jump in years in addition to the tight capacity. Simply put, shippers will have to make smart moves if they want to stay ahead of the competition.

 

 

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How does Freight and Transportation Fit into your Budget?

The 2018 budget season is heating up!

We all know how it goes. The heads of each department work on their annual budgets and turn them in to finance. Finance then returns with remarks like “the budget is too high, make it leaner.” How do you go about “trimming the fat” off of the transportation budget? Transportation is typically a 10-12% cost band on the general ledger for most manufacturers and distributors and once the 2018 budget is locked in, it doesn’t change.

MABD and OTIF Affecting 2018

There will be challenges rolling into 2018 with freight carriers and big box retailers making their Must Arrive by Date (MABD) programs or On Time In Full standards (OTIF) rules more strict.

Huge retailers have very strict rules when it comes to receiving products by a certain date to restock their shelves. If a manufacturer or distributor is not getting their product to the retailer by the (MABD) or Must Arrive By Date, the retailer can hit the business with a ‘charge-back’ for a certain percentage of the invoice value. Not only will the business have to pay a fee, but it will reflect poorly on their business scorecard as well. Now, Walmart is taking it one step further with OTIF, On Time In Full standards that can penalize businesses for being too early or not having matching amounts of product.

General Rate Increase with Less-Than-Truckload

At the beginning of every year the LTL carriers will begin to roll out general rate increases also known as GRIs.

Something to remember about LTL carrier GRI’s, is that the announced GRI isn’t necessarily indicative of the true impact to a shipper’s bottom line freight cost because the GRI is not a flat percentage rate increase across the board.

It is merely an aggregate combined average percentage increase across all lanes serviced by a carrier. Rates in some lanes may remain unchanged but some may increase by more than 4.9%.

A shipper could be seriously impacted by a general rate increase much higher than what’s announced by the carrier, so it’s imperative for shippers to check each lane for actual impact on costs.

Has your transportation and supply chain departments brought these items into consideration when rolling out transportation budgets?

Freight Cost Allocation

There is also the issue of past freight cost allocation. True freight cost allocation should show your most profitable ship to locations, customers and products. Were you able to deploy sales people, advertising and marketing budgets to the correct locations? Were customers and product lines also accurate in relation to your budgeting for 2018 as well?

Transportation cost is much more than beating up LTL Carriers on price, sending out an annual RFP and picking carriers based on cost alone.

Don’t just remove a carrier and bring in a new one if you have a spat with the driver or if a shipment gets damaged. Make the decision based on the total of the carriers activity.

Consider a 3PL When Budgeting

Transportation costs affect all aspects of your organization and should be taken very seriously. When working on the 2018 budget, consider working with a third party logistics provider (3PL), as they will take the time to learn your business and see how these costs can affect everyone in your organization.

 

 

 

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Embracing the New Future of Logistics

When it comes to transportation and logistics, the market is a decidedly different place than it was only a few short decades ago. These changes are not small things either, and given the speed at which these changes are coming, it’s creating a rift between those that are willing to plunge headlong into the abyss, and those that are still afraid to look over the edge.

While firms like Amazon are leading the charge, more companies are warming up to the idea of the new ways of doing business by embracing the digital chasm, as it were.

According to the findings from the “26th Annual Study of Logistics and Transportation Trends (Masters of Logistics)”,  more companies are beginning to understand that new business models and new competition in the field are changing customer expectations.

“Results from the 2017 study show that roughly 75% of respondents are using the mix strategy (be all things to all people) as the predominant approach for their companies compared to the 51% who we reported utilizing a mix strategy in our 2016 results. However, unlike 2016 where many of these same companies focused on reducing cost as a primary objective, respondents this year were almost equally focused on increasing customer service or reducing costs—31.3% and 30.9%, respectively,” says Logistics Management.

The Structure of Service

A strong structure is becoming even more important than it has been in the past. Part of the focus for this years study is the relationship between strategy and structure. Simply put, if a company’s strategy aligns with its objectives, then the structure of the company will naturally develop in a way that makes those goals achievable. While this seems straightforward enough, there is a surprising gap between strategic focus and organizational structure for many companies.

Companies that reported a cost leadership focus strongly agreed that transportation is strategically important to them

“For example, companies that reported a cost leadership focus strongly agreed that transportation is strategically important to them. However, there is not this same level of strong agreement for elements that would provide the supporting organizational structure, such as working together with transportation service providers to be successful or spending time with those providers to learn more about various aspects of their business,” LM explains.

Companies with a focus on customer service, however, have a strategy that better aligns with a transportation oriented structure. So why would a company that’s focused on customer service have a better transportation network than a company that is more dedicated to a cost leadership strategy? Because in the now digitized world of transportation, both transportation and speed of service are goals that directly align with customer service. This means that by focusing on customer service, a company can naturally set itself up to have a more efficient and successful supply chain.

The Impact of Technology

Cost is, of course, another important aspect of running a successful business. When developing a successful cost strategy, it’s crucial to understand the tradeoffs between cost and service. Sacrificing good service for the sake of cutting costs is just as bad, if not worse, than overpaying for subpar service. Additionally, the speed of service becomes even more important when it comes to the digital economy. Companies as well as their transportation service providers “must be able to quantify the cost/value of increasing service levels.”

“Understanding transportation pricing should rely heavily on data science,” says Tommy Barnes, a sponsor contributor. “Currently, there are a lot of decisions being made without a firm grasp and understanding of how they will affect transportation costs—both in the short-term and long-term.”

While we can certainly agree with that, Barnes also believes that most transportation providers don’t have the necessary technology in place to accurately determine the cost of delivering services to their customers.

“Without that, they can’t accurately convey the value associated with increasing service levels or capabilities, leaving their customers to make decisions on a commodity price basis only,” Barnes said.

Having the “right technology” in place is simply a matter of having the right Transportation Management System (TMS) in place.

Yet having the “right technology” in place is simply a matter of having the right Transportation Management System (TMS) in place. The transportation industry, as a whole, are embracing and utilizing a TMS and even those that don’t, can have access to a world-class TMS for free!

Improving Data Shows the Real Strength of Trucking

There is an interesting correlation between the success of the survey and the data technologies that are utilized as more companies start relying on digitized services. As more manufacturers and companies go digital, the ease of gathering information increases, which allows the survey to get a better feeling for what’s going on in all parts of the industry.

A company must have real-time visibility into the entire lifecycle of their freight—all the way from quote-to-invoice

The report credits this improvement as a direct result of adopting modern automation and visibility tools. “To compete in a digital economy, a company must have real-time visibility into the entire lifecycle of their freight—all the way from quote-to-invoice—in order to manage exceptions, and even prevent errors from happening altogether.”

“The most efficient way to achieve this is through a multimodal, multiservice connectivity platform, a single source that views and analyzes all inventory and transportation positions,” he added.

While new data does reveal a larger portion of the industry, it also highlights some of the troubled areas. Capacity in the LTL sector is beginning to tighten, owing to a lower availability of equipment. Additionally, we’re seeing a growth in turndown rates, which usually bodes ill for the industry.

“All of this is happening at a time when we’re also seeing some interesting changes in the transportation spend by mode. There was a sizeable increase in spend for private fleet/dedicated (23.8% in 2017 versus 20.8% in 2016). This was the largest shift in transportation modal spend YOY. LTL remained essentially unchanged despite healthy rate increases during the past 12 months. Surprisingly, TL showed a 2.1% increase in its share of the transportation budget despite significant pressure to reduce prices as capacity outpaced demand,” says TM.

All of this to say that despite the troubles the trucking industry has been facing, between new regulations, bouncing freight rates, and weak demand, the trucking industry is still going strong. In fact, trucking remains the favorite mode of transportation for the United States.

Embracing the Change

Fortune often favors the bold, and it will be the bold that emerge victorious in the changing market place. For companies who are still taking their first tentative steps to technology and digitization, embracing this new methodology sooner rather than later will pay off in the long run. Fortunately, trailblazing and pioneering isn’t necessary, especially when it comes to strengthening logistics and your supply chain. Find out how BlueGrace can help your company run more efficiently and let us help you take those first steps into the new market landscape.

 

 

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Strong Supply Chains Create Strong Customer Experiences

Regardless of the industry, customer service will always be the cornerstone of a successful business foundation. Ask anyone you know, and they can tell you about a time they received subpar service, and they will always remember the business who delivered it. It’s that little facet of human nature, the ability to recall something that displeased us so vividly, that makes customer service so vital to a company. Yet even knowing that only 27 percent of companies believe that they offer a superior service over their competitors according to research from Gartner.

A significant opportunity for companies to up their game isn’t from the front end, but the back

While customer service representatives play a prominent role in managing customer relations, a significant opportunity for companies to up their game isn’t from the front end, but the back. The supply chain is pivotal in both marketing and customer service, and strong supply chain organization can make a tremendous difference.

“The supply chain organization typically plays a secondary role to marketing in driving customer experience strategy,” according to Lisa Callinan, a research director at Gartner. “Things are changing, however, in forward-thinking organizations, because the supply chain is uniquely placed to identify customers’ needs and drive better customer experiences.”

Connection Between Supply Chain and Customer Service

Of course, many big name companies understand the importance of the supply chain when it comes to driving up customer satisfaction. Apple, Johnson and Johnson, and Toyota are just a few. Amazon is perhaps the reigning champ when it comes to their supply chain and customer satisfaction. “Customers are influenced by their experience of the supply chain — even in the simplest terms, it’s easy to see that a late delivery can disappoint, whereas an expedited delivery can delight,” Callinan added.

Logistics and customer service make up the backbone of customer interaction

Logistics and customer service make up the backbone of customer interaction, yet many companies still haven’t discovered the best way to obtain the maximum value from either aspect.

A Case Study

At BlueGrace we have the privilege of serving a broad range of companies and industries. One company in particular highlights just how important strong supply chain management can be when it comes to customer satisfaction.

In this particular example, we worked with a company that is the leader in lifting and moving equipment rentals for the U.S. and maintains a comprehensive inventory of equipment. However, despite being best in class for customer service, the company began to suffer when rapid growth began to affect their supply chain.

“Within their industry, this company has a well-earned reputation for best in class customer service. However, faced with changes brought on by rapid growth, they experienced increased inventory management costs and a negative impact on invoicing as a result of delays associated with rentals placed in Off-Hire status but not yet returned to them.”

Given the changes and increased volume of demand, the supply chain became disrupted which then created a domino effect. Inventory management costs began to rise while invoicing suffered because the supply chain stuttered. As a result, a company who typically excels in customer service started lacking which hurt the business as a result.

Through our four step transportation management process, the solution left the company in much better standing:

  • Discover – Research and analysis of current processes,
  • Engineer – Build the solution and plan for integration of process improvements,
  • Execute – Implement recommendations/support and finally
  • Perform – Measure, review and ongoing process improvement

Improved return rental cycle time by 7.3 days, reduced pickup information errors by over 95% and sped up invoicing of returned equipment by 80%.

With the solution in place, the company was able to improve their return rental cycle time by 7.3 days, reduce pickup information errors by over 95% and speed up invoicing of returned equipment by 80%. By making these improvements to the supply chain and making the process more efficient the level of customer satisfaction rose significantly.

This goes to show just how truly interconnected the supply chain is with good customer service. Customer service and the supply chain are the building blocks for any good business foundation. Handling them both properly is what separates a good business from a great business.

 

 

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Trucking is Still America’s Favorite Mode of Freight Transportation

The American Trucking Association recently released the latest edition of the ATA American Trucking Trends 2017 which serves as a compilation and benchmark of data for the trucking industry. Interestingly enough, despite the lull in trucking over the past few years, the ATA report shows the trucking industry’s revenues for 2016 to be upwards of $676.2 billion dollars for the year.

ATA report shows the trucking industry’s revenues for 2016 to be upwards of $676.2 billion dollars for the year.

“The information in Trends highlights exactly what I tell elected officials, regulators and key decision-makers every day: trucking is literally the driving force behind our great economy,” said ATA President and CEO Chris Spear. “Safe, reliable and efficient motor carriers enable businesses throughout the supply chain to maintain lean inventories, thereby saving the economy billions of dollars each year.”

Trends don’t just cover revenues either. Just about any data you could want or need about the trucking industry in the U.S. is at your fingertips. Here are some other interesting statistics uncovered by the ATA’s Trends

  • Trucks carried 70.6 percent of all freight moved in the U.S., about 10.42 billion tons.
  • In 2016, there were 33.8 million registered commercial trucks including 3.68 million class 8 trucks.
  • Combined they used 38.8 billion gallons of diesel, 15.5 billion gallons of gasoline and traveled a distance of 450.4 billion miles.
  • U.S. commercial trucks paid $41.3 billion in state and federal highway fees and taxes.

The trucking industry is one of the most resilient in the country

While it might seem like the U.S. trucking industry is on the ropes, the nation still depends on trucks to haul freight and keep the country moving. The Trends report just goes to show that the trucking industry is one of the most resilient in the country and will continue to be so for years to come.

Partner with BlueGrace Logistics

BlueGrace is an award-winning, full-service Third Party Logistics (3PL) provider that helps businesses manage their freight spend through industry leading technology with a large network of established carriers to customers across the country. Sure, lots of firms may claim that, but what really sets us apart is our passion to support your success in this complex $676.2 billion Billion U.S. trucking industry.

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Walmart OTIF Policy – What are the Challenges and Concerns?

Walmart’s new addendum to their Must Arrive By Date (MABD) provision is making some suppliers more than a little nervous. OTIF (On Time In Full) rule will begin to punish suppliers for late deliveries with a 3 percent charge back if they are not made in a timely fashion. While this extension of the MABD fits with Walmart’s ever growing expectations, it could create some significant challenges for the supply chain, particularly when fresh produce is involved as it narrows the delivery window from MABD significantly.

It could create some significant challenges for the supply chain, particularly when fresh produce is involved

While MABD isn’t anything new as other major retailers such as Target and Home Depot have been using the threat of the 3 percent charge back as a means of encouraging more timely deliveries from shippers, OTIF significantly narrows the grace period a shipper would have to make the delivery.  

“Walmart is going to require its suppliers (shippers) to meet a two-day shipping window instead of its previous four-day window, as well as up its required compliance rate from 90 percent to 95 percent,” says Logistics Management.

Tightening Expectations

Under the MABD guidelines, suppliers had a four-day window to ensure that product was delivered to it’s intended destination. Under the OITF policy, that window will narrow significantly, only allowing a one day window for produce and perishables and a two-day window for other general goods. Suppliers will be hit with the 3 percent chargeback penalty if goods arrive late, incomplete, or even early. Additionally, if Walmart decides the supplier is, in any way, responsible for a variance in the delivery, they’ll receive a chargeback, end of story.

Under the OITF policy, that window will narrow significantly.

Good For The Customers But Tough For The Suppliers

Walmart’s plan does make a lot of sense when you consider they are working with JIT (Just in Time) principles. They don’t want excessive inventory sitting in stockrooms or in trailers behind the store, and they expect their suppliers to help make that a reality.

They don’t want excessive inventory sitting in stockrooms or in trailers behind the store

“The impetus for these types of changes over the years, according to Walmart, is part of an effort to ‘streamline its supply chain and cut costs,’ adding that ‘stores are no longer acting as warehouses, with too much inventory in back stock rooms or in trailers behind stores. Walmart wants merchandise to arrive in stores just in time to restock shelves and serve customers,’ ” Logistics Management adds.  

Compliance for shippers and suppliers is a going to be much tougher

While this is a sound decision from the retailer standpoint, compliance for shippers and suppliers is going to be much tougher, especially when you consider the nature of the produce industry.

“We predict in advance when the crop is going to come off, but weather can change that. Are we going to be held accountable for that? That’s going to cause a problem,” says one Walmart produce supplier.

Walmart produce executive, Bruce Peterson of Peterson Insights Inc says “The fresh produce industry is different and there should be ‘at least some degree of tolerance.’ From his more than 20 years of experience as the top produce executive at Walmart, he noted that almost all of the violations of the OTIF policy are at the beginning or the end of a season when weather and timing do play an out-sized role.”

The fresh produce industry is different and there should be ‘at least some degree of tolerance.’

The Blame Game

Obviously, no one wants to take the financial hit for falling out of grounds on compliance. So the question being asked is if there is a violation, who’s at fault, the supplier or the carrier?

Who’s at fault, the supplier or the carrier?

Take a look at the industry wide issue of assessing a fee or a fine on someone involved in the logistics of the supply chain. Holding the supplier of the transportation financially responsible is problematic when factoring in the risk-reward nature of the total transaction.

For example — A supplier could have a load of product with a value of tens of thousands of dollars. A trucker may only be getting $3,000 for the delivery of that load. Assessing the trucker a fee, which could easily be 30 percent of his take, for a delivery out of compliance seems unreasonable.

It doesn’t seem right to punish a good shipper in the off chance that they’ve had a late delivery due to weather or some other unforeseen circumstance. Rather, if there’s a serious problem with the shippers, then it’s time to find a better shipper.

The Solution

Proper lead time is crucial for suppliers and manufacturers that work with larger retailers like Walmart. One way to increase your chances of success is to partner with a third party logistics provider (3PL).

The new OITF mandate is going to have an impact on supplier ratings,

The new OITF mandate is going to have an impact on supplier ratings, so finding a 3PL who is both consistent and reliable is critical for navigating these new changes successfully. A good 3PL partner can examine your supply chain from start to finish and help to strengthen weak spots that might create issues in the future, reducing the chances of chargebacks and other issues that might be caused by OITF.

A good 3PL partner can examine your supply chain from start to finish and help to strengthen weak spots

BlueGrace can work with suppliers on freight consolidation, chargeback auditing, and management as well as load planning and optimization. We look at every aspect of the shipment and find the appropriate fix for the shipments to reach the shelves on time and in-full. Combine this with our proprietary technology BlueShip™ and your chances for success during these mandates/compliance regulation changes will undoubtedly increase!

 

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Is Intermodal on the Rise with ELD, Driver Shortage and Tightening Capacity?

A recent Cowen & Co survey discovered that 65 percent of shippers didn’t move their freight from road to rail during the second quarter. This result was also backed by a survey from Morgan Stanley, which had 59 percent of respondents indicating the same. However, while few shippers decide to make the switch, that could be changing this December. Why would shippers decided to hop the rails instead of utilizing trucks? Because of the Electronic Logging Device mandate which will be going into effect at the end of the year.

65 percent of shippers didn’t move their freight from road to rail during the second quarter.

The Reluctance to Shift

While rails are touted as a way to save money, more than a few shippers are reluctant to shift away from using trucks to haul their freight. Ideally, railroads as an intermodal service can offer a lower price at the expense of some speed. When it comes to inbound costs, it can be a way for some shippers to cut down on expenses in order to remain competitive. Or at least, that is the reasoning being sold to them.

Railroads as an intermodal service can offer a lower price at the expense of some speed

According to the Cowen survey, nearly half of the shippers surveyed stated that intermodal options only saved them upwards of five percent. A quarter of the respondents said that truck prices were lower than intermodal options. It’s that tight gap that might be responsible for making the reluctance to shift from road to rail. As there isn’t a huge cost advantage for sacrificing speed, most shippers prefer to stick with trucks as they don’t believe that rail can keep up with the speed of inventory turnover.

They don’t believe that rail can keep up with the speed of inventory turnover

Rails Starting to See Growth

Whatever reservations shippers might hold for rail and intermodal options will soon be falling to the wayside. For shippers that already made the switch, they noted not only better intermodal service but also the tightening of truckload capacity as their main reasons why.

Tightening of truckload capacity is a BIG concern

“Morgan Stanley asked shippers to rank truckload capacity in six months based on a scale where one equals abundant, five is balanced, and 10 is very tight. Shippers put the current market at 6.3 and projected 6.8 in six months. One year ago, the number was 4.9,” according to Transport Topics.

Executives believe that many truckers will leave the industry rather than deal with the ELD mandate

Another factor to consider is the potential spike in truck rates as truckload executives believe that many truckers will leave the industry rather than deal with the ELD mandate. Which, in turn, could cause a modest 3 percent increase in intermodal rates over the next six months due to a rise in demand.

“Overall, we view the results of this survey as positive for the railroads,” says Jason Seidl, a Cowen & Co analyst. “The 3.0% price increase expectation leaves additional breathing room from the all-important 2% rate, which is important because rail-cost inflation typically hovers in that area, and pricing will need to remain above that level in order for the railroads to improve their operating ratios.”

We view the results of this survey as positive for the railroads

The ELD mandate, the tightening of capacity, and the driver shortage could all be contributing factors to shippers taking a more favorable look at intermodal and rail options. In any case, 72 percent of respondents for the Morgan Stanley survey indicated that they would be increasing their rail spending in the next six months. However, in order to close the gap between either mode of pricing to err on the side of rails, there would have to be a serious shift in the trucking industry.

 

 

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Supply Chain: Nervous Over NAFTA

The White House has released President Trump’s plans to “renegotiate” the North American Free Trade Agreement. While it comes as a welcome sight for investors, it’s only sent the logistics industry into a mild state of panic as they try to determine just what effects these changes will have on the supply chain.

While on the campaign trail, Trump cited the deal as “the worst trade deal signed maybe anywhere” making a bold proclamation that maybe it was time to leave it altogether. However, in a recent press release, the administration suggested a slight restructuring, rather than a total withdrawal.

Sudden Changes Can Hurt the Industry

Trump’s business demeanor has a lot to do with the reason that the logistics industry is nervous, according to the president of the Arkansas Trucking Association, Shannon Newton. She said that a sudden change to the free trade agreement between the U.S. and its neighbors could cause some serious issues in the supply chain, especially when there isn’t time to adapt to these changes.

The industry has anxiety over change.

“The industry has anxiety over change, and it’s not necessarily that the way we are doing it is the best way,” Newton said. “It’s that the way freight currently flows dependent upon the methodologies that are currently in play.”

A sudden change in any trade agreement, could upset the way shippers do business.

A sudden change in any trade agreement, let alone NAFTA, could potentially upset the way shippers do business. Combine that with innovations in technology and rapid changes in consumer demand and renegotiations could have some serious adverse effects on shipping.

The Ripple Effect: Automotives

Just how bad could this ripple effect hit U.S. industries? Quartz explains that renegotiating NAFTA would more likely kill jobs in the U.S. auto industry rather than improve them.

Renegotiating NAFTA would more likely kill jobs

“Take the proposed (and widely criticized) border-adjustment tax proposal, which would result in higher taxes for imports. If it was applied at a 15% rate, it would raise the cost of making a car by $1,000, according to the BCG analysis. That’s too small of a difference to warrant moving production from Mexico to the US but large enough to force manufacturers to adjust—at the expense of US suppliers,” Quartz says.

So the manufacturers pass the buck, and the consumer pays a little more for the end product, right? Not exactly. What would likely happen is that automakers would simply offer vehicles with fewer features. Those features, such as automatic braking systems, would shut down other jobs somewhere down the supply chain.

Automakers would simply offer vehicles with fewer features

The Boston Consulting Group projects that 20,000 to 45,000 US jobs could be lost this way if the US adopts a 15% border adjustment tax. Which not only goes against the grain of the “America First” initiative proposed by the Trump administration but also make the United States significantly less competitive in the global market. And that’s just for the automotive industry, saying nothing of other manufacturers that rely on goods from Mexico.

Not All Doom and Gloom

Most of what is causing the anxiety in the trucking industry is simply the uncertainty of what’s to come. However, there are some positives to the new proposals. For instance, the new proposals heavily support the automation and streamlining of the customs procedures at the border which could help to be boost efficiency of cross border logistics.

The new proposals heavily support the automation and streamlining of the customs procedures

“For its part, the U.S. has already indicated an interest in automating and streamlining customs and border procedures. Those were among negotiation objectives released on July 17 by the Office of the United States Trade Representative (USTR). That 18-page document asks for ‘automation of import, export, and transit processes’ as well as ‘reduced import, export, and transit forms, documents, and formalities [and] enhanced harmonization of customs data requirements’ for goods crossing the border,” according to an article from Today’s Trucking.

If President Trump’s negotiations could help to address the imbalance, specifically in wage and labor gaps between the U.S. and Mexico, while streamlining trade between customs process, then it could end up as a win for the logistics industry. As it stands, however, only time will tell.

 

 

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BlueGrace Awarded Top 100 3PL By Inbound Logistics

Over the last nine years, BlueGrace Logistics has been awarded Inc. 500, Best Places to Work, Top Minority Owned Business, Happiest Company Award, Inc. Hire Power Award, and many more. As one of the fastest growing leaders of transportation management services in North America, BlueGrace is now being awarded the Top 100 3PL prize from industry publication, Inbound Logistics.

Inbound Logistics editors selected this year’s class of Top 100 3PLs from a pool of more than 300 companies.

“Today’s leading companies are struggling to balance the need for advance planning against the demands for supply chain agility, low-inventory schemes, and complex omni-channel and e-commerce distribution regimes.  BlueGrace Logistics continues to provide solutions to help companies meet those challenges, and that’s why Inbound Logistics editors have recognized BlueGrace Logistics as one of 2017’s Top 100 3PL Providers.” said Felecia Stratton, Editor at Inbound Logistics.

Top 100 Selection Methodology

Inbound Logistics’ Top 100 3PL Provider’s list serves as a qualitative assessment of service providers they feel are best equipped to meet and surpass readers’ evolving outsourcing needs. Distilling the Top 100 is never an easy task, and the process becomes increasingly difficult as more 3PLs enter the market and service providers from other functional areas develop value-added logistics capabilities.

Distilling the Top 100 is never an easy task

Each year, Inbound Logistics editors select the best logistics solutions providers by carefully evaluating submitted information, conducting personal interviews and online research, and comparing that data to our readers’ burgeoning global supply chain and logistics challenges.

“The service providers we selected are companies that, in the opinion of Inbound Logistics editors, offer the diverse operational capabilities and experience to meet readers’ unique supply chain and logistics needs.” said Stratton.

A Look Ahead

BlueGrace Logistics will continue its quest to be the best 3PL, by offering its freight customers the ability to ‘Simplify their Freight’ by providing customized transportation management through their proprietary technology, BlueShip™. By developing tighter integrations with BlueShip™ and major ERPs such as SAP and NetSuite, the transportation management team can offer more tools to help consolidate, streamline and predict future freight issues and opportunities. The BlueGrace team of transportation management experts have already helped many companies reduce their over freight spend through a tight combination of data engineering, carrier relationships and excellent customer support.

The transportation management team can offer more tools to help consolidate, streamline and predict future freight issues and opportunities

About Inbound Logistics

Inbound Logistics is the leading trade publication targeted toward business logistics and supply chain managers. Inbound Logistics’ mission is to help companies of all sizes better manage corporate resources by speeding and reducing inventory and supporting infrastructure, and better matching demand signals to supply lines. More information is available at www.inboundlogistics.com.

 

 

 

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The Battle for The e-Commerce Market Continues on The Logistics Front

The battle for the e-commerce market continues between Walmart and Amazon. As both are vying for every customer they can get, Walmart has decided to take a new strategy against the e-commerce giant. A warning to Walmart carriers has been issued. Do business with Amazon, and you may not be doing business with us in the future.

So the question is, is this simply a threat to divert carriers away from Amazon, or is there something else to it?

The Peak (Season) Concern

There certainly is a sense of pragmatism behind this threat. If carriers are hauling for both companies, then Walmart could lose out, specifically during peak seasons when freight volumes tend to spike.

Satish Jindel, head of SJ Consulting out of Pittsburgh says one of Walmart’s chief concerns is freight cyclicality and securing trucking capacity to move during busy seasons. “The genuine concern is that when [Walmart] needs 30 trucks from a company, that they get those 30 trucks instead of losing out because they are [working] for Amazon,” he says. The company is “protecting its ability to get capacity when they need it,” he says.

The company is ‘protecting its ability to get capacity when they need it’

This practice doesn’t stop with just Walmart’s carriers, either. The company has issued a similar warning to other suppliers. Typically those that make use of Amazon’s cloud storage capabilities.

The Possible Storm Among the Cloud

Why would Walmart be concerned with suppliers using the Amazon cloud? Well, would you feel comfortable storing data in a competitor’s server? In the cases of a supplier, having proprietary information in the digital hands of a competitor can be more than a little discomforting. To that end, Walmart warning stands: Use this service, lose our business.

In the cases of a supplier, having proprietary information in the digital hands of a competitor can be more than a little discomforting.

It’s not just the proprietary information that makes Walmart execs a little uneasy. In the wake of the Petya cyber attack in June, there are a number of companies who are getting more than a little uncomfortable with the idea of all their precious information being vulnerable. But just how vulnerable is the cloud? Based on the service interruption that happened only a few months ago, it might be more vulnerable than you would expect.

But just how vulnerable is the cloud?

“Amazon Web Services, by far the world’s largest provider of internet-based computing services, suffered an unspecified breakdown in its eastern U.S. region starting about midday Tuesday. The result: unprecedented and widespread performance problems for thousands of websites and apps,” says a article from Georgia based Newspaper.

While there was no reported leak of information from this outage, consider again the recent wave of cyberattacks. The Petya ransomware virus all but decimated the shipping industry including ocean carrier giant, Maersk Line. Given the amount of information that’s stored in the cloud, it’s reasonable to expect that a competitor might consider a use of the service to be a potential breach of trust.

Is Walmart being reasonable with their concerns

At the end of the day, the question is this: Is Walmart being reasonable with their concerns, or are they simply trying to put pressure on their carriers to steer them away from Amazon? While both sides of the argument can be made, the answer likely lies somewhere in the middle.

 

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Understanding and Managing Your Hazardous Materials Supply Chain (hazmat)

Shipping Hazardous Materials

Any company that ships hazmat knows that every piece of the puzzle needs to be perfect before the freight gets moving. Between surcharges, accessorial fees, packing groups and hazmat classes, every aspect of each shipment needs to be in its place or else someone gets fined.

With the government mandates and regulations so heavily involved in every aspect of the transportation industry, it is imperative for a logistics coordinator or a third-party logistics (3PL) provider to be knowledgeable and current with industry and carrier regulations. Here is where it can get sticky for some providers who may not have excellent carrier relationships.

Our relationship with our carriers is different.

Our relationship with our carriers is different. They are as important to us as our customers, so it is to our benefit to work with them to stay up to date on industry and carrier regulations. We are constantly training our transportation and freight representatives as well as communicating weekly with our ‘Carrier Update’ that goes out to our entire company, not just sales!

How BlueGrace is Different

BlueGrace is different than other 3PLs for several reasons, but one that sticks out above the rest; Business Intelligence and Transparency.

Business Intelligence and Transparency

A massive agriculture chemicals manufacturer in the United States was with another large 3PL when an opportunity came across for BlueGrace to do a consultative review. Upon conducting the review and data engineering screening, this company felt that BlueGrace offered greater transparency and pricing structure than their current provider and ultimately made the switch.

See How BlueGrace Helped an Agriculture Chemicals Manufacturer Realize a Cost Savings of 14% YOY

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Shedding Some Light on Dimensional Pricing

As more carriers are beginning to make a move to dimensional (DIM) pricing, it’s important that we take a moment to understand what this means exactly. Just like any change that happens in the shipping industry, being aware of it before it becomes the norm is the best way to stay ahead of the curve and to mitigate any unwelcome surprises in the form of higher shipping rates.

So what is dimensional pricing?

So what is dimensional pricing? Simply put, DIM pricing is a way for carriers more accurately price packages that take up more space rather than simply basing it on weight. A blog released earlier this year from EasyPost sums it up like this.

“Dimensional pricing (or dimensional weight) is a pricing technique for carriers to better reflect the cost of carrying bigger packages, regardless of their weight. Traditionally, carriers have used weight as the major determinant in rates. But by charging only by weight, carriers lose money when carrying bulky and lightweight packages that take up valuable space. Space can be just as important to a carrier as weight since bulky packages limit the amount of total packages the carrier’s vehicle can carry,” says EasyPost.

While the calculations might vary from carrier to carrier, there is a basic formula used by most.

Some carriers, like USPS, offer a DIM weight calculator so you can plug in your dimensions and see what your dimensional factor would be before you take your package to be shipped.

Understanding What this Means For Your Business

Once a carrier has their DIM factor, they can determine the rate to ship the package. However, here’s the catch. A carrier will also determine the weight rate as well and likely charge you the higher of the two. Understanding how your carrier will use dimensional pricing, as well as what the rates are will give you some insight as to how to move forward.

Understanding how your carrier will use dimensional pricing, as well as what the rates are will give you some insight as to how to move forward.

If their dimensional pricing is higher than their weight pricing, it might be time to rethink your packaging process, breaking items down into smaller packages or changing your packing material and box sizes for example.

LTL Shippers Might Get Hit Harder Than Most

The thought behind DIM weight pricing was born from both necessity and technology. Given the boom in e-commerce, many carriers realize that they’re maxed out on space, rather than weight, making their trips less than efficient. Given that we have the technology to accurately measure the dimensions of packages, this move is the next logical step for the LTL sector.

The thought behind DIM weight pricing was born from both necessity and technology.

‘The (LTL) industry in the last three or four years has rapidly embraced dimensioning (measuring) machines,” said Satish Jindel, principal of SJ Consulting, which closely tracks trends in the LTL sector. “It works, and it’s cost effective—the payback comes in just a few months,’ according to an article from Logistics Management.

How BlueGrace Can Help

While LTL carriers have been slow to react in comparison to parcel carriers, Dimensional Pricing is a reality in the future of our business. The DIM weight trend is beginning to grow, quickly. With the increased usage of dimensioners, carriers can more accurately capture cost data and ensure that price is compensatory with the cost to move it. The ultimate laggards here will be big shippers migrating off of the conventional class based system. Dimensional pricing is prevalent throughout the world, now the U.S. based shippers will have to play catch up. Not only will it apply to boxed parcels, but to palletized freight as well. Shippers will feel the sting of excessive packaging quickly if they don’t start making changes now.

Shippers will feel the sting of excessive packaging quickly if they don’t start making changes now.

Dimensional shipping might seem like a quick grab for a few extra bucks on shipping rates, but it’s actually a more accurate and fair way of doing business for all parties involved. Still, it can be a bit confusing at first, especially when dealing with other changes at the same time. At BlueGrace, we make it our mission to not only keep pace with these changes but to help you do the same. Whether it’s getting a better handle on dim weight, or finding carriers at the best rates to help you keep your supply chain moving, we’re here to help.

 

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CSA Report Card: Room for Improvement

Compliance, Safety & Accountability

While the Compliance, Safety, Accountability (CSA) scoring mandate is meant to improve carrier performance and safety for trucks on the road by providing a scoring metric, it wasn’t without its blind spots. A recently released report from the National Academies of Science, Engineering, and Medicine (NAS) shows that the CSA scoring method has some pretty glaring flaws when it comes to the Safety Measurement System (SMS) which can lead to an unfair scoring for a company.

CSA scoring method has some pretty glaring flaws

The main issues brought up by the NAS report include “some BASICs lack correlation with crash risk, data insufficiency, use of relative rankings, use of non-fault or non-preventable crashes, state variations in inspections and violations, lack of consistency in violation coding, a lack of transparency of the SMS algorithm and the public availability of SMS rankings,” according to GloStone.

The DOT will need to make the SMS metrics more fair and accurate

A point to note from the NAS report is that they believe the premise behind the SMS is fairly solid; it’s the FMCSA’s execution of the program that leaves something to be desired. The DOT will need to make the SMS metrics more fair and accurate when it comes to assessing actual safety risk.

Recommendations for the SMS

Again, the idea of the SMS is sound, the main problem is when it comes to the execution of the SMS. “The Safety Measurement System is used to identify commercial motor vehicle carriers at high risk for future crashes. It’s the heart of the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability enforcement regime, known as CSA. After numerous criticisms of the methodology from the industry, Congress called for the review of SMS as part of the Fixing America’s Surface Transportation (FAST) Act of 2015,” according to TruckingInfo.

Congress called for the review of SMS as part of the Fixing America’s Surface Transportation (FAST) Act of 2015

The current SMS metric fails to take into account some variables that play a bigger role in safety practices. Some of these faulty measurements include:

  • Using highly variable assessments
  • Not accounting for crashes where the motor carrier is not at fault
  • Including carriers that have very different tasks in the same peer groups
  • Using measures that are sensitive to effects from one or more individual states
  • Using measures that are not predictive of a carrier’s future crash frequency
  • Using measures that are not reflective of a carrier’s efforts to improve its safety performance over time.

Statistically Principled Approach

It’s easy to see that these oversights can lead to some bigger issues down the road. For that reason, the NAS study suggests that the current system takes a “more statistically principled approach” when it comes to collecting data. The NAS report recommends using latent trait theory or an “item response theory” (IRT) model. The IRT is the same approach used by hospitals for safety and performance rankings and helps to shape policy decisions.

“We have found, for the most part, that the current SMS implementation is defensible as being fair and not overtly biased against various types of carriers, to the extent that data on MCMIS can be used for this purpose,” said the National Academies panel.

SMS implementation is defensible as being fair and not overtly biased against various types of carriers

“However, we believe some features of SMS implementation can be improved upon, and some of the details of the implementation are ad hoc and not fully supported by empirical studies. Many of these details of implementation would be easily addressed if the algorithm currently used were replaced by a statistical model that is natural to this sort of discrimination problem,” they added.

Quality of Data

Another issue mentioned by the report is the poor quality of data. It’s recommended that the FMCSA continues to work with state departments and other agencies to improve the collection of data when it comes to miles traveled and crashes. Unfortunately, as it stands, this data is either missing or is of poor quality. Should the FMCSA be able to improve the quality of their data, the SMS will be able to take other factors such as environmental factors of travel which will give a better understanding of the crash conditions.

Unfortunately, as it stands, this data is either missing or is of poor quality

There are other, more obscured, data points that the report says should be included when collecting data on carriers, including driver turnover, cargo type, as well as method and level of driver pay. The panel suggests that driver pay is an important factor to consider especially when taking into account that better-paid drivers (those who aren’t paid based on miles traveled) tend to have fewer crashes.

What Does this Mean for the Industry

As you can imagine, the trucking industry has been waiting for NAS findings as it highlights all the issues they’ve had with the program for the beginning.

“This report has confirmed much of what we have said about the program for some time,” said American Trucking Associations President and CEO Chris Spear. “The program, while a valuable enforcement tool, has significant shortcomings that must be addressed, and we look forward to working with FMCSA to strengthen the program.”

we look forward to working with FMCSA to strengthen the program

If the FMCSA does decide to implement the suggested changes, then we can expect a more or less total overhaul of the CSA rating system. Now carriers with a mediocre level of safety performance can’t rely on poorer carriers to make them look good. Simply put, everyone is going to have to step up their game and start pulling their weight, safely.

Carriers with a mediocre level of safety performance can’t rely on poorer carriers to make them look good

In addition to providing more accurate and reliable data, carriers will also be able to get a better understanding of their score as well as how to improve it.

 

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