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How does Freight and Transportation Fit into your Budget?

2017-budget

The 2017 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 2017 budget is locked in, it doesn’t change.

MABD Affecting 2017

There will be challenges rolling into 2017 with freight carriers and big box retailers making their Must Arrive by Date programs or MABD 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.

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 2017 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 2017 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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The Logistics of Natural or Manmade Disasters

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Transporting freight to areas affected by natural or manmade disasters is one of the toughest challenges in logistics. The recent floods in Louisiana are an example of the difficulties involved. Two interstates were closed causing 55,000 daily motorists, including truckers, to use Interstate 20.

This added over 200 miles to some of the trips.

There were trucks being dispatched with relief supplies and there were trucks passing through the affected regions with loads destined for Houston and San Antonio, TX. The detours and interstate delays caused many loads to miss their service deadlines.

Now Hurricane Matthew has it’s eye on the southeastern corridor. 

Hurricane Matthew will hammer parts of eastern Florida starting Thursday, and then spread up the coast of Georgia and the Carolinas Friday into the weekend. This will inevitably affect deliveries and pick ups, as terminals will possibly be closed due to mandatory evacuations throughout the coastline.

Disaster Recovery Procedures Established

Since the terrorist attacks on September 11, 2001 and the devastating flooding of Hurricane Katrina in 2005, much improvement has been made in the area of disaster recovery logistics.

We now have established frameworks are in place to handle almost any situation.

However, due to the nature of disasters and catastrophes, logistics experts must be adaptive. An example of the Strict Utilization of Established Frameworks is brought to mind with the story of a few “Good Samaritan” truck drivers who wanted to support the Hurricane Floyd relief effort. They arrived at inland shipping locations, volunteering to move the loads of supplies at no cost. After much confusion and hours of waiting, they were turned away as the contracted carriers transported the loads.

Some companies like Anheuser-Busch, take this opportunity for charity as well. They recently sent over 250,000 cans of water to the Louisiana flood victims.

FEMA Diverts Carrier Assets

During times of disaster, the Federal Emergency Management Agency (FEMA) works with contracted carriers to transport basic needs items like water, food and temporary shelter.

When the event happens, carriers supply resources to FEMA immediately because the response has to be swift in order to be effective. These FEMA contracts are very lucrative and assets must be provided as requested per the demanding federal contracts. Shippers could be left out in the cold when carrier assets are diverted to such an operation.

Specialized 3PLs Dedicated to Recovery

Major segments of the economy have standing agreements with 3PLs that specialize in business continuity and disaster recovery operations. When disaster hits, there is no time to build relationships and negotiate responsibilities. It has to be pre-planned and recorded in a binding contract or a memorandum of understanding.

When asked about his responsibilities, this small fleet owner who contracts with a specialized disaster relief 3PL said –

“I subcontract with a logistics provider who contracts directly with AT&T. The communication sector is vital to our national economy and national security, so when there is a disruption, we are called to transport fuel, generators, sanitation equipment, temporary shelters, food and anything else you can think of that is needed in a disaster response.”

In conclusion, logistics providers must have established procedures in place, prior to a disastrous event. Attempts to circumvent established procedures will not work in times of crisis.

Customer needs must be clearly defined.

Customer needs must be clearly defined for these situations and a framework of service providers identified. When such an event happens, the long hours of planning will pay off and result in the service being provided.

 

 

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Carrier Spotlight | Old Dominion Freight Lines

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OD Freight Line fits many of our Core Values. Their ability to Pursue Outrageous Goals for over 82 years, is a huge reason why we continue to work closely with them to provide our customers with complete shipping needs.

One of BlueGrace Logistics Core carriers, Old Dominion Freight line, has 226 shipping service centers, 32 transfer points, and more than 18,000 employees. OD Freight Line provides service to six major geographical regions and thousands of direct shipping points in the lower 48 States.

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OD’s single-source operation helps you manage your domestic freight shipping needs with confidence and provides complete nationwide coverage across all regions of the United States.

Their Super Regional Service allows businesses to ship both inter and intra-regionally with the most competitive transit times and pricing available.

In 1934, Earl and Lillian Congdon founded Old Dominion Freight Line in Richmond, Virginia, with one truck and a commitment to keep their promises to customers. Since then, OD has turned into a global transportation leader. Today, Earl Jr. and his son, David Congdon, carry on the family tradition of doing whatever it takes to help the world keep promises.

Recently, Old Dominion was recognized with the following acknowledgements for company leadership in the industry:

  • Inbound Logistics magazine recognized Old Dominion as a 2016 Top 100 Trucker and named the company to its 75 Green Supply Chain Partners (G75) list for the sixth consecutive year.
  • For the seventh consecutive year, Logistics Management honored OD with its Quest for Quality Award.
  • SupplyChainBrain named ODFL in its 2016 “100 Great Supply Chain Partners” listing.
  • NASSTRAC honored the company as 2016 Multi-Regional LTL Carrier of the Year for the fourth consecutive year.
  • Forbes Magazine named Old Dominion one of America’s Best Employers in 2015
  • Fortune named CEO David Congdon to its 2015 Businessperson of the Year list.
  • The ATA Transportation Security Council awarded OD with its 2015 Excellence in Claims and Loss Prevention Award for the third consecutive year.
  • Mastio & Company ranked Old Dominion as No. 1 National LTL carrier for the sixth consecutive year.
  • 2015 SmartWay Excellence Award winner.
  • Commercial Carrier Journal ranked OD No. 10 on the 2015 Top 250 Carriers list.
  • Forbes Magazine named Old Dominion as one of America’s 100 Most Trustworthy Companies for three consecutive years.

Carrier Relationships

BlueGrace Logistics is always focusing on how to make each shipment, with each carrier, cost efficient. Working with carriers like Old Dominion Freight Lines is one of the many reasons we are successful in providing cost efficient and custom transportation plans for our shippers!

 

 

 

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How Expedited Freight Can Influence Purchasing Decisions

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Steve Daniels: Account Executive at BlueGrace Logistics

Expedited Shipping Options & the MABD

In a previous blog post we detailed how BlueGrace Logistics was able to resolve a long standing Must Arrive By Date (MADB) dilemma that was negatively impacting a health and beauty products company whose business model was increasingly moving towards “big box” retailers.

While big box retailers mandate MABDs to ensure their shelves are always stocked with products consumers want, many companies who sell products out of their own brick and mortar stores or through online eCommerce sites, are often losing potential customers and revenue by not offering expedited shipping options to customers who have their own Must Arrive By Dates in mind for purchases.

Fast Growing Automotive Industry

In 2015, the US automotive industry had a record 5.7% increase in sales growth over 2014. With this increase in sales comes additional demand for parts, to service these newly bought vehicles.

Many dealerships and local service shops find themselves having to order parts from manufacturers outside of their local areas to complete repairs and get vehicles back on the road as quickly as possible. The price of an item is just one factor consumers consider when deciding where to order an item from. Others, such as those in the automotive industry, are increasingly basing their purchase decisions on how quickly they can get a product delivered.

For smaller parcel sized items a business will often utilize the overnight or next day air options available from USPS, FedEx or UPS. Many businesses and consumers aren’t aware that expedited shipping options are available for larger sized items requiring freight shipping and often they aren’t able to receive reliable or economical shipping rates from their transportation partners.

Expedited LTL Transit

The transit of a standard LTL shipment is typically estimated as the shipment being picked up and be taken to a terminal where it will be cross-docked. During this process the shipment will be loaded and unloaded from freight trucks multiple times, depending on the distance, before it arrives at the final destination. While many LTL carriers offer guaranteed shipping services, some shipments need to arrive sooner than LTL shipping can provide. Depending on the size of a shipment there are multiple expedited shipping options available for freight sized orders.

By cutting out the cross-docking in LTL shipments, expedited services are able to cover a lot more ground or air, in a much shorter time than a standard LTL carrier could.

Cargo Vans and Air Freight

Cargo vans and air freight can be utilized for shipments that would ordinarily take up a few pallet space on a LTL truck, and for orders that require a full truckload, a team of drivers can be booked so that your freight can theoretically move non-stop without breaking regulations imposed by the United States Department of Transportation.

30 Minute Guaranteed Price And Capacity

BlueGrace can easily handle any expedited freight shipment request. With a network of over 1,100 carriers and 10,000 pieces of equipment available we can meet demanding pick-up and delivery times on weekends, nights and holidays, including 2 day cross country service. BlueGrace is also one of the few providers that is able to offer guaranteed pricing and availability within 30 minutes of your request.

GPS Tracking Of Your Freight

We also offer GPS Tracking of your expedited shipment. This data is updated every 2 hours for 1 Day Point shipments, every 4 hours for 2+ Day point shipments. Either way your Expedited Freight is tracked for visibility and security.

For any questions, please contact your BlueGrace Logistics Rep today! If your request is after 5PM EST or weekends, please email expedite@mybluegrace.com

 

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How We Reduced Freight Costs by 14% for Healthy Living Company

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A company that specializes in healthy, protein rich treats was able to see a 14% reduction in a transportation costs by partnering with BlueGrace Logistics. This organization was growing at a rapid speed which lead to a long list of transportation issues that needed to be alleviated and managed more efficiently.

Opportunities For Cost Savings

Their transportation problems range from costly carrier invoices and freight re-classing to no carrier management and lack of warehouse space to hold orders. We saw several opportunities to cut their costs and improve their bottom line. Our first order of business was to break down their issues into sections and tackle them one at a time…

Does your Health & Wellness organization ship product to retail? If so, this Case Study will reveal how BlueGrace is able to transform your current transportation program for maximum cost savings.

New BlueGrace Heathy Living Product Case Study - 14% Reduction In Costs
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5 Things to Consider When Selecting a TMS

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A Transportation Management System (TMS) can offer huge benefits for manufacturers, distribution companies, and anyone who ships freight. The benefits go way beyond lowering the cost of shipping freight by helping to reduce costs throughout the entire transportation process.

Transportation Management Systems help companies move freight from origin to destination efficiently, reliably, and cost effectively. A TMS serves as the logistics hub for route planning, load optimization, freight audit and payment, order visibility, carrier management and much more.

But is every TMS the same?

Not every TMS is the same. Here is what you need to know before selecting a TMS for your business.

1. Upfront costs can be high

In most cases, your business will need to budget accordingly and prepare for a costly bill. At BlueGrace Logistics we offer our TMS to our customers as part of our business partnership package. Having a powerful and user-friendly TMS is a benefit to both our customers and to our staff.

2. It takes time

A full implementation and integration for a TMS can take several months and there will have to be upgrades every few months to ensure efficiency. It is true that integrating a TMS with other systems can take time, but at BlueGrace our in-house IT team works directly with yours to integrate almost any ERP system into our BlueShip product.

3. IT Staff

Will your IT staff be able to integrate the software into your ERP system? If you find that your staff will not be able to handle the work load for implementations and upgrades, you can partner with our IT staff at BlueGrace Logistics; we can help manage the upgrades and integrations.

4. Ongoing Management

Who will be using the system and how many people do you have on staff dedicated to transportation that would be logging into the system on a daily basis? We would recommend having a specialist dedicated to this system that is able to provide direct reports to your organization. Your team at BlueGrace will also be available to work closely with your team daily to answer questions, correct issues and instruct them how to maximize the system.

5. Key Performance Indicators (KPIs)

You will need to decide what exactly you will be using the TMS software for. Will your freight bills be invoiced into the TMS via EDI’s or API’s from freight carriers? Will the system manage accruals and freight cost allocation? If you answered yes, these variables would need multiple licenses and different departments working in the software during the implementation and attribute to the ongoing success of the software.

This all becomes before transportation procurement, negotiating with carriers, getting the carriers to EDI tracking, and invoicing into your TMS. Your new team at BlueGrace will discuss all these options before any integration takes place. We will work together to determine what KPIs matter most and report on them so we both know which KPIs are being hit and which may be a miss.

This whole process can be and will be overwhelming to most.

Partnering with a transportation management provider that has the dedicated resources as far as IT, transportation procurement, dedicated support, project management, finance, and operations is often a better option.

So, do the hard and soft costs outweigh the benefit of implementing a TMS software platform for your business exclusively?

Take the time to discuss with BlueGrace your needs before you shop for a new TMS. You will find that we offer all of the tools of a standard TMS. We combine that with the ability to integrate the TMS, monitor KPIs, handle disputes and provide customer support for all your shipments.

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Electronic Logging Devices:  Making time more valuable

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There has been much speculation on the upcoming electronic logging device (ELD) mandate that is to be implemented in December 2017.  The discussion often heard is not about the benefit to safety even though that was how it was sold to Congress.  The American Trucking Association (ATA) lobbied the Federal Motor Carrier Safety Administration (FMCSA) for ELDs based on the promise of safer highways.

However, compliance enforcement and keeping everyone on a level playing field is most likely the goal of the ATA.

That is understandable as smaller companies and independent truckers have not voluntarily embraced ELDs and subsequently can move freight farther and faster.  But that is about to change in December 2017.

Pending Lawsuit to Stop ELDs

Before we predict the future of trucking and develop a course of action for shippers and logisticians alike, it would be clumsy to not mention the lawsuit that is standing in the way of implementation.  The Owner Operator Independent Drivers Association (OOIDA) filed a lawsuit that can be read about here and should be decided by the end of 2016.  OOIDA’s legal team has a history of challenging FMCSA overreach and winning – so stay tuned.  OOIDA’s president recommended to members that they wait on the court decision before they purchase an ELD.

The Law of Supply and Demand

Now, assuming the ELD implementation goes into effect next December, there will be an immediate demand for more trucks as the supply will be reduced.  How is the number of trucks reduced you wonder?  There will still be the same amount of trucks on the road the day after ELD implementation as the day before.

But the amount of hours available to wait on the shipper, receiver and drive will be strictly enforced.  There will be no more favors of putting in a few extra hours to get the load delivered a day early.

Some service times between a shipper and receiver may increase by an entire day if they were already borderline before mandatory ELDs.  Paper log books are easily manipulated and some shippers and 3PLs have standardized the faster service times by expecting everyone to do it.  A conversation with a 3PL agent sometimes sounds like this:  “You can’t get this shipment 800 miles to destination next day?  My other carriers do it all the time.”

Loading and Unloading Times Should Improve

The detention of trucks at shippers or consignees will have to improve.  Either the load/unload times will be expedited or heavy detention rates will be charged in order to compensate for the lost driving time.  Remember, every minute that a truck driver is on-duty will be more valuable because it will be precisely measured and regulated by ELDs.

In the past, some trucking companies have looked the other way as the dock delays cut into driving time.

Now, with strict compliance to hours of service regulations around the corner, trucking companies will no longer look the other way in order to save business, but will look to levy detention fees to shippers and receivers who unnecessarily borrow valuable driving time from a trucking company.

 

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The Busiest Time for Logistics – Holiday Season

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Holiday Logistics Ramp-Up

The busiest time of year for retail sales will soon be upon us. Logistics during the holiday season requires a significant amount of planning. If shippers are not currently prepared, they may already be too late. Product inventories are being increased as early as August of each year in preparation for the coming rush. For products arriving from overseas on container ships – early summer is when things heat up.

Nineteen percent of consumers begin their holiday shopping in October and 40% are holiday shopping during November. The average consumer plans to spend $804 for gifts and this number climbs steadily each year.

Large retailers are already moving products into warehouses and reviewing/finalizing contracts with large fleets. The sharp increase in the volume of retail products being moved in the next few months is staggering. It is “all hands on deck” for companies looking to capitalize during this strong, but brief uptick in the economy.

Where are my trucks?

Shipping around the holidays creates a significant amount of traffic, so it’s important to keep in mind the international holidays as well. Top of mind is Thanksgiving, Black Friday, Hanukkah, Kwanzaa and Christmas.

If your business depends on trucks to move your products to distribution centers or retail locations, I recommend that you keep constant communication with your transportation management team during the next few months. Often they are lured away from routine shipments to help support large retailers with their increased capacity needs during the holiday rush. It is a very lucrative time for carriers who are in high demand a few short weeks.

Amazon/UPS Drop the Ball in 2013

Remember the big Amazon/UPS debacle from 2013? Many packages did not make it to their destination as promised. Frankly, Amazon sold more products then projected and UPS and other carriers could not handle the excess. They have shipped more packages in subsequent years and have not had service failures as they did during Christmas of 2013. That is mainly because of Amazon deciding to take more of a lead in response to the increased demand and securing more truck capacity then in the past.

UPS and Fed-Ex contract heavily with outside carriers prior to the holidays for extra truck capacity. They both work with large trucking companies to gain line haul support in order to move thousands of extra loads from service center to service center. The trucking companies send a good portion of their fleet over to support the package carriers.

During this time, routine shippers may have trouble securing trucks for their normal operation.

That is why the constant communication between shippers and their carriers is imperative in understanding and reassuring capacity concerns.

Things to Bear in Mind When Planning for Holiday Uptick

  1. Be Proactive – Stay in constant contact with your 3PL. Have everyone on the same page and send out your forecasting to everyone who has a part in your success. “All Hands On Deck”
  2. Go Over Last Years Mistakes and Key Wins – Compile a list of previous years takeaways. Going over the things you could have done better is an effective way to avoid making the same mistakes this year.
  3. Be Flexible – As you may know one of our Core Values is to Embrace Chaos and we strongly encourage vendors, shippers, and carriers to do the same; especially during the holiday shipping season. By constantly communicating with your 3PL and handling your shipments early, you can avoid most last minute issues.
  4. Have a Plan B – Effective supply chain execution is the difference between getting products to customers on time. Make sure you have a Plan B and are able to execute it as soon as you notice any issues with Plan A!

Shippers – there is no need to fear.

There are still many solutions to get your products delivered to the destination during the busy holiday season. I recommend that you begin a business relationship with a 3PL if you have not already. You need to begin and foster this relationship as soon as possible because they too, will be called upon heavily during the holiday season.

3PLs have access to thousands of carriers across the country that can be called upon with short notice to transport your products to their destination.

Working with a 3PL anytime of the year will improve your bottom line, but if there is any time that we urge shippers to utilize the resources of a third party logistics provider – it’s the holiday season!

Is your business ready?

 

 

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Internet of Things: 2016 Status

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The IoT has come a long way within the logistics world, making both significant headway as well as changes within the logistics industry. Eft polled 600 supply chain decision makers to see what their standpoint on the IoT was, as well as any other thoughts they might of had. Of the respondents polled, many have plans to incorporate the IoT into their operations; while almost half already have an active IoT solution which means the majority of the respondents have or are planning to have the IoT as part of their inner logistics workings.

On the Roadmap

Respondents who have plans to implement the IoT have shown similar findings as those polled during 2014. While the IoT can offer a considerable amount of data, the three main areas of focus where:

  • Location
  • Temperature
  • Speed

While other variables such as Theft Prevention and Security have risen, some respondents have indicated that they are looking forward to having every statistic, showing that companies are taking a growing interest in not just the practical applications, but the potential application that the IoT can bring to their supply chain.

Additionally, the survey showed the different types of technology that companies are using to track and monitor their freight. While the IoT remains the most popular choice presently, other options such as GPS tracking, barcodes, and the much vaunted RFID aren’t far behind as companies are looking for higher levels of visibility in their supply chain.

Reasons for Implementation

There are a number of reasons companies are looking to step up their technology. Safety and compliance, access to real time freight data such as temperature and humidity levels (product integrity), as well as improving efficiency throughout their operations. However, the most important use of the IoT listed by the respondents is the customer. Having access to real time data and location for freight not only allows for more frequent updates regarding the location of their freight, but also offers companies the ability to provide better customer service through more information.

With the tumultuous nature of the freight industry, especially given the current policy changes, international regulations, and overall issues spanning from weak demand to overcapacity, strong customer service is becoming more important than ever, especially if companies want to attract and keep new clients.

Technology Growth Overall

In addition to the overall improvements to customer service and visibility made by incorporating the IoT many businesses have embraced a number of technological advancements. From 2014 to 2016 GPS and Satellite Tracking has increased 5%, data logging has increased by 14%, and IoT sensor and monitoring technology has increased to 19%. Conversely, RFID and barcode solutions have remained mostly constant, which would seem to indicate that companies are making a shift towards technologically advanced solutions.

One of the driving goals for the tech upgrades is to increase the visibility and efficiency of the supply chain. Given the complexities of land based logistics, it comes as no surprise that 80% of respondents dealing with land based freight are looking in increase visibility. About 50% of air shipments and only 33% of ocean freight carriers are looking for visibility improvements.

Implementation and Use of the IoT

Respondents were also asked how they planned to use the IoT within their business. Over half, 59% are currently using the IoT simply for real time monitoring and alarms, while 41% are looking to use the data to create predictive models and optimize their supply chain. With continued growth and development of the IoT, it’s very likely we’ll see a shift from monitoring and alarms over to prediction and optimization.

However, while there is a considerable amount of potential with the IoT, 61% of the respondents say they only utilize less than half of the information gathered. This is likely due to the lack of analytic capabilities necessary to process the sheer amount of data gathered by the IoT.

Return On Investment

Return on investment is important, especially when it comes to big ticket items like implementing new technology. The survey asked respondents what they felt the time frame on their return on investment would be.

The majority answer, at 28%, said that their ROI would be seen within 12-18 months. More confident companies, 17%, said that they would see their ROI within 12 months or less. This leaves a number of companies not expecting to see their ROI until 24 months or longer.

However according to the 2014 findings, more often than not, this was due to execution and implementation issues, which means companies who were experiencing a longer than average ROI timeframe, are confident that they would see it within a reasonable time frame after getting their program back on track.

Plans to Expand

Perhaps one of the most vital bits of information gathered is that 87% of current IoT users have plans to expand on their IoT capabilities. With the high success rate for the ROI and the growing shift to predictive modeling, the continued growth and expansion of the IoT amongst companies world wide would only help to strengthen the data collecting capabilities, providing more sources to draw from. As companies continue to make the shift to advanced technology, it can be assumed that we will see a change in the way that freight and logistics are carried out, harnessing the power of data and analytics over the trial and error method of the past.

 

 

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How Do You Cut Supply Chain Costs On Your Next Acquisition?

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The size of the private equity market is huge.

Assets under management have grown from just $30 billion to $4 trillion over the past two decades.

In the last few years the news has been inundated with “Private Equity Firm Invests in Logistics Company” types of articles. We have all seen it before and most recently here at BlueGrace Logistics where Warburg Pincus invested $255 million for a minority stake in the company. It’s a daily conversation in this space and will continue to be, as Third Party Logistics (3PL) start-ups build momentum.

But what if we twisted the story?

What if BlueGrace Logistics could assist with an acquisition from a private equity group? What if we could aid them in reaching their ROIC in a timely fashion?

These types of transactions aren’t always front and center. For example – a Private Equity Firm is considering investing in a restaurant supply company and this company has been operating their supply chain at a dismal pace with an inefficient system and extremely high costs. When identifying proprietary opportunities, a PEG should consider partnering with a 3PL.

According to the State of the Logistics Market Report, two-thirds of US total logistics costs are attributed to transportation spend. Additional industry reports further corroborate the high cost of transportation spend citing it as either the #1 or #2 largest line item cost driver for many manufacturers.

Private Equity Groups can often lack the capabilities, sophistication, experience or resources to truly transform this major line item cost into a strategic competitive advantage over their competition. For many of these clients, as business grows, transportation can exceed its internal capacity and resources thus proving difficulty to manage its day-to-day transportation function on its own. As such, partnering with a logistics provider like BlueGrace can prove beneficial.

New BlueGrace and PEG Case Study - 12% Reduction In Costs

Before The Investment:

We review your data before the investment to determine potential issues.

No cost consultation – with no upfront cost to the private equity group, VC or even the business being acquired, we can immediately offer:

  1. Introductory discovery call
  2. Historical data review
  3. Engineering reports of data
  4. Potential transportation issues
  5. Integration opportunities

After The Investment:

After the investment is finalized, an ongoing partnership would ensue and BlueGrace Logistics would continue to work with the PEG to grow profits and reduce costs.

BlueGrace clients on average, save 8% on freight costs.

We would work directly with the investment to provide ongoing logistics expertise, dedicated service reps, ERP systems integration, KPI and Goal setting, and Business Intelligence reporting.

In the case of this restaurant supply company, we were given a set of parameters and a timeline to achieve certain cost reductions and integrations.

We were able to provide 12% reduction in transportation costs – a $300k in annual savings. The PEG was also able to see their ROI within 11 months of the acquisition.

BlueGrace can vet and bring acquisition opportunities into shared services.

BlueGrace can vet acquisition opportunities for our clients. If the customer decides to acquire the prospective business BlueGrace will bring them into shared transportation services.

It doesn’t end with reporting.

BlueGrace Logistics will provide the investment and PEG with suggestions and plans to execute the changes. Lost profitability, warehouse relocation studies, consolidate shipments and much more will be addressed in order to cut costs.

BlueGrace provides scalability for PEGs to achieve their aggressive cost cutting and profit goals without labor or technology investments.

Our expertise and processes provide PEGs with the bandwidth to operate efficiently and drive direct cost reduction through our procurement and dedicated management.

It’s a partnership worth investing in.

When a private equity group is considering acquiring any company, especially a manufacturer, a 3PL with a track record of success should definitely be brought into the mix. BlueGrace Logistics brings a tremendous amount of knowledge and skill to quickly assess situations which in turn generates substantial savings and performance improvements to supply chains.

New BlueGrace and PEG Case Study - 12% Reduction In Costs

 

 

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The Challenges of Exhibit and Trade Show Freight

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Trade show freight is a very time-sensitive segment of the transportation industry.

In fact, due to the extremely high standards within this niche, there are companies solely dedicated to trade shows.  Trade show freight requires narrow pickup and delivery windows, no tolerance for damage and a “get it done-no matter what” type of attitude.  Most transportation companies do not normally provide this level of white glove service, therefore a logistics company dedicated to trade shows and exhibits must be called upon. These full-service companies will help plan, create, transport, set up and tear down trade show exhibits – all for a premium price.

If a shipment is late – at best, there will be higher costs for last minute material handling, up to a 30% increase.  At worse, it can cause the exhibit to miss the show entirely.  Very high penalties are involved if that happens.

3PLs can provide the type of service that most trade show exhibiters require.

Companies with large marketing budgets and complex displays are perfect customers for these premium turn-key trade show logistics providers.  However, most exhibiters do not require an all-in-one type of solution.  3PLs can provide the type of service that most trade show exhibiters require.  Even though a 3PL does not have its own assets to support a trade show event, they do have many contacts within the industry to call upon.  Their access to the best carriers in the industry, coupled with a strong team of logistic professionals that plan and coordinate challenging moves on a daily basis, makes an excellent choice for moving trade show freight.

3PLs – dependable and more economical than specialized logistic providers

The dependable carriers that partner with a 3PL are the best for a reason.  They consistently perform at a 100% on time service rate and utilize good communication with the 3PL.  This is vital in making any move a success.   A carrier must constantly inform the 3PL of current location of shipment, alert them of anticipated problems along the route and communicate a back-up plan in case of something that could delay the shipment.

If you are planning on participating in a trade show in the future, start planning now.  This will allow plenty of time for you and your 3PL to garner support with their carrier partners and coordinate for the specialized needs of a trade show move.

A 3PL can perform as well and more economically than a specialized turn-key trade show logistics company.

 

 

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Out with the Old: Changes to the Bill of Lading

bluegrace_billoflading

Last week saw a change to the National Motor Freight Classification (NMFC) bill of lading, as a supplement was released by the National Motor Freight Traffic Association (NMFTA) which changes the terms and conditions of the Uniform Straight Bill of Lading.  According to a missive released by the Airforwarders Association, there are some rather substantial changes to the long standing and widely used bill. Two trade organizations that represent shippers in such matters, the Transportation Logistics Council (TLC) and the National Shippers Strategic Transportation Council (NASSTRAC) filed a petition for Suspension and investigation of the new changes; They were ultimately shot down by the Surface Transportation Board (STB).

What Does this Mean for You?

The Uniform Straight Bill of Lading is something of a staple when it comes to land based shipping. If you are handling truck shipments, here are some of the more important changes that you need to know.

  • The Motor carrier responsible for cargo loss or damage is the one listed on the bill of of lading, rather than the one currently in possession of the bill during the time of loss.
  • According to the new terms and conditions, Carriers will no longer be responsible for loss, damage, or delays caused by Riots, Strikes, and any causes related to the five common exceptions. The burden of proof will now fall from the carrier to the shipper in these matters.
  • Prior to the changes, all claims were to be filed within nine months after delivery of the cargo, or in the event of failure to deliver, a reasonable amount of time after the delivery was supposed to have taken place. Under the new conditions, claims will have to be filed with nine months from the date of the bill of lading.
  • Previously, the limitation of liability could be applied if the cargo value was established by the shipper or was agreed upon, in writing, as the released value. Under the new language, a carrier can limit liability simply by publishing the limitation in its tariff.

It’s important to note, however, that these are only some of the changes being effected by the NMFTA’s new supplement. With the new bill of lading already in effect, make sure you understand the changes entirely to avoid possible future complications.

 

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Carrier Spotlight | A. Duie Pyle

Carrier Spotlight | A. Duie Pyle

A.DuiePyle 1

A. Duie Pyle is the Northeast’s premier transportation and logistics provider, offering solutions for LTL, Truckload, Custom Dedicated and Warehousing & Distribution. Through established partnerships our service coverage extends into the Southeast, Midwest, Canada and the Caribbean. A family-owned and operated business for more than 92 years, A. Duie Pyle provides a complete range of integrated transportation and distribution services supported by 22 transportation service centers, and 9 warehouses strategically located throughout the region.

A. Duie Pyle holds the highest “On-Time  Delivery” performance for a regional core carrier in their direct service footprint.

Coverage

Regional LTL Solutions

  1. A. Duie Pyle’s extensive infrastructure provides all the flexibility shippers need to meet the expectations of your customers. They operate out of over 1,100 terminal doors, with more than 1,150 drivers to meet their service commitments throughout the Northeast.
  2. A. Duie Pyle also offers extended service coverage beyond their core area through our reliable partners, Southeastern Freight Lines, Dayton Freight Lines, Midland Transport and Concord Transportation. Our time-proven relationship with these carriers is supported by similar cultures, values and goals, which always puts the customer first to assure your products are delivered safely and on time. Our partnerships produce transit times that are more reliable than the multi-regional and national carriers.

Specialized Services

Regional Flexibility in the Northeast.

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Predictability is the key to delivering on their promise. You can always count on their Northeast LTL solutions for service features that meet your specific needs. A. Duie Pyle provides a full range of specialized services, from high-performing Pyle Priority Service to their 24/7 Protect from Freezing Program. All service features are integrated throughout their growing network of LTL service centers.

Performance

More Measurements. More Predictability.

A. Duie Pyle knows that customers look for a service advantage in multiple areas of performance, from on-time pick-ups and morning deliveries, to exception-free freezable protection and preventable accidents. They measure more performance metrics with precision, and issue a Quality Process report to many of our customers on a monthly basis, and they can provide one for you by request.

 

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Can Visibility Be A Problem With 3PLs?

Visibility

Dustin Snipes – Enterprise Sourcing Manager, BlueGrace Logistics 

“I lose control of my transportation with a 3PL.”

“I started with a 3PL and had a multitude of issues.”

“I do not see the value in a 3PL partnership.”

These are all quips heard when calling on potential new 3PL clients. When starting a 3PL partnership, the new customer gains visibility. A successful 3PL partnership gives clients visibility into their supply chain that they may not be ready to see and that may cause internal and external issues. 

For example, the client had a carrier relationship before the 3PL came on board and the customer service rep would receive quotes from the carrier websites and book the shipment. When the invoice arrived, the accounting department did not have a proper system setup to make sure the quoted cost is also the invoice cost. Somewhere along the way there was a re-weigh or re-class and the invoice cost was 20% more than the quoted cost. The bill did not seem uncharacteristically high to accounting, so they processed the payment to the carrier accordingly.

There are a multitude of issues with this type of arrangement:

  1. There is not a quote cost to invoice cost verification system.
  2. This example is just one bill. What if the shipper is doing 50 bills a week? The cost can become exponential.
  3. Why was there a re-weigh? Is the business using a certified scale? If every pallet was weighed on a certified scale the shipment was not be subject to re-weigh costs and re-weigh fees.
  4. Why was there a re-class? Is the client up to date with the NMFTA? The class codes can sometimes change on a weekly basis and the shipper may not be aware!
  5. The shipper is responsible for freight bill pay and audit. If the client is busy shipping more than 50 bills a week and receiving stacks of paper invoices, one could see why these extra fees are just being approved and paid.
  6. What is the main KPI? Freight cost as a % of PO cost, so if a $100 shipment turns into a $200 shipment the profitability on that order just got reduced by 50%.

These are some of the issues found on just one shipment.

A good 3PL is going to pull up the mattress and shed some light to the bugs that have been hiding in your transportation program. As a shipper, know that the probability of issues being hidden are extremely high if they are not utilizing a 3PL. Let a 3PL handle your freight program and spend more time focused on your profits.

Do not be afraid of visibility – It is worse to not have any.

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Must Arrive By Date (MABD) Compliance and How it Affects YOU

MABD Blog

We’ve talked about it before | Walmart Compliance Regulations

Suppliers are under tighter compliance regulations to get the right products to the right stores or distribution centers by a certain time or they pay a fee. Walmart suppliers now face paying a fee of 3% of the cost of goods of all non-compliant deliveries.

These regulations for Walmart were implemented back in January of this year, but other retailers such as Target and Home Depot have been charging these fees for some time.

Manufacturers and suppliers that work with large retailers like Walmart, Target and Home Depot are more successful in getting their merchandise on the shelves with the proper lead time due to partnering with a third party logistics provider (3PL).

A third party logistics provider, or a 3PL, is an expert in transportation management and supply chain optimization and has the ability to help estimate from start to finish where the MABD will impact the suppliers products.

The MABD Window

The MABD Window includes the day the merchandise is due to the distribution center or other facility, plus the three previous days. It’s not just the arrival date that counts, it is also the contents and the number of items. If less than 90 percent of merchandise cases are received within the MABD delivery window, the supplier must pay 3% of the cost of goods.

Basically, retailers like Walmart and Target are no longer acting as warehouses, with too much inventory in back stock rooms or in trailers behind stores.

With these regulations, you can see that a smaller manufacturer might have an issue in managing the stresses of logistics. If the supplier is currently using the “cheapest” route to get products from point A to point B, their goods may be affected and the transportation model may need to change to not conflict with the MABD.

This is where a 3PL with a proven track record would come in and provide a customized transportation plan.

Ship Truckload or Less-Than-Truckload?

Manufacturers and Suppliers who ship Full Truckload have a much easier time complying with the rules because their trucks deliver to one destination. Unlike Less-Than-Truckload (LTL), which has their freight combined on a truck with several customers and several deliveries and has more opportunities for delays; especially if the goods are being delivered by a cheaper mode like rail.

A third party logistics provider could assist in an LTL shipper’s evaluation of their supply chain.

The entire supply chain would be evaluated. A 3PL could help the supplier consider using a more efficient carrier or find ways of improving the proper lead times and shipping the full order.

A Way to Avoid Fees

If at least 90 percent of the merchandise complies with the MABD window in a month, then the supplier is not subject to fees. That means one order in a month might arrive late or only contain 85 percent of the ordered merchandise for that purchase order. However, if that is the only out of compliance purchase order, then the supplier likely has a 90 percent or better compliance average for the entire month.

Resolving Issues

The hardest thing is to resolve issues. It’s better to stay ahead of the game and track compliance and with Walmart’s “Retail Link.” 3PLs and suppliers will need to keep focused eyes on the MABD compliance reports.

 

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The Uncertain Road to Autonomous Trucks

Autonomous Trucks

If you spend any time reading technology related content, you’d think that we’re ready to see flying cars in a few months.  The talk of autonomous vehicles dominates the automotive sector and most recently the trucking industry.  Trucking companies have been wanting this technology for years, but didn’t know it.  They’ve complained about rising labor costs, driver shortages and excess regulations. The autonomous vehicle engineers have nearly solved these problems.

Should the Freight Industry Adopt the Idea of Autonomous Trucks in the Future – Here are some of the benefits:

  • Trucks can run 24 hours a day – no hours of service regulations
  • Half of the trucks will be removed from roads as they can now operate 24/7
  • Maximum fuel economy – no stopping for sleep or food
  • Longer transit times will be cut in half
  • No labor costs for driving the truck – this will offset the higher prices of the vehicles

Will Autonomous Vehicles Become a Reality Sooner than Later?

The topic of autonomous vehicles has only been mainstream recently, however the ongoing work has been quietly advancing for quite a few years.  It’s been, and will continue to be an incremental process to full autonomy.  This incremental process has been happening before our eyes and we didn’t even know it.  Below are some of those incremental steps toward full autonomy.

  • Predictive cruise control
  • Collision prevention assist
  • Active blind spot assist
  • Active parking assist
  • Lane departure assist
  • Pedestrian recognition systems
  • Cross-Wind and roll-over stabilization

There is enough data available now for a vehicle to drive itself

 

Standard cruise control has been around for years, but the safety assist systems are comparatively new and are only found in late model vehicles.  There’s enough data available now for a vehicle to drive itself.  Cameras and radar are present so everything relevant to the safe operation can be picked up by the sensors.  Then, an advanced computing system calculates and initiates corrective actions.  These corrective actions are performed much faster than a human can react.  The final piece is to remove the driver and connect these systems to the steering mechanism and fully into the driveline.

So When Could This Actually Happen?

It’s hard to say because the general public will take a lot of convincing before they will accept and trust this technology.  The transition will be extremely challenging as it should be – there are many unanswered questions in regards to the programming.  Philosophers have been tapped to determine what the most ethical decision would be when the vehicle has to react to a situation where there aren’t any good choices.

Here are some thoughts on how autonomous trucks may be implemented:

  • Fully autonomous trucks will most likely operate on “smart highways.”
  • They will be upgraded interstates
  • They will incorporate sensors that communicate with the trucks
  • The U.S. government will have to invest heavily into our infrastructure to make this work.
  • With $19 trillion in debt, it’s doubtful they can do this.
  • Lag in government spending will slow the implementation.
  • Privately funded smart highways will be approved and built.

The implementation of autonomous trucks seems very likely despite the remaining obstacles.

The projected increase in efficiency will demand that this massive effort succeed.  The increased efficiency will lead to a myriad of positive results to include a reduction of trucks – therefore a reduction in fossil fuel consumption and greenhouse gases.

 

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A Modern Day Shipper Needs to Partner with a Progressive 3PL

ModernDayShipper

Technology Demands and the Freight and Logistics Industry

Quantum leaps in technology have brought our world more change since the first days of the internet. Technology is all around us, in our hands, in our cars, in our homes and we have the ability to communicate with someone or search for something within seconds by a device that can slide into our back pockets. Even with all this technology, many of the companies in the multi-billion dollar transport industry are still operating in the 1980s. Fax machines, filing cabinets, pen and paper coupled with hours of daily telephone conversations are the norm for many trucking and freight brokerage firms as they conduct business each day.

It is no surprise that these companies are not keeping up with industry demands and are being outflanked by new, lean technology companies.

These tech companies can do the same thing cheaper, better and faster – the holy grail of business self-actualization that most experts think impossible. The trucking sector took in $650 billion in total revenue in 2013, which originally caught the eye of some of these technologists from outside the industry.  These tech gurus identified vulnerabilities within the trucking industry and weaknesses to exploit.

But some very forward thinking 3PLs pivoted as they saw the technologists from outside the industry riding the tech wave that was threatening to wipe them out.  It remains to be unseen if the traditional 3PLs can head off the technologist’s steadfast march toward their domination of logistics.

The 3PLs that are succeeding are the ones that are adept and have embraced the technology platform.

Some of the industry leading 3PLs created exceptional online tools that helped leverage technology in their favor before these new start-ups came in to set up shop.  Now, these leading 3PLs can display available loads, negotiate rates, tender loads, track loads, collect paper work through these online systems and begin the billing process as soon as the load delivers.

The missing piece is still matching empty trucks to available loads in a more efficient way.

There is ample room for improvement in this challenge.  There are hundreds of thousands of loads being shipped each day, but the process of connecting the dots is very inefficient.  Companies like Uber and Lyft, who have seemingly perfected the matchmaking process in the ride-sharing community, could easily make the shift to the trucking industry.  It is the same concept- Uber matches empty car seats to people needing car seats.  They could easily match empty trailers to shippers needing empty trailers if 3PLs do not continue to service their shippers as efficiently as possible.

A modern day shipper needs to partner with a progressive 3PL

A modern day shipper needs to partner with a progressive 3PL that utilizes the latest technology platforms in order to run a successful, efficient logistics program. These companies have proven their worth within the logistics community by their continued exceptional service.  They have also proven their resiliency by adapting to advances in technology and staving off outside start-ups trying to break new ground.

 

 

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Carrier Spotlight | Estes

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With “On-Time, As Promised” delivery and over 85 years of regional experience, it is a no surprise that Estes is one of the core carriers that BlueGrace Logistics works with.

Combined with strategically placed terminals and a national network, Estes provides its shippers with extensive coverage, a modern and well-maintained fleet, cutting-edge technology, an extremely low claims ratio and an industry-wide reputation for excellence.

Their Guaranteed Service can be booked directly in BlueShip. Just look for the “Guaranteed Standard Service” option next to lanes serviced by Estes.

Estes BlueShip

 

 Estes Regional Services Feature:

  1. In-depth coverage with nearly 750 million one and two day points
  2. Six strategic service regions in the U.S. with thousands of knowledgeable employees at each hub
  3. Multiple Estes terminals in each region to efficiently support heavy shipment volumes
  4. Technologically advanced loading and delivery systems
  5. Superior transit times
  6. A comprehensive, direct service territory including Alaska and Hawaii
  7. Over 99% claims free

Need to Expedite Your Freight after it’s shipped? Estes offers an In-Transit Upgrade.

Freight Moves Fast.

Estes-Express-truck

Time Critical  When it comes to providing time-critical services, Estes has one of the highest success rates for on-time, as-promised delivery.

Expedited – Given their comprehensive network, some shipments other carriers consider expedited are standard, next-day deliveries for Estes.

Time/Date Definite – If you have freight that must be delivered on a specific date and/or within a short time frame, Estes has a solution. They can travel around the world on the next flight out or across the country using their asset-based ground services. You tell them the time, and they’ll get the job done.

 

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How Electronic Logging Devices (ELD) Are Going To Affect Consumer Goods Manufacturers

 

ELD_ Trucking

 

According to a new survey of 257 carriers and owner-operators by DAT Solutions, most drivers spend three to four hours waiting to get loaded or unloaded.  54% of the carriers surveyed stated that they wait between three to five hours every time they arrive at a shipper’s dock.  A whopping 9% said that they wait more than five hours on average.  There has been very little consideration for the wasted time of the driver and the cost of a $200,000 truck and refrigerated trailer sitting at the dock for hours, but that will soon change.

54% of the carriers surveyed stated that they wait between three to five hours every time they arrive at a shipper’s dock.

The Need For More Trucks And Rates Will Increase

When the electronic logging device (ELD) mandate is implemented in December 2017, strict adherence to federally mandated hours of service regulations will turn these dock delays into service failures.  A conversation with a small fleet owner demonstrated the disruptive nature of the ELD mandate.  He said, “97% of all trucking companies have 20 trucks or less.  We haven’t fully implemented this technology yet, but when we do, you’ll likely see a need for more trucks and rates will increase to make up for the decreased capacity.” The refrigerated sector, which is most often delayed by shippers and receivers, may start experiencing extended transit times because the unnecessary detention will no longer be hidden in paper log books.  The days of sitting at a dock all day, then driving all night to the destination are soon ending.

The days of sitting at a dock all day, then driving all night to the destination are soon ending.

Once a driver wakes up and moves their truck, the hours of service clock starts ticking and cannot be stopped.  Creative paper log books have hidden the inefficiency of shippers and receivers for years, but after ELD implementation, these delays will balloon into increased transportation costs for the shipper.  Delays at the dock will impact a carrier’s transit times and load schedule.  If the first delivery of the week is delayed, the rest of the scheduled loads will be negatively impacted – leading to lost revenue.

Produce and Live Animal Transport has Added Complexities

The transportation of produce has added complexities.  Bumper crops, specific harvest seasons and spoilage prevention all add difficulty to the already over-regulated business of trucking.  The addition of mandatory ELDs will most likely lead to a capacity crunch at best and a substantial driver shortage at worst.  Rates will probably increase because the demand to transport produce, which has a very limited shelf life, will be met with a decreased supply of available trucks and hours to drive.

Currently, bee and livestock transporters have successfully petitioned the Federal Motor Carrier Safety Administration (FMCSA) for hours of service exemptions.  The business of transporting live animals has special considerations that are usually overlooked when sweeping regulations are implemented.  Regulations have been temporarily suspended in times of disaster and national emergency.  Weight limits have been suspended during hurricane clean up as logging and waste trucks move the cleared debris.  Fuel transporters have seen their hours of service regulations suspended in times of extreme cold or supply disruptions.  Once the ELD mandate is fully implemented, the “just-in-time” nature of produce transport and other time sensitive commodities, may experience disruptions of their own.

 

 

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