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Can Your Supply Chain Weather The Storm?

With two months left to go of this hurricane season, the eastern seaboard has been hammered by Hurricane Florence. While the storm has died out, the overall damage reports are still rolling in. As of now, over 500,000 businesses and homes are without power, mostly in North Carolina. Prolific flooding and rainfall continue to be an issue for many in the area and current damage tolls from the storm are estimated to be between $17 and $22 billion in property damage and lost economic output.

a new report for the movement of critical supply chains, food, fuel, clean water, and medical supplies and equipment, during a hurricane

In the wake of these storms and natural disasters, the researchers from the MIT Humanitarian Supply Chain Lab have created a new report for the movement of critical supply chains, food, fuel, clean water, and medical supplies and equipment, during a hurricane and how these supply chains might be better directed during future disasters.

The report is a summary of the MIT roundtable discussion, “Supply Chain Resilience: Restoring Business Operations Following a Hurricane,” held last December. The discussion brought in 40 supply chain leaders from both the public and private sectors to discuss the challenges that were brought about by the 2017 hurricane season, which has proven to be one of the worst in U.S. history since 1900. The discussion focused on the need for better ways to share information and coordinate resources and how that could accelerate the restoration of business operations.

Pre-crisis supply chain mapping and post-crisis visibility may enable better management of resources.

“The discussions revealed potential opportunities for improvement, especially in the realm of business-government coordination. For example, pre-crisis supply chain mapping and post-crisis visibility may enable better management of resources. In cases where detailed real-time data is impractical, aggregate indicators and sentinel data sources could provide timely, actionable insights. Better relationships among businesses and the many government agencies in all levels of jurisdictions could improve coordination in a crisis. Although the future of disasters may be dynamic and unbounded, research, development, and rehearsal of resilience strategies can help mitigate the black swans to come,” MIT News says.

Transportation Breakdown

In addition to a number of businesses being closed due to loss of power or structural damage, there are some severe disruptions to transportation as a result of major hurricanes. Ocean transportation can be seriously disrupted by major storms. The port of Wilmington, for example, and the port of Charleston, just to the south, only recently reopened and resumed intermodal travel for freight.

The problem is that port closures can cause some significant delays for general freight transportation, even to areas that aren’t necessarily affected by the storm.

The problem is that port closures can cause some significant delays for general freight transportation, even to areas that aren’t necessarily affected by the storm. Freight has to be rerouted to another port which can cause some heavy congestion during the loading and unloading phase. In addition to that delay, the freight now has a longer distance to travel before reaching its intended destination. Hurricanes also bring on a tremendous amount of flooding which can shut down city infrastructures as well as closing off major roadways. The roads that are open are often heavily congested with traffic which can all but shut down transportation into these areas.

Temporary Regulation Repeal Should be Permanent Says Truckers

Of course, safety is also a concern for the trucking industry, but with the Hours of Service ruling and the Electronic Logging Device mandate, truckers are having to operate on a very tight schedule. This means spending time in rest stops and hotels while storm victims are left waiting for their supplies. Fortunately, the FMCSA granted blanket exceptions to the HoS regulation for any drivers carrying relief supplies for those that have been affected by Hurricane Florence.

Weather-related waivers are routine, says Todd Spencer, president of the Owner-Operator Independent Drivers Association (OOIDA). “It’s done for storms, whether it be for floods or hurricanes, it’s done for snow or dramatically cold weather. We watch with great interest in looking for the mushroom clouds. We don’t see them. Safety doesn’t go to hell.”

With the current ruling, once the driver starts the clock, they have to work their 14-hour block. This means a driver can’t take an extended break or wait for traffic to clear up. This combined with the ELD’s that are now required on freight haulers means that even moving the truck across the parking lot starts the clock running with no way to stop it.

Combine this with the inclement weather from a storm and drivers are going to be driving through the thick of it by necessity once the blanket exceptions are lifted.

Spencer argues that this inflexibility could actually detract from safety, rather than enhancing it. Because the clock starts running as soon as the truck moves, and doesn’t stop until the clock runs out, a driver is more likely to continue driving, rather than taking a rest break. Combine this with the inclement weather from a storm and drivers are going to be driving through the thick of it by necessity once the blanket exceptions are lifted.

Help Your Supply Chain Weather Out the Storm

Given the fact that a hurricane has the potential to severely disrupt your daily operations, it’s important to take precautions ahead of time.

Know when they’re going to happen: Hurricane season begins June 1st and runs until November 1st. During that time, it’s important to keep an eye on storms that could develop into something worse. When it comes to hurricanes, it’s usually not a matter of if, but when.

Increase Your Visibility: Visibility plays a huge role in protecting the supply chain. The more aware you are of your freight movements, the easier it is to reroute in the event of an emergency.

Plan Ahead: Making contingency plans ahead of time can save you a lot of hassle and heartache later on down the road. Having the right key systems in place and understanding your operations from front to back is crucial. Not just during natural disasters, but for day to day operations.

Get Help: Consider working with a 3PL to help manage your transportation needs. Freight capacity in the United States is scarce to begin with. During a natural disaster, capacity becomes needed for disaster relief efforts which makes that capacity window shrink even further. As a result, spot rates rise which can make hurricanes a truly costly endeavor for a number of businesses. Working with a 3PL like BlueGrace can help secure capacity and enhance your ability to book freight . This can help make all the difference. To speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below.

Understanding the Capacity Effects of the ELD Mandate

Carriers in the trucking industry are still adjusting to the growing pains of the federally mandated electronic logging devices (ELDs) following implementation deadlines earlier this year. For many carriers, even with deadlines in the rearview mirror, there is still confusion around the details of the mandate. Even those who are fully intent on cooperating may not be confident that they are in full compliance, or which specific aspects of their operations even need to be in compliance. 

The fines, which went into effect in April, state that under Title 49, section 521, any driver or carrier who does not keep a Record of Duty Status (RODS) is subject to being pulled off the road and face a civil penalty of $1,000 to $10,000 for each offense. Even still, one-third of U.S. truck drivers still use paper logs to track hours of service, despite the federal mandate, says a new survey with 2,400 respondents from software-as-a-service (SaaS) company Teletrac Navman that provides GPS fleet tracking. 

But contrary to popular belief, fines are regularly being issued to carriers.

While there has been an industry narrative developing since news of the mandate emerged that the potential to face fines is more of a “boogeyman” scare-tactic than a real concern, the evidence tells a different story. But contrary to popular belief, fines are regularly being issued to carriers. Almost $32 million worth of fines had been racked up as of Feb. 28 and another $142 million as of Aug. 22, totaling at $174 million. 

Source: https://www.supplychaindive.com/news/fleets-not-using-ELD-data-survey/531410/

BlueGrace’s Brian Blalock, Senior Manager of Sourcing Strategy, and Raddy Velkov, Director of Trucking Operations, explain these fines’ effect on the nation’s trucking capacity, the lanes that are the most affected, and how to use mode optimization to respond to the situation in their webinar,“Response to the ELD Mandate”.

Blalock says that with trucks being taken off the road, shippers are experiencing a constriction of capacity, “which means things are becoming more and more difficult for us as shippers to be able to create good business plans, make good decisions and make sure our freight arrives on time and in full.” 

First, Blalock lays down how the ELD mandate affects different routes, i.e. local, short haul, tweener, and long haul.  

What Does the ELD Mandate Mean: Transit times, Capacity, and Rates 

Local (less than 100 miles): Runs that are under 100 air miles are considered not subject to the ELD mandate, so the segment of small carriers that operate entirely on a regional basis have been unaffected.  

Short Haul (100-450 miles) “As the mileage grows… there is more of an adjustment period due to the longer length of haul.” But if you drive beyond the 100-mile radius or take more than 12 hours to return to your home base, you are required to maintain a RODS.  

Tweener (450 – 800 miles) This category is the most affected by the ELD mandate, Blalock and Velkov explain. Smaller carriers that were running one- and two-day points illegally were able to charge shippers less because they were recording use of the equipment for one day, whereas the larger size carriers who were in compliance had to pay the true, higher amount. 

Once you’re inspected and ticketed by the DOT you are more likely to get ticketed or inspected again.

“Larger carriers… were compliant to run these two-day points,” Velkov explained. “Some of these larger carriers were already compliant for a lot of years, just due to the sheer size of their fleet.” Velkov added, “Once you’re inspected and ticketed by the DOT you are more likely to get ticketed or inspected again, so the carriers with larger fleets were getting inspected more than the owner-ops. with one or two trucks, so they wanted to adjust the playing field in this market space and be price competitive.”  

Long Haul (over 800 miles) The long haul runs are also affected by the ELD mandate, of course, but many carriers operating these runs were already in compliance. 

With the ELD-mandate changing business dynamics many carriers have made it their goal to minimize cost in order to reduce rates to stay competitive, but that’s only one piece of the puzzle.  

Analysis with BlueGrace 

If all of the conversations you’re having internally are about rates, you’re having the wrong conversation.

“If all of the conversations you’re having internally are about rates, you’re having the wrong conversation,” Blalock said, “because more of the cost can be driven out by better decisions than by any decisions that can be made to rates.”  Velkov and Blalock explain how businesses can use data to optimize their business models, using the metrics and analysis available with Bluegrace’s services. The process starts by looking at a full picture of the supply chain to understand the network and cost distribution. 

Shippers should internally ask questions like, which vendors are costing more money than they’re worth? Can I negotiate better dollar per pound rate with them? Are we losing money with this a specific vendor? Once you have a strong understanding of your current network and the costs associated with your vendors, you can begin to dig deeper by looking at various analysis offered by BlueGrace, such as the ship weight analysis, explained below.  

Ship Weight Analysis Report: This measure allows shippers to look at month-to-month based on average weights cost per pound per month to determine if there are any outliers. For instance, were there any particular times your company did better than others? 

There is a tendency to steer away from FTL because of cost, to shift to multiple LTLs, but this may not always be the best option.

“You’re not always looking for mistakes, but instances in which things were done considerably better,” Blalock commented. You want to understand the exact cost per unit, or as Blalock says, the cost to put each widget on the shelf. This will help you make smarter business decisions, for instance, whether or not to book full truckload (FTL) or less than truckload (LTL.) “There is a tendency to steer away from FTL because of cost, to shift to multiple LTLs, but this may not always be the best option,” Blalock said. You may be making the mistake of booking LTL thinking it is saving you excess cost, but if sixteen LTL booking costs you $200 each, versus paying for one $1000 FTL, you’ve just paid in excess of $2,200. 

How BlueGrace Can Help

With the ELD-mandate in effect and a capacity crunch in full swing, there is an industry-wide pressure to curb costs, but there is no reason to fold under the pressure. There are plenty of opportunities to save on costs waiting to be revealed. All it takes is a hard look at your business model.  To speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below. 

6 Reasons Why We Must Appreciate Truck Drivers All Year

Every year, from September 9th to 15th, we celebrate Truck Driver Appreciation week to thank the 3 million plus professional truck drivers in the country for their tireless service to the nation and all of its people.

While as an industry we have earmarked a specific week in the year to acknowledge the great work these professionals do for us, appreciation for their work should not be limited to seven days in a year. It should be a part of how we interact with them day in and day out all year round.

Six Reasons to Thank and Appreciate Truck Drivers Every Day of Every Year

#1. They drive the economy – Road transportation makes it possible for us to reach our end customers with ease and on time. Our truck drivers deliver the goods and commodities that we or our business require on a day to day basis to function with efficiency.

#2. Truckers facilitate other modes of transportation – Over the road transportation provides the link to sea, air, and rail transport. Our truck drivers deliver our goods to the terminals where they can be loaded on ships, cargo planes, or trains for further transportation. Road transportation managed by our truckers is what makes international trade and global movement of goods possible.

#3. Truck drivers keep our roads safe – By following all rules and regulations set for safe driving irrespective of how long they’ve been on the road, truck drivers ensure that the roads are safe for the other drivers and pedestrians. They are the monitors and the guides on the road.

#4. They’re always at work – Torrential rains, rough storms, heavy snowfall, or hot summer days, nothing can stop truck drivers from getting on the road and working. They’re working even when the roads are closed due to rough weather and all of us are sitting beside our fireside enjoying a day off from work with a hot cup of coffee or chocolate.

#5. They provide the calm in the calamity – When entire cities get washed away in storms or collapse due to earthquakes, truck drivers are the first to offer their services to go to the affected areas with food, clothing, medical aid, and other support. If required, they also help evacuate the people to safety, even if it means putting their own life at risk.

#6.  They stay away from their families for many days – Truck driving requires drivers to be on the road for days, sometimes even weeks at a time. To ensure that our lives and businesses continue to function without any hassles, the drivers often miss out on special occasions of their loved ones – wedding anniversaries, children’s birthdays, holidays, and other functions where their families may need their support or presence. For this devotion to their jobs, we must thank not only the truck drivers but also their families who support them in fulfilling their duties efficiently and effectively!

Take Time to Thank The Trucker Community!

As a part of the freight and logistics industry, we at BlueGrace Logistics would like to thank the truck driver community for the work they do to keep our business operating seamlessly and efficiently and for keeping our customers happy with every trip they make! Here’s a big THANK YOU to the drivers who keep our lives moving!  

What Can Shippers Do To Stay Competitive?

The e-commerce boom has no doubt stimulated economies internationally, driving demand for consumer goods and creating jobs in its wake. Logistics companies and carriers have celebrated the phenomenon. After all, growth in consumer demand means growth in demand for transportation services and invariably juicier bottom lines. Right?

Actually, the story doesn’t quite follow the Economy 101 text book’s narrative of what happens when an uptick in demand occurs. Real world factors have made the equation more complicated. The trucking sector of the logistics industry experienced this boom firsthand — ground carriers seeing massive growth in demand for the transportation of smaller loads, characteristic of e-commerce cargo. So, what is the downside?

While ground carriers should be reporting their best quarters on record, they are instead coming face to face with a serious problem: meeting the demands of their customers.

The trucking capacity shortage. There is simply not enough capacity to go around. While ground carriers should be reporting their best quarters on record, they are instead coming face to face with a serious problem: meeting the demands of their customers. As a result, shippers are forced to be more competitive about reserving trucking capacity, and the price of that capacity has risen substantially. This economic situation is the reverse of what was happening in recent years when carriers were scaling down their fleets, holding off and making any orders of new trucks in the face of overabundant capacity. Now, carriers are putting in orders all at once due to an uptick in demand experienced in both land and air freight, that commenced during the first half of 2017.

How are shippers being affected? 

Shippers are experiencing the shortage of capacity in raised shipping rates. The script has flipped on them; instead of being able to shop around for the best package deal on their ground transportation needs, they are instead experiencing limited options for their needs at higher prices. The Wall Street Journal recently wrote about the effect of the trucking capacity shortage on shippers, referencing that last year, transportation costs rose 7% for U.S. businesses, a substantial increase compared to the 4% average over the last five years ended in 2017. This data was originally reported by the Council of Supply Chain Management Professionals’ annual State of Logistics Report. The rise in costs are not likely to be temporary. This means shippers will have to adjust to new tighter margins, allocating more of their budget to transportation costs. For some, this difference could mean being nudged out of the market, especially considering that the shortage is only forecasted to increase. 

What is causing the shortage? 

Growth in demand is one half of the coin that is the shortage in truck capacity. The other half is the shortage of truck drivers, which is a multi-faceted issue in itself. Until innovations like drones and autonomous vehicles become real-world technologies, which are still a long ways from hitting the market, there is no getting around the fact that truck drivers are crucial to the supply chain.  The driver shortage is not a cyclical issue that will decrease or stabilize anytime soon, according to experts. The U.S. saw a shortage of 51,000 truck drivers at the end of 2017, according to the Washington Post’s sources, up from a shortage of 36,000 the year before, and according to NASDAQ: CNBC, the shortage is actually going to triple in the next decade if nothing changes. The acquisition of a trucking license takes only a few weeks. Even though drivers are now being offered upwards of $80,000 yearly salaries, and some in the six-figure range, low barriers to entry and high salaries are not enough to attract enough drivers for a combination of reasons. So, why can’t ground carriers find enough manpower to keep up with demand?  

Electronic logging devices 

The electronic logging device (ELD) mandate has caused some controversy in the industry. Truck drivers and CEOs alike have opinions on both side of the fence, as to whether or not the federal requirement of the implementation of ELDs is a good idea. 

While it’s true that truck driving deaths have increased over the last decade, the drivers themselves don’t necessarily appreciate the new, digitized version of hour logging.

The mandate was established to hold drivers more accountable for accurately recording their hours in hopes that fewer accidents and fatalities would occur as a result of fatigue from overworking. While it’s true that truck driving deaths have increased over the last decade, the drivers themselves don’t necessarily appreciate the new, digitized version of hour logging. Executives are also apprehensive about the mandate because of the high cost of implementation, the associated learning curve and the hiccups that come along with it. Many believe that the ELD mandate has been a major cause in deterring truck drivers from continuing their careers in the field, due to a perceived distrust or disrespect of privacy. 

Public perception & lifestyle 

Outside of the ELD mandate, experts also think that a low public perception of truck driving is causing a low rate of entry to the career. As the older generation of drivers begins to retire, they are not being replaced with a younger generation as quickly as demand for capacity needs.  The lifestyle associated with being a driver includes sleeping on the road, long hours, and many nights spent away from family.  

With the younger generation pursuing higher education at higher rates than ever before and unemployment being at a low right now, the workforce is not gravitating toward trucking, despite the appeal of high pay. 

While the wages seem like they should be attractive to younger generations entering the workforce, it seems that lifestyle may be another deterrent. With the younger generation pursuing higher education at higher rates than ever before and unemployment being at a low right now, the workforce is not gravitating toward trucking, despite the appeal of high pay. 

What can shippers do to stay competitive? 

As industry leaders work to find solutions to attract more truck drivers, many companies are rethinking their supply chains in order to prepare for a continued more expensive freight market. This means optimizing inefficiencies wherever possible in order to compensate for the greater expense by minimizing costs where you can. Shippers can implement strategies like defining business rules around factors like weight, volume, time constraints, and cargo sensitivity of their shipments in order to gain a strong understanding of what their actual costs are and where there is an opportunity to minimize them. 

Investing in software that will allow you to purchase capacity and plan your shipments can be the make-or-break factor in a highly competitive environment.

Investing in software that will allow you to purchase capacity and plan your shipments can be the make-or-break factor in a highly competitive environment. BlueGrace’s proprietary technology is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® offers cutting-edge tools for strong reliability and quick performance. To speak to one of our experts and find out more about BlueGrace and how we can help provide you with the solution to your supply chain needs, fill out the form below or contact us at 800.MYSHIPPING.

Stepping Towards a Digital Supply Chain

Technology is changing the way we look at logistics and, ultimately, the supply chain as a whole. With today’s global marketplace being what it is, companies need to be both agile and smart about the moves they make. “Making do” simply isn’t good enough. Supply chains, by necessity, need to be leaner, meaner, transparent, and most importantly, smarter.

The digital supply chain offers companies a degree of visibility and insight into their supply chain that was never before possible.

For that reason, many companies are beginning the process of digitizing their supply chain. Moving away from the analog game of tag that was the way of doing things in the past, the digital supply chain offers companies a degree of visibility and insight into their supply chain that was never before possible. In order to do it correctly, companies need to have a plan. “The impact of digital trends on the supply chain has caused plenty of excitement, but also confusion. In a 2017 Gartner survey of 318 supply chain organizations worldwide, 75% reported concerns about the governance of digital projects. Yet corporate digital business initiatives continue to evolve rapidly, and 36% of supply chain organizations say their own digital projects don’t align to them,” says Gartner contributor Rob van der Muelen.

Supply chain leaders should already have a plan for supply chain digital initiatives and how to align them to what’s going on in the wider organization and its ecosystem.

“Supply chain leaders should already have a plan for supply chain digital initiatives and how to align them to what’s going on in the wider organization and its ecosystem,” says Michael Burkett, vice president and distinguished analyst at Gartner. “Yet the reality is that organizations pursue digital projects in silos far too often.” Burkett encourages companies to be proactive and to “define the emerging technologies that will best optimize and transform your supply chain.” “Feed this expertise from the front line into the organization’s wider digital business strategy, and then do your part to make it a reality,” Burkett says.

Understanding the Digital Vision 

Wanting to digitize the supply chain is all well and good, but knowing what you want to accomplish with it is the important part.

Burkett says that the starting point for creating a solid plan for going digital begins with breaking out of the data silos and agreeing to a digital business vision across the entire organization. This agreement is what sets the gears in motion, where the needs of both the company and its customers are defined, and what changes will need to be made to the supply chain to make it happen. Wanting to digitize the supply chain is all well and good, but knowing what you want to accomplish with it is the important part. “Look for supply chain technologies that have the potential to open new revenue streams rather than simply efficiencies, and get buy-in and participation across the business,” says Burkett. 

Align the Supply Chain to Match the Vision 

According to Gartner, only 25 percent of supply chain organizations have their digital projects aligned under a single governance process. “A lack of alignment clearly makes it less likely a supply chain will successfully support key organizational priorities,” Burkett explains.This ultimately shapes what you can deliver to your customers and what changes will need to be made to the supply chain to make that happen. “For example, a product manufacturer’s business priority might be to ensure that a customer’s equipment never stops working. Digital advances now give it the ability to digitally monitor assets and offer solutions in near real time. This capability effectively creates or improves a service-based revenue stream for the manufacturer.” In order to make that a reality, the company must be able to predict a malfunction or failure and have a process in place to preemptive send both parts and a service technician to maintain the equipment to reduce downtime. In the past, this would have been all but impossible. However, digitization has created a useful toolkit that can make that a reality.

  • Internet of Things (IoT) to measure performance in real time 
  • Data Analytics to predict failure and automate delivery and service processes 
  • Mobile Data Access Capabilities 
  • Application program interfaces (APIs) to share data with the partner ecosystem 

Prioritizing Technology Investments  

Digital supply chains, when done correctly, do more than simply streamline operations, they become a differentiator from the competition, setting your company apart from all the others.

Investment in new technology can be hard to swallow, especially considering the uncertainty of the global market. As a result, many supply chain organizations tend to focus their investments on upkeep rather than upgrades. While that strategy might have a short-term effect of bolstering profits, it will ultimately prove to be short-sighted as customer’s expectations shift to a digitally based supply chain. Digital supply chains, when done correctly, do more than simply streamline operations, they become a differentiator from the competition, setting your company apart from all the others.“This is a supply chain that delivers a customer experience and not just a product,” says Burkett. “It’s an intelligent supply chain that makes decisions as it interacts across an ecosystem of digitally connected partners.” 

Simplify Your Supply Chain

BlueGrace Logistics offers complete, customized transportation management solutions that provide clients with the bandwidth to create transparency, operate efficiently, and drive direct cost reductions. For more information on how we can help simplify your supply chain, contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today!  

Growing A Green Supply Chain

“Going Green” has been an action catchphrase for just about every industry over the past decade. Consumers laud companies that put out green initiatives or take other steps that make their company run cleaner and help slow some of the daily damage caused to the environment. Yet despite all the happy little symbols and environmentally friendly packaging, many companies aren’t really concerned about it. Off the record, some companies will admit that they don’t think the effort is actually necessary and that their company is running just fine the way it is. A more common opinion is that even if global warming is a real danger, that it’s simply cost prohibitive to make any drastic or long-lasting changes to their operations.

There is something of a disparity between consumer idealism and what a corporation deems as necessary. Moreover, it creates an argument between the two. The need to protect the planet, and a corporation’s responsibility to create paying jobs for the general public while providing affordable goods and services. 

The Lesser of Two Evils 

Even for the corporations and manufacturers that realize the need for environmental sustainability, there is a need to continue to manage their supply chains in such a way as to sustain their own business. This creates a rift between corporate and consumer. A good example of this was when NGO ForestEthics released a report that slammed retailers and logistics providers alike for using companies who fueled fleet trucks with diesel that was created with bitumen sands from Alberta which causes a considerable strain on the environment 

Even when companies are trying to do the right thing, it’s never so cut and dry, leaving them handling the proverbial double-edged sword.  

Alberta’s government, however, countered with statistics showing the number of jobs created by the oil sand farming as well as the overall economic contribution that came from the operation. Walmart also came up against a consumer conscious hardship in the effort to take steps towards sustainability. In 2015, the retail giant developed a seafood certification plan that was intended to promote ocean sustainability. The environmentalist group, Greenpeace, said that Walmart’s efforts weren’t enough, whereas the Alaskan fishermen that were providing the seafood said that the requirements were too much to handle. Even when companies are trying to do the right thing, it’s never so cut and dry, leaving them handling the proverbial double-edged sword.  

A Matter of Cost 

Why should a company go the extra mile to make sure they’re going green if the consumer isn’t willing to meet them at the checkout line?  

Speaking of the double-edged sword, there’s also the cost to be concerned with. While the general consumer consensus says that they would like everything to be sustainably sourced and environmentally friendly, the truth of the matter is that most consumers don’t want to pay the extra costs associated with it. So that begs the question, is environmental sustainability really worth the effort? Why should a company go the extra mile to make sure they’re going green if the consumer isn’t willing to meet them at the checkout line?  

Three Big Reasons to Go Green 

According to Yossi Sheffi, the Director of the MIT Center for Logistics and Transportation, there are actually three big reasons why companies should continue to make the effort to become sustainable. Risk mitigation, cost-cutting, and hedging. “Regardless of the degree to which company executives believe in the threat of climate change or the ravages of environmental degradation, many of their customers do, and they need to respond to these beliefs (even though the same customers are not likely to be willing to pay more for sustainable products). If they don’t, they risk incurring the wrath of NGOs and the media, leading to reputation damage,” Director Sheffi explains. In terms of cutting costs, Mr. Sheffi explains that green initiatives can help to reduce supply chain costs. “An example is how reducing the number of empty miles can shrink a company’s carbon footprint and capture cost savings in freight transportation. Retailer Macy’s eliminated 21% of empty miles and saved about $1.75 million annually by joining a program that posts retailers’ empty miles and finds shippers that can take advantage of the unused truck capacity.” 

Millennial consumers tend to be more environmentally conscious than the baby boomer generation of consumers, and these convictions may shape future markets.

Hedging is also a big reason to start planning and initiating green operations. Given that the generational dynamic is moving away from the baby boomers and into the millennials, there is going to be a change in consumer taste and demand. “Millennial consumers tend to be more environmentally conscious than the baby boomer generation of consumers, and these convictions may shape future markets.” Sheffi explains that the Clorox Company actually lost money with their green initiative “Green Works.” It was a small, environmentally friendly product line, that didn’t fare too well in the market but in exchange, the chemical company learned a lot about the manufacturing and marketing of such products.  

It’s Not Easy Being Green  

Finding the right balance between green practices and practical manufacturing is easier said than done. In the case of Clorox, they had to lose money to learn a valuable lesson. But not all initiatives are a loss for the company. Campbells Soup, for example, managed to change their packaging process which cut waste and saved them a good bit of money in exchange.  

Companies really have to examine their operation and decide which is the best course of action to take for manufacturing and the transportation of their goods, start to finish. In this, the ultimate intentions aren’t really what’s important. Even if a company tweaks their supply chain just to be more efficient and ends up cutting down on carbon emissions, the end result is a net win, both for the environment as well as the profit margin.  

 Improving the supply chain is not only a great way to lessen the carbon footprint, but improve operational efficiency and profits.

With better efficiency comes a reduced impact on the environment. As the supply chain is the industry heavy hitter for greenhouse gases and carbon emissions, improving the supply chain is not only a great way to lessen the carbon footprint, but improve operational efficiency and profits. This is where a 3PL like BlueGrace can help. BlueGrace specializes in identifying weak spots in the supply chain and provide a holistic solution, making your supply chain run as smooth and efficient as possible. To find out more about how we can help you improve efficiency, reduce cost, and simplify your supply chain, call us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today!

Hunger Pains from Trucker Shortage

The ongoing driver shortage is nothing new in the U.S. freight industry. As more and more drivers approach the age of retirement, younger generations are less inclined to take up truck driving as a profession. As the driver shortage increases, so too does the cost of freight which is putting the squeeze on a number of industries.

One of the biggest industries to be hit by the shortage? Food, perhaps the most important of all consumer items. Everything from restaurants and fast food chains, to grocery stores and even wineries, are going to start feeling the pain of the higher transportation costs.

Shortage By the Numbers 

According to statistics from the American Trucking Associates, 2017 saw one of the most significant driver shortages in history, approximately 50,000 drivers. That number could continue to grow to 174,000 unfilled positions by 2026.  

It’s not just shippers that are being hit with the higher costs.

“In addition to the sheer lack of drivers, fleets are also suffering from a lack of qualified drivers, which amplifies the effects of the shortage on carriers,” ATA Chief Economist Bob Costello said. “This means that even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain and for the economy at large.” Cass Information Systems shows that U.S. trucking and rail freight spending have increased by 17 percent over May this year, versus last year, and that figure continues to grow. And it’s not just shippers that are being hit with the higher costs. Shippers, Carriers, and brokers alike all expect trucking costs to increase by about 6.4 percent this year according to a poll conducted by Morgan Stanley.  

Shortage Hits the Shelves

Consumer packaged goods companies, agricultural consortiums, and vintners are already feeling the pressure of the shortage. Kellogg Co. has commented that freight is causing its most “acute cost pressures”. Restaurants are starting to feel the issue, but it’s their suppliers that are being hit the hardest. Tyson Foods’ CEO notes that higher freight costs have had a net impact of approximately 14 cents per share. “While we were climbing the hill, the grade steepened and now we are estimating the full-year impact to be roughly $250 million,” Tyson Foods’ CEO Thomas Hayes said, adding that the company “cannot subsidize the increased freight.” Given how closely most restaurants work with Tyson Foods, that price increase will more than likely be passed on to the consumers who frequent such restaurants.  

The industry is struggling to get good, qualified drivers.

“It is a crisis and there has been a perfect storm of consequences that has led us to where we are now. The industry is struggling to get good, qualified drivers. The industry only appeals to half the workforce to start – women account for only about 6% of drivers. Recently, the economy has picked up, so demand is higher than it’s been in a decade and that adds pressure on the supply side. And we have a regulation where 21 is the age limit to drive, but by the time someone turns 21, they’re likely involved in some other profession,” Jim Murabito, executive VP of supply chain at Michigan-based Hungry Howie’s Pizza, said he sees the freight-cost issue getting worse before it gets better. Murabito goes on to say that they’ve been seeing somewhere between a 10 to 20 percent increase from all of their suppliers over this course of this year to help cover the higher freight costs.   

“These are suppliers who haven’t had increases in three or four years. That underscores the issue this year,” he said. “There are some lanes that are seeing increases of 50 to 100%. (For example) We get supplies from Minnesota and there aren’t a lot of goods that come out of Minnesota so people don’t send their trucks there.” 

Added Complications  

In addition to the increase in freight costs, there’s also the increase in lead times for deliveries. The Electronic Logging Device mandate and the Hours of Service ruling are putting a hurt on a number of businesses, especially agricultural which has a more time sensitive delivery schedule than most companies. “Nationally, what used to take two days is now going to have two-and-a-half to three days to move product from one end of the country to the other,” Yvonne Sams, director of logistics at G3 Enterprises said. 

The logistics industry as a whole is going to have to buckle down to find a solution.

With some major companies like Walmart and Target tightening the delivery window, shippers and carriers are having to become significantly more coordinated if they want to avoid the sting of chargebacks and penalties accrued by late or incomplete deliveries. As the driver shortage continues, the logistics industry as a whole is going to have to buckle down to find a solution. There’s a long road ahead of us, and it will likely get worse before it gets better.

How Can Your Business Adapt? 

BlueGrace partners with an extensive list of carriers, providing you with the resources needed to ease the affects of the tight capacity crunch.  If you would like more information on how BlueGrace can help simplify your supply chain and reduce transportation costs, fill out the form below or contact us at 800.MYSHIPPING to speak to one of our freight experts today! 

Landed Cost & Vendor Compliance

Many shippers think that knowing freight cost as a percentage of goods is enough for decision making. While this may be a good jump off point, this measure does not take into account the details associated with a specific vendor or a specific product. This leaves them in the dark about how much money shipments are actually costing them, and whether or not those shipments are actually worth the cost of doing business.

In order to gain a better understanding of the breakdown of your company’s bottom line, it is crucial to know what the unit cost of inbound shipments is from vendor-to-vendor. In our recent webinar, Landed Cost & Vendor Compliance, we posed some prudent questions for companies to review with their operations teams, listed below.

  • What is the true landed cost of freight in terms of inbound shipments?
  • What is the cost of doing business with a vendor?
  • Is the cost worth it?
  • How can you improve efficiency and visibility when controlling costs?

In the following sections, we will break down why it is important to understand true cost and how BlueGrace helps businesses understand their own.

How businesses normally measure cost

Most firms measure performance on a macro or aggregate level by taking the total cost of purchased goods and diving that by transportation spend. “That’s great if you’re just trying to gather some overall business data,” Brian Blalock, Senior Manager of Sourcing at BlueGrace Logistics, says. But somewhat insufficient if “you’re trying to price your products for sale or accurately select vendors.”

“If we don’t understand how the vendor is impacting our cost, then we can’t truly understand what the landed cost of our product is going to be when we deliver it to our customer,” he continues.

On the front end, business intelligence can be formed from data gathered from a transportation management system (TMS), a logistics platform that enables users to manage and optimize the daily operations of their fleets. Many different companies make TMS systems, including BlueGrace. From a back-end perspective, an operations manager can identify industry trends and patterns and use their insight to decide which vendors are the most lucrative business partners and from there, improve inventory management processes.

Once the product is in your hands, you are paying inventory costs.

For example, if you have an agreement with a vendor to move product into one of your warehouses, and the associated cost per product upon delivery is 10 cents per unit, “we don’t want to be at the mercy of their inventory,” Blalock says, meaning that once the product is in your hands, you are paying inventory costs.

Blalock explains that the same reason you may get chargebacks when you deliver your product early to the next member of the supply chain is the same reason you don’t want product arriving early from vendors, “because there is a cost for handling those goods,” he says. At the same time, receiving product late is not an option for obvious reasons. Striking the balance between minimizing the time product is in your storage facilities to avoid extra storage cost and ensuring that it gets to its final destination on time is the plight middle-members of the supply chain is aware of, but achieving that optimal scheduling is easier said than done. Having a firm grasp on your company’s data, or having “business intelligence,” enables you to optimize operations at a higher level than was previously an option, by coming as close to striking that balance as possible.

The key to turning information into profitability is defining goals and measuring performance.

The goal of business rules is to prevent vendors shipping product that will “cost you more money than what you originally allocated,” Blalock explains. “Once you’ve gained an understanding of that landed cost, then you can track your vendor performance and hold them to the established rules.”Knowing exactly what it costs to land the freight on the shelf is essential. So, how do you get there? “You can’t expect to improve in anything you don’t measure,” Blalock says. The key to turning information into profitability is defining goals and measuring performance.

Measuring performance

BlueGrace’s platform allows users to easily calculate the above-described metrics, for instance, cost of carrier per pound and true cost per product SKU. Users can navigate with a map of their network to see the origins of products and their destinations.

Then, you can click on a specific vendor, which allows you to see each shipment to “drill in to find out whether the inventory that belongs to your supplier is affecting the cost of transportation that you’ve agreed to a set cost with them on,” Blalock says. Referring to the earlier described inventory receiving optimization scenario, he reiterated, “We don’t need to fall victim to their inventory issues.”

Having a dashboard that encompasses all of your shipments and their data enables you to make smarter, faster decisions without the headache of calculating these figures on a case-by-case basis.

In the BlueGrace dashboard, users are able to navigate by tabs which include shipment, schedule, and tracking, to view route maps and shipment details in one place. There, users can access data like real-time transport status, port-to-port time, and carrier information. Having a dashboard that encompasses all of your shipments and their data enables you to make smarter, faster decisions without the headache of calculating these figures on a case-by-case basis.

Knowing the true cost means a better ability to set pricing, based on the “right day, right time, right carrier,” Blalock says. From there, the creation and implementation of business rules are what takes your business to the next level. The goal is to make business plans that drive profitability and provide better information to stakeholders.

CLICK HERE to view our webinar and learn more about how BlueGrace can benefit your company. If you would like to speak to one of our freight experts, contact us at 800.MYSHIPPING or fill out the form below.

Chilled Supply Chains

While most supply chains operate on the assumption that if the freight is frozen, something has gone terribly awry. However, some goods need to be kept on ice in order to maintain freshness and comply with food safety regulations.  

Much the same as any other supply chain, however, cold and frozen supply chains are also subject to the laws of demand. For example, there are roughly 2.5 billion pounds of beef stockpiled in U.S. cold storage facilities as a result of trade regulations and tariffs set forth by the Trump administration.  

Here are some interesting cold storage stats provided by Quartz 

49 million: Pounds of butter in US cold storage in July 1918 

310 million: Pounds of butter in cold storage in July 2018 

3.6 billion: Cubic feet of cold storage space in the United States 

36 million: Temperature-controlled square feet at 2800 Polar Way in Richmond, Washington, the largest cold storage warehouse in North America 

$28 billion: The projected value of China’s cold chain market in 2025 

25%: The growth rate of India’s cold chain industry 

$24 million: The cost of two refrigerators for Air Force One, which must carry 3000 meals in case of an emergency. 

A Brief History of Cold Supply Chains 

Refrigeration was brought about in the United States in the late 1800s. Originally it was thought that warehouse owners were using cold storage to scam consumers by stockpiling fruits in order to control pricing. However, that notion was quickly set to the side and by the mid-20th century, refrigerated transportation had changed the nature of the supply chain and access to proteins and rarer produce to the average consumer.

As the middle class continues to grow in developing countries, the demand for reefer transport is rising.

Refrigerated shipping containers, “reefer units” were originally invented in the 1950’s and are still used to haul approximately 90 percent of the world’s food trade. As the middle class continues to grow in developing countries, the demand for reefer transport is rising. Anything from food to pharmaceuticals relies on reefer units as these goods make their way around the world.   

How a Cold Chain Works 

There are a number of different goods that utilize chilled transport: meats, produce, flowers, pharmaceuticals, even transplant organs. While the exact practice varies from product to product the general practice remains the same. Quartz details the step by step for produce.    

  • The first step is pre-cooling: Getting the harvest from the field to on-site cold storage. A one-hour delay in hot weather means one day less of shelf life at the store. There are a lot of methods, from the simple (shade, spraying water) to the sophisticated (vacuum cooling). 
  • Then it’s into the reefer. An automated system can fill a truck in 10–15 minutes. 
  • Next, it moves to a cold storage facility, which is just a giant warehouse with lots of metal shelves. Here’s what an automated one looks like. 
  • After that, it’s back to the reefer and to the store, where fresh fruit and vegetables are taking up an increasing amount of space. 
  • Finally, it’s moved out to the display case, where fresh-cut produce has to be maintained between 32℉ and 41℉, a tricky physics problem. 

Of course, with more stringent requirements from the FDA, containers have to get smarter as well as the supply chain. One such adaptation is reefer containers that can monitor temperature data in real time. This allows suppliers to monitor and prove that their produce or other temperature sensitive goods have been within acceptable thresholds for the duration of the trip.   

Blockchain is expected to play a big role in the future for preventing expired or mishandled food from reaching customers.

Another advancement links that container to data systems, specifically blockchain data, which provides a more or less permanent snapshot into the entire life cycle of the product. There are a number of major players in the food industry including Walmart and Nestle that have had a bad rap for bad food. Blockchain is expected to play a big role in the future for preventing expired or mishandled food from reaching customers. “You’re capturing real-time data at every point, on every single food product,” says Frank Yiannas, vice president of food safety at Walmart, which leads the effort. “It’s the equivalent of FedEx tracking for food.” 

One of the biggest advantages to using blockchain for food item supply chains is that the data can’t be faked, changed, or altered. Once the data is in, it’s in for good since blockchain databases work peer to peer instead of being housed on a single server. Additionally, because of the shared nature of the data, it can actually help to cut down on operation costs, by eliminating the need for data silos and processing.  Should a food issue arise, the process of tracking down not only the spoiled goods, but the location and other goods that might have been contaminated from the same source can be tracked down in minutes, rather than weeks, which helps protect not only the consumers but the retailer selling the products.  

How Can I Simplify My Freight Needs? 

This is just one example of the diverse nature of the supply chain and highlights the need for agility, visibility, and flexibility to make it all work. At BlueGrace, we help our customers navigate through the constant changes the industry brings. No matter the situation, we can help simplify your freight needs. If you have any questions about how a 3PL like BlueGrace can assist, contact us at 800.MYSHIPPING or fill out the form below to speak with a representative today! 

Tight Capacity Ahead

It’s a good time to be a carrier. With markets running hot, carriers have ample opportunities to pick up freight and can be choosy about which ones they take. From the most profitable lanes to the highest price loads, carriers have been running the game and raking in some serious revenue, as much as high single or double-digit percentages. According to the latest earning reports from FTL carriers, shippers haven’t secured peak season capacity on notice. As it stands, there is no indication of freight demand slowing or contractual truck capacity lightening up any time soon. As a result, many carriers are noticing a markedly improved performance from that over previous years.

Reinvesting in the Fleet Can Have Downsides 

Given the fact that many carriers are increasing their profits, they’re looking to reinvest in their company, replacing older trucks with newer, more efficient models. According to the Journal of Commerce, one such company, Covenant Transport, brought on 400 new trucks, while getting rid of 465. In total, the company plans on bringing in 880 new trucks while removing 940 aged trucks from the fleet.“Covenant’s truckload revenue increased by $16.1 million year-over-year in the quarter, a 17.4 percent gain attributed to a 14.2 percent increase in average freight revenue per truck. The carrier increased that revenue with fewer team drivers, fewer average team miles per truck, and an increase in the number of trucks that lacked drivers — 5.2 percent of its fleet,” says the JOC.  

While more revenue is being generated from shippers being willing to pay for capacity, the overall capacity is being diminished.

The problem here is twofold. While more revenue is being generated from shippers being willing to pay for capacity, the overall capacity is being diminished. Conversely, the driver shortage is beginning to exacerbate the problem considerably. “From a capacity perspective, attracting and retaining highly qualified, over the road professional truck drivers remains our largest challenge,” Richard B. Cribbs, executive vice president, and chief financial officer, said in a statement Wednesday. “Low unemployment, alternative careers, and an aging driver population are creating an increasingly competitive environment.” Which means in order to fix the current problem, carriers are going to have to do something to draw in some fresh blood to take up the wheel and keep freight moving.  

Raising the Pay Grade 

So how much is enough of a pay incentive to bring in younger drivers? According to DCVelocity, the pay is going to have to increase to about $75,000 annually if there’s any hope of not only attracting but keeping qualified drivers on the roster for the long haul. Typically speaking, drivers get paid by the mile. However, when you factor in delays for shipping and receiving (miles not being driven) a lot of drivers are having a hard time making a solid living from hauling freight.  

“As of May 2017, the median truckload driver wage was slightly more than $42,000 a year, according to the U.S. Bureau of Labor Statistics (BLS). The top 10 percent of earners pulled down more than $64,000, according to BLS data. Since then, an increasing number of fleets have substantially increased driver wages. Many salaries have risen by double-digit amounts during the past year or so,” according to the DCVelocity Team 

A Continuing Problem  

According to Driver iQ, a company that produces background screening products and other services for the trucking industry, larger fleets are having a harder time keeping personnel than smaller companies.  “While about two-thirds of recruiters at larger companies said their drivers were retiring at their expected times, about the same percentage of executives at smaller carriers indicated their drivers were staying longer,” according to the survey.  

As for shippers, capacity is already tight, and it’s only going to get tighter as the driver shortage continues.  

In their second-quarter forecast on driver recruitment and retention trends, Driver iQ predicted that approximately 45 percent of fleet recruiters are expecting a rise in driver turnover rates, even more so than the already high levels from the previous quarter. The turnover ratio is double what it was in the fourth quarter of 2017, meaning trucking companies are steadily losing more drivers. While carriers are making out well now given that they can cherry-pick freight due to the high demand, losing more of their driving force is going to put them in a tight spot down the road. As for shippers, capacity is already tight, and it’s only going to get tighter as the driver shortage continues.  

Strengthen Your Supply Chain

BlueGrace partners with an extensive list of carriers, providing you with the resources needed to ease the affects of the tight capacity crunch.  If you would like more information on how BlueGrace can help simplify your supply chain and reduce transportation costs, fill out the form below or contact us at 800.MYSHIPPING to speak to one of our freight experts today!

Controlling Costs and Preventing Accessorial Loss

Controlling costs is critical for any business to be successful. When working with a supply chain, the more complex it is, the more chances there are for additional costs and surcharges, any of which can cost your company a great deal of extra money.

They are any freight services that go beyond the normal scope of pickup and delivery.  

Accessorial charges are a particular type of surcharge. They are any freight services that go beyond the normal scope of pickup and delivery. This can include inside or special delivery charges, waiting or detention time, fuel surcharges, storage fees, and many others. Given the way the freight market is changing, especially due to the rise and continual growth of e-commerce, many companies are looking to a more specialized version of last mile delivery as customers want their products sooner rather than later. The “white glove” last mile service, while costly, is growing increasingly important as customer service is becoming one of the last true differentiators among the competition.  

In our webinar, we covered the basics and most common questions of accessorial charges which include:  

  • What are accessorials? 
  • How do they affect cost? 
  • How do they affect supply chain efficiency? 
  • How can we mitigate problems? 
  • How do we know if we have a problem? 

Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday.

Logistics and supply chain management has become a very tight game, almost cutthroat in its harsh severity. Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday. With the ability to order just about anything a consumer could possibly want from the vast online marketplace, brick and mortar retailers have to run an even tighter ship than they have before if they have any hopes of competing. To that end, some retailers are upping the ante and doling out punishment for shippers who aren’t in compliance.  

What Are Accessorials?  

As we mentioned above, accessorials are extra charges associated with freight delivery that fall outside simple pick up and delivery. We gave a few examples above, but those are by no means the only accessorial charges that you could be stuck paying. Here are some other types of common accessorial charges.  

  • Reweigh 
  • Limited Access 
  • Liftgate 
  • Residential delivery 
  • Appointment / Notify 
  • Sort & Segregate 
  • Hazardous Materials  
  • Trade Show Delivery  

While inaccurate weighing of freight could be a result of an honest mistake, the cost of that mistake can add up quickly.

It’s important to control and monitor as many of these as possible to help control costs. Consider reweigh charges for example. When a carrier weighs freight and compares the actual weight to what’s listed on the bill of lading, the difference can be instantly tacked on to the invoice. For shipments that are 50 pounds or more over what the bill of lading states, there is a $25.00 validation fee as well as an increase to shipping costs. Additionally, all freight fees, fuel surcharge fees, and any other applicable accessorial fees will be adjusted accordingly. While inaccurate weighing of freight could be a result of an honest mistake, the cost of that mistake can add up quickly.

How Accessorial Fees can Affect Your Supply Chain  

One way to better control accessorial charges is to have a more efficient and agile supply chain. Detention fees are a prime example of where efficiency pays off. For the LTL market, every shipment has a set amount of free time per stop before the charges start being applied. While this is based on weight, meaning that heavier shipments have more time, it can be hard to gauge just how long each stop is going to take which leaves your company exposed to detention fees.  

Another thing to consider is that the ELD mandate severely limits the amount of working time a driver has available. The longer it takes to load and unload freight can cause delivery delays and will ultimately increase the price of a shipment. Once you start adding detention fees onto the bill it can quickly become more expensive than you were initially anticipating. 

It’s critical to have your supply chain running smoothly and efficiently.

Because of this, it’s critical to have your supply chain running smoothly and efficiently. Not only does it increase the chances that you will make your delivery schedule, but having a more efficient operation makes you a more attractive customer to carriers (which increases the likelihood of getting the capacity you need) as well as helping to control shipping costs.  

Learn More About How You Can Manage Accessorial Charges   

When it comes to controlling costs, the more you understand about extra fees the better off you’ll be. Because many of these accessorial charges can compound and complicate others, it’s important to understand the full workings of your supply chain and identify any potential problems before they arise.  

The truth of the matter is that the more you understand your freight and the way your carrier works, the more accessorial fees you can either reduce or negate entirely. Many of these fees won’t even enter into the picture so long as the shipper is taking the time to make sure they’re doing things right. Doing this means preventing the issue before it even begins. On the other hand, if your freight invoice is coming as a bit of a shock, it might be time to take a closer look at the surcharges and determine what you can you do to correct the issue.  

Ultimately, everything we covered in the webinar is about helping your company to manage these fees and perform better across the board. From internal operations to external executions, everything is connected and we break it down for you. Watch the full webinar to learn more about how you can be successful!

If you would like to speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below:

BlueGrace Logistics CEO Is Newest Member to Join Northwestern University Transportation Center’s Business Advisory Council

FOR IMMEDIATE RELEASE

JULY 30, 2018

CONTACT:

Michelle Damico michelle@michelledamico.com 312.423.6627

BlueGrace Logistics CEO Is Newest Member to Join Northwestern University Transportation Center’s Business Advisory Council

CHICAGO,ILLINOIS — BlueGrace Logistics is proud to announce that Founder and CEO Bobby Harris has been welcomed as the newest member of Northwestern University Transportation Center (NUTC) Business Advisory Council (BAC).

Harris joins an esteemed group of senior-level business executives representing all modes of transportation. They meet regularly to discuss the latest NUTC research and to consider solutions to the economic, technical and social problems facing national, local and global transportation systems.

“I am deeply honored to join the distinguished Business Advisory Council at NUTC,” said Bobby Harris, CEO of BlueGrace Logistics. “There is not a greater collection of transportation leaders anywhere in the United States than this group of executives.  I hope to provide a unique perspective on transportation issues, especially during this time when many industry segments face an array of global challenges that affect local economies. I look forward to contributing to the ongoing mission of the Transportation Center and its research.”

Northwestern University Transportation Center (NUTC) is a leading interdisciplinary education and research institution serving industry, government, and the public.  NUTC was founded in 1954 to make substantive and enduring contributions to the movement of materials, people, energy, and information. In so doing, NUTC aims to influence national and international transportation policy, management, operations, and technological developments.

“NUTC is delighted to welcome BlueGrace Logistics as the newest member of our Business Advisory Council,” said Professor Hani S. Mahmassani, the Director of Northwestern University Transportation Center. “Mr. Bobby Harris will feel right at home with the distinguished transportation industry leaders and innovators on our BAC, and we look forward to working with him and BlueGrace for years to come to advance the Center’s leading-edge research for the transportation industry,” added Mahmassani.

BlueGrace Logistics, a nationwide third-party logistics (3PL) provider, recently announced the opening of its new downtown Chicago office in the iconic Chicago Board of Trade Building, 141 W. Jackson Blvd. The second Chicagoland location for BlueGrace Logistics reflects the area’s importance to the company.  BlueGrace plans to add an additional 80 employees in downtown Chicago in 2018, and they currently employ over 50 people in their Itasca, Illinois office.

The BlueGrace Logistics’ recruiting staff is currently deep into their search for both experienced sales professionals and recent college graduates in Chicago who are looking for a new and exciting opportunity in the rapidly growing market, which the industry’s Journal of Commerce described as “a high-tech logistics magnet”.

BlueGrace has an industry-wide reputation for its high-performance shipping technology, innovative culture, and hyper-growth since its inception in 2009. In 2012, INC 500 named BlueGrace the 20th fastest growing company in the United State, and in 2014, Bobby won Ernst & Young’s Entrepreneur of the Year.

About BlueGrace Logistics:

Founded in 2009, BlueGrace Logistics is one of the largest third-party logistics (3PL) providers in the United States.  With over 500 employees and working with over 10,000 customers to provide successful shipping solutions, the company has achieved explosive growth in its nearly 10-year operating history.  Backed by a $255 million investment by private equity firm Warburg Pincus, the company operates 11 locations nationwide, and its headquarters are in the sunny Tampa Bay area of Florida.

About the Northwestern University Transportation Center (NUTC):

NUTC’s Business Advisory Council (BAC) is comprised of senior-level executives representing all modes of transportation including shipper and carrier firms, freight forwarders and third party logistics providers, financial institutions, consulting firms, and trade associations. Unequaled by any academic transportation advisory board in the country, the BAC is a critical asset to NUTC and a major factor in its long-term success.

BAC members serve as advisors to NUTC, providing important real-world insights into the issues and problems they face in their businesses. This perspective is vital to NUTC as it strives to shape its research and educational programs to best serve the changing needs of the dynamic transportation industry.

Bobby Harris, President and CEO

Driving Down Supply Chain Costs with Mode Optimization

The term “optimization” is thrown around often in the logistics landscape. It’s true, optimization is an indispensable part of a well-run business model. Of course, every business owner wants their operations running as tightly and efficiently as possible, but the footwork required to determine how to optimize your business’s operations and see tangible results is often easier said than done.  

Our Webinar discusses the typical LTL network and differentiates between less than truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment.

In our Webinar “Driving Down Supply Chain Costs with Mode Optimization,” Brian Blalock, Senior Manager of Sourcing Strategy at BlueGrace, discusses the typical LTL network and differentiates between less than truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment. Both have their advantages and weaknesses, but one may suit the business better depending on the kind of freight being transported, the location or origin and destination. While the decision is sometimes considered arbitrary, in order to optimize your operation, i.e. lower cost and maximize profit, it is crucial to consider the following factors. 

LTL vs. Full Truckload

LTL shipments must be 12 linear feet or less, usually 5000 pounds or less, and are “typically consolidated with other freight from other shippers,” Blalock said, continuing that they are identified by class and that the structure, and that pricing can be very complex because it is determined by product class, distance and weight. Typically, it costs less than a full truckload, an obvious appeal to any shipper. 

Fewer claims of damage occur with truckloads than with LTLs.

Fewer claims of damage occur with truckloads than with LTLs. “Why?” One might ask. It’s simple. Blalock uses the example of witnessing luggage being boarded into the belly of an aircraft; people rarely handle a stranger’s items as gently as they would their own. In conclusion, the “less handling of freight, the less damage to the freight,” Blalock says. Since LTLs require more stops and handling, more damage is incurred to LTL freight than full truckload on average. 

When shipping a full truckload, your freight is the only thing on the trailer, so transit time is only contingent upon the required breaks for drivers and the time between pickup and delivery locations. The freight never has to leave the truck because it travels directly to its destination, so truckload shipments tend to arrive faster than LTL shipments, while at the same time, incurring less damage. 

When to Not Ship LTL?

LTL loads should be the choice for shippers dealing in smaller quantities at a time as carriers charge by weight and volume, but may not be the optimal choice at every juncture. In order to determine which mode is right for your operation, create business and shipping rules around factors like weight, volume, time constraints, and cargo sensitivity of your shipments. You need to consider the rate at which damage may occur in your LTL shipments. How much does it really end up costing you at the end of the day? In knowing this information, you will be better able to decide in which case you need to opt for a full truckload, and which you are able to go with an LTL. 

If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line.

Another key is understanding how business decisions affect OTIF (on time in full). “If you ship to Walmart you can’t show up late, you can’t show up early, and you can’t show up incomplete,” Blalock said. “Any of those that you do, typically, [are] about a 3% ding to the cost of the entire invoice.” If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line. “Likewise, if you continue to not hit your dates, you’ll find that you can lose valuable shelf position, and you won’t be shipping to Walmart anymore.” Blalock says to consider using different carriers for different shippers to this end: “The choices that you build into your business rules include choosing the right type of carrier every time,” he said.  

Supply Chain Engineering

“Understand that we are following the linear rules of the carriers,” Blalock says. “Build the rules of your freight around your tariffs.” Blanket rate pricing main type associated with the LTL market. Customer specific pricing is negotiated on your behalf when all of your capacity is going to a single provider, which is typically preferred for shippers with a larger freight spend. BlueGrace negotiates specifically customer-by-customer to determine which suites the customer better. “If you’re in Montana or the upper peninsula of Michigan, sometimes you may just want to pay the more expensive LTL cost,” he said, due to the fact that market is more remote, and competition between carriers is less apparent. 

Identifying consolidation opportunities is the key to the cost-reducing aspect of optimizations.

Identifying consolidation opportunities is the key to the cost-reducing aspect of optimizations. BlueGrace’s software is designed to help clients consolidate unnecessary costs in their unique supply chains. One measure that BlueGrace uses is a center of gravity study, which considers various origin points and points of destination and calculates where each region should ship from to find the fastest route at the best cost. “You want to be able to take advantage of the ability to choose the right mode every time and drive down costs. If all things are equal, an FTL is going to travel much faster … and [incur] less damage to freight,” Blalock said. “If time is no issue, if the freight is indestructible,” then LTL could be the best option for you. 

Click HERE to watch the full Webinar and learn more about tariffs and fuel surcharges associated with costs. If you would like to speak to one of our freight experts, contact us at 800.MYSHIPPING or fill out the form below.

The Importance of Retail Compliance in Today’s Market

Logistics and supply chain management has become a very tight game, almost cutthroat in its harsh severity. Consumers want their product today, that means that retailers want it delivered, checked in, and on the shelf yesterday. With the ability to order just about anything a consumer could possibly want from the vast online marketplace, brick and mortar retailers have to run an even tighter ship than they have before if they have any hopes of competing. To that end, some retailers are upping the ante and doling out punishment for shippers who aren’t in compliance.

So what can you do to maintain retail compliance? What about improving your operations to make your company more efficient? We covered these and many more topics in a recent webinar including:

  • Weekly Product Planning
  • Proactively Managing Appointments
  • Planning Optimal Shipping Dates
  • Eliminate Reactive Shipping
  • Creating an Internal Scorecard
  • Learning to identify Real Issues and Actionable Items
  • Improving Communication and Cooperation among Multiple Departments
  • Daily Tracking Updates
  • Full Visibility on Actual Deliveries
  • Learning to Identify Preferred Carriers
  • Utilize Upgraded Carrier Service Levels

Here are some of the key highlights from our webinar that can really have an impact on your business. While this doesn’t cover everything, these elements are vital to running a successful business in today’s marketplace.

Visibility is a Must

One of the key points that the webinar focuses on is visibility. Keeping up with retail compliance is more than just making delivery deadlines. The amount of disruptive technologies and customer expectations hitting the field requires a level of visibility that was, until recently, unheard of.

Customers want to know where their product is during transit. They want to be able to track its progress, start to finish until the product is in their control. More than that, they want to know the status of the product itself during transit. While this might not matter quite so much for clothing and other domestic goods, it plays a huge role for sensitive goods such as electronics and food items.

Being caught out of compliance could result in more than just heavy fines, it could result in a total shutdown of business and operations, which is ruinous for smaller companies.

Earlier this year, the FDA passed the Food Safety Modernization (FSM) act which details the requirements for sanitation, cleanliness, and closely monitored temperature control. Being caught out of compliance could result in more than just heavy fines, it could result in a total shutdown of business and operations, which is ruinous for smaller companies. This is one of many reasons why visibility is so vital to companies in their day to day operations.

OTIF and MABD Requirements

Walmart, one of the biggest retailers in the United States, is just one of many companies that are tightening their expectations for their suppliers. Walmart’s On-Time In-Full (OTIF) policy has set a precedent that will actually fine shippers and suppliers if goods don’t arrive when they are supposed, whether that be early or late. This means that shippers and carriers need to work closely together to hit the designated delivery window.

Must Arrive By Date (MABD) and OTIF are crucial for the changing client expectations.

Must Arrive By Date (MABD) and OTIF are crucial for the changing client expectations. Given that Walmart is such a substantial customer for many suppliers in the United States, making deliveries on time and in full is the difference between making a tidy profit, or losing out on a major customer. Additionally, chargebacks could carry a heavy fine, especially for smaller companies. As it stands, Walmart will penalize shippers by 3 percent of the total PO for any late or incomplete shipments. It’s not just Walmart that’s stepping up the regulations either as more companies continue to tighten their delivery windows.

We covered the importance of having someone managing these new requirements as well as questions that need to be answered. Are shipping dates being planned into production times? If there’s a mistake resulting in a delayed shipment, will you be able to identify where the mistake happened? What plans are there in place to reduce potential chargebacks and improve vendor reliability?

Better Planning Means Better Compliance

Planning is a large part of logistics, and being able to enhance planning is another touchstone of what we covered in our Retail Compliance Webinar. For example, what do you do if a truck breaks down while en route to a delivery? Is your company able to catch it with enough time to make the deadline? What about finding carriers with an open capacity to move product? Is your company able to find space, even when capacity gets tight?

These are a few questions that logistics planners and decision makers need to be asking themselves on a regular basis. Reactive shipping, planning a shipment due to a shortcoming of the original agreement, is a risky practice. There’s a lot that can go wrong when you’re already trying to play catch up. Much like maintenance on a piece of machinery, waiting for something to break is always much worse than fixing something before the breakdown actually occurs.

While there are a considerable number of possibilities to consider when trying to be proactive rather than reactive, it’s becoming easier to be proactive with the advancements of visibility and supplemental technologies.

The supply chain is very much the same. It requires a good deal of forethought to keep it flowing smoothly. If, for example, you don’t have a dedicated carrier fleet, will you have the necessary capacity to keep freight moving in a timely fashion? While there are a considerable number of possibilities to consider when trying to be proactive rather than reactive, it’s becoming easier to be proactive with the advancements of visibility and supplemental technologies.

That level of planning is no longer a novelty or a nicety for customers. It’s becoming a requirement as well as a differentiator among suppliers. Companies who are playing it too conservatively will have a harder time meeting retail compliance than companies who are staying abreast of the changes as they occur.

Staying Compliant

Changes in transportation regulations, tightening capacity, new technology hitting the market, higher spot rates and higher levels of demand from customers and consumers. Any one of these can be hard to navigate by itself, but trying to deal with all of it at the same time can border on the impossible.

Ultimately, everything we covered in our webinar is about helping your company to stay compliant and perform better across the board. From internal operations to external executions. Everything is connected and we broke it down for you. Click HERE to watch our webinar about retail compliance and learn more about how you can be successful. Ready to speak to an expert? Fill out the form below or call us at 800.MYSHIPPING

How The New Tariffs Could Affect the Supply Chain

With three rounds of attempted trade negotiations come and gone, a trade war between the United States and China, representing the two largest economies in the world has begun. China’s Ministry of Commerce has made a declaration that they will fight back against the Trump administrations imposed retaliatory tariffs on imports to China. China is now joining the ranks of other major players in the global economy, Canada, Mexico, and the EU, who are fighting back against these tariffs.

The $200 billion in import products that are being considered span a wide array of household and consumer goods

The $200 billion in import products that are being considered span a wide array of household and consumer goods including, but not limited to, bicycles, sound systems, refrigerators, pocketbooks, vacuum cleaners, cosmetics, tools, and seafood. With a 10 percent duty markup, the tariff would highlight just how dependent the U.S. consumer economy has become on imports.

“In recent days, Vice Premier Hu Chunhua, who oversees foreign investment, has instructed local governments to gauge how the biggest round of U.S. tariffs to date—25% duties on $34 billion of Chinese goods imposed on Friday—is affecting American businesses operating in China, the officials said. In particular, authorities are looking for signs of U.S. companies potentially moving facilities out of China. That would be a blow to Beijing’s effort to attract foreign capital and keep people employed at a time of gathering economic gloom,” according to the Wall Street Journal.

“The idea behind the imposition of tariffs is to increase the cost of imported goods to the point where American manufacturers can compete more effectively, and punish other countries for unfair trade practices. But the reality is that the global economy is so intertwined that most U.S. manufacturers rely heavily on imported parts to support their own U.S. production,” according to Supply Chain Management Review.

Seeing as how many U.S. based manufacturers rely on parts that come from outside the country, we could see a stymie point in production that could create a heavy impact on manufacturers and shippers in the near future.

So how will this growing trade war affect global supply chains? Seeing as how many U.S. based manufacturers rely on parts that come from outside the country, we could see a stymie point in production that could create a heavy impact on manufacturers and shippers in the near future.

The Backlash from the Automotive Sector 

While the new jobs are a boon to the U.S. economy, it is not without consequence. “BMW said Monday that it would move production for some of its SUVs out of the U.S. as a result of new tariffs placed on the vehicles,”  according to The Post and Courier in South Carolina. “The German-based automobile manufacturer signed an agreement with its Chinese partner, Brilliance Automotive Group Holdings, to increase the number of vehicles produced in the country, according to the Charleston newspaper, with the total reaching 520,000 by 2019.” 

 Volvo might also be pulling jobs out of the United States as a means of offsetting these tariffs.  A necessary step as many of the vehicles the company produces in the U.S. and exports to other countries such as Europe and China. Volvo has recently put its plans to expand production in the United States, which would increase staffing from 1,200 to 4,000 on hold.  

A Slow Build for the U.S. Economy

There will undoubtedly be a good deal of fluctuation as U.S. and Chinese companies alike learn how to negotiate these new tariffs. Partner companies between the two countries are already negotiating terms for splitting the difference to help offset some of the lower point tariffs such as the 10 percent increase on Chinese seafood. However, the more substantial duties, such as the 25 percent markup on exported automobiles have some manufacturers looking to pull away.  

“Over time, tariffs reshape the economy. Newly protected industries draw workers and investment away from exporting industries whose inputs are now more expensive. That effect is compounded when exports are also targeted by foreign retaliatory tariffs. Heavily protected industries, like U.S. sugar farmers, don’t export much because prices abroad are much lower than at home. Protectionist countries like India and Brazil have lower imports and lower exports relative to GDP than open economies like South Korea and Chile,” Douglas A. Irwin, an economist, and trade historian at Dartmouth College notes. 

Exporters are going to have a hard time finding ways to mitigate the additional costs of the tariffs while still making a profit.  

Ultimately, the U.S. economy could see some potential benefit from these changes as it might level the playing field for U.S. manufacturers. In the end, however, those that will suffer the most boil down to the consumers buying the products affected by the tariffs, and the exporters. Exporters are going to have a hard time finding ways to mitigate the additional costs of the tariffs while still making a profit.  

How the Supply Chain Will React 

As the cost of raw materials goes up, many companies will have to reevaluate their opinions and suppliers to determine what the best course of action is.

With any major jostling of exports and imports, there will be a rather substantial effect on the supply chain. As the cost of raw materials goes up, many companies will have to reevaluate their opinions and suppliers to determine what the best course of action is.   As tariffs were introduced on imported washing machines Marc Bitzer, the chief executive of Whirlpool Corp., celebrated his win over South Korean competitors LG Electronics and Samsung Electronics Co. “This is, without any doubt, a positive catalyst for Whirlpool,” he said on an investor conference call. 

Nearly six months later, the company’s share price is down 15%. One factor is a separate set of tariffs on steel and aluminum, imposed by the U.S. in March and later expanded, that helped drive up Whirlpool’s raw-materials costs. In the best case scenario, existing suppliers can negotiate with clients to help offset costs. Worst case means disruption and possible standstill for production should components and materials become cost prohibitive for manufacturers. Part of what has helped control the price of consumer goods is the low cost of Chinese labor. Without that, we could see a considerable rise in inflation on U.S. consumer goods at least until the market is able to rebalance itself.   

What Supply Chain Managers Need to Keep in Mind  

Purchasing and Sourcing managers will have their work cut out for them with the new tariffs in place, leaving them to scramble to find new sources where the tariffs don’t apply in order to help keep costs low. However, finding a new supplier is only the first step. There will still be the need for qualifying and completing a risk assessment before a new supplier can be brought on board. Additionally, the supplier must be vetted for product quality, capacity, delivery schedules, and other vital categories to make sure that they will be a reliable partner. Unfortunately, this can be a time-consuming process, but many companies already began sourcing new suppliers when the new tariffs were first announced.

Logistics channels will need to evaluate and contract with foreign trucking companies, freight forwarders, and identify export requirements from other countries before the supply chain can flow smoothly.

Negotiating transportation will be another matter altogether. Logistics channels will need to evaluate and contract with foreign trucking companies, freight forwarders, and identify export requirements from other countries before the supply chain can flow smoothly. This could mean completely altering ocean freight sailings and ports of call, as well as new air freight routes which could cause some delays in the production schedule during the early stages of these changes.  

Supply bases will also be profoundly affected as they take a considerable period of time, approximately 12-18 months, to be reestablished, especially when it involves complex parts such as circuitry. Unfortunately, some of these parts will be unable to be sourced from other countries which means that the base price of components will increase. With manufacturing costs on the rise, many companies will have to make the decision as to how far they can push their customers on the price point before they have to swallow the increase and take a hit to the bottom line.  

Many manufacturers will have to become more flexible in their approach to the supply chain to help offset eventual overages in inventory which will often occur as an attempt to prevent shortages.

Sales and Operations planning will need to make some considerable adjustments in the way they view their supply chain. Supplier schedules will inevitably change which will also change logistics needs. Inventory levels will also have to change as a result which could incur more shipping costs as production runs short on necessary components. This means that many manufacturers will have to become more flexible in their approach to the supply chain to help offset eventual overages in inventory which will often occur as an attempt to prevent shortages.  Of course, there’s also the consideration of what forms the “retaliation” will take as any number of them could result in higher costs and longer shipping times. China has already proposed closer inspections on U.S. imports as well as long delays through customs for more rigorous checks, which can significantly reduce the speed and efficiency of the supply chain.

Your focus should be on developing alternative and flexible supply chains that can be adjusted with speed. It’s time for all hands on deck to fight for your company’s survival.

“Supply chain professionals should take immediate action, if you haven’t already, to secure new suppliers and to do strategic planning using multiple “what-if” supply and cost scenarios.  Your focus should be on developing alternative and flexible supply chains that can be adjusted with speed. It’s time for all hands on deck to fight for your company’s survival,” Supply Chain management suggests.  

In short, this new trade war is going to force changes on many companies, and the supply chain will suffer. Those companies who have the agility to respond quickly will be the best off, but as relations between these global powers remain in limbo, the final result is yet to be determined.  

All Hands on Deck

BlueGrace helps our customers navigate through the constant changes the industry brings. No matter the situation, we are here to simplify your freight needs. If you have any questions about how a 3PL like BlueGrace can assist, contact us at 800.MYSHIPPING or fill out the form below to speak with a representative today!

The Search for a Supply Chain Solution

Supply chain management has always been an essential part of running a successful business, but now the rules of the game are changing. In order to stay ahead of these changes, the supply chain needs to become better organized, more flexible, and able to adapt to whatever is coming down the road.  

Compliance, for example, is becoming a big concern. Trucking companies are being hit with some heavy rules and regulations, such as the ELD and the HoS mandates, which can limit the efficiency of freight transportation. The EPA has passed new regulations regarding carbon emissions which also need to be contended with. Not the least of which is the change in demand and expectations of the customer. Everything is moving at a much more accelerated pace. Consumers aren’t content to wait for two weeks when they think they should have it in two days.  

Handing these changes appropriate does more than making your company more efficient. It raises your overall customer service experience which is vital to the day and age of social media where bad publicity and losing a customer to the competitor is just a tweet away. Legacy systems and the old-school methodology has gotten us this far, and it’s not going to cut it in today’s market. So what needs to change? 

Supply Chains: Out with the Old and In With the New 

Looking back at those legacy systems, they’ve worked for a considerable amount of time, so what’s wrong with them now? Ultimately, they’re clunky and slow to move. Companies need the ability to change and adopt new strategies quickly, be it a capacity shortage or a bottleneck in materials. Legacy systems support a certain rigidity which, back then, was fine. A customer could wait a little longer for a part, piece, or item to be delivered. Now trying to stick to the old ways runs the risk of hindering growth, costing more in both business and expenses, and could put the future of the company itself in jeopardy.  

Unfortunately, many of these changes in demand for the supply chain are coming at a time where IT budgets are being cut back. The end result is that more money is being spent on maintenance and upkeep rather than overhauling and innovating these systems. It’s not much better for new companies, however. Having to shell out a considerable investment in new systems and technology might prove too dear a price for a company that doesn’t necessarily have the extra capital to throw around.

Realistically, what we need is a new approach to this problem

Realistically, what we need is a new approach to this problem. A new way to push both innovation and differentiation from the competition. A scalable solution that can be moved up incrementally as a company is able to both adapt and afford these changes based on needs and goals for the supply chain.

Modern Flexibility 

Another interesting thing to note is that these changes are coming at a much faster pace than we’ve ever seen before, and they aren’t showing any signs of letting up or slowing down.  

Customer and consumer expectations are growing and changing. They want newer, better, and faster, and they want it delivered quickly in a way and location that is convenient for them. Couple that with the fact that new startups and companies are hitting the field daily, and it’s easy to see how a rigid supply chain could spell out disaster.  

Aside from looking to incorporate other systems or looking to a 3PL to help troubleshoot your supply chain, the only other alternative is to get left behind.  

Speaking of newer companies, many of them are already hip to these marketplace changes. They’re starting the game with a scalable and more agile approach to their supply chain which makes them a heavier competitor, despite being new to the game. While changing over to the latest versions of system software and new functionalities can help keep pace with the competition, it’s both, time consuming and expensive. Aside from looking to incorporate other systems or looking to a 3PL to help troubleshoot your supply chain, the only other alternative is to get left behind.  

Visibility is a Must 

Today’s supply chain is a global construction in the majority of cases. Crossing over borders and oceans creates a new level of difficulty that we haven’t seen in the past. Customs and regulations, translations and transportation issues, demurrages and delays, any and all of these events can severely slow the supply chain down and rack up some hefty surcharges in the process. This is one reason why enhanced visibility is an absolute must. It not only helps a company to mitigate risk but helps to reduce costs while raising profitability.  

Visibility, however, remains one of the more difficult bridges to cross for many companies.

Visibility, however, remains one of the more difficult bridges to cross for many companies. Much of a companies information is buried and when systems aren’t communicating, it makes true visibility seem all but impossible without dedicating substantial resources to it. However, a lack of real-time visibility means that almost every area of your business could be affected. Production costs, product design, customer satisfaction and compliance all rely on a high level of visibility. 

Finding the Right Solution 

Having the right solution in place for your supply chain can take many different forms, but all of them share a few key characteristics.  

Agility: The ability to change to new demands quickly is vital. The right solution should be able to highlight and identify weak spots within your organization and supply chain and help you to create a plan to fix it.  

Ease of Use: The solution shouldn’t create more problems. Having a system that is excessively complex or difficult can bog down the process while leaving existing issues unfixed. The right solution should cut the processing time down and help you get your freight on the road faster.  

Completeness and Connectivity: When it comes to shipping freight, your solution should be able to handle it all. Whether you need to manage full truckloads, LTLs, or a complete, multimodal transportation and logistics program.  

Cost and Efficiency: Simply put, having a solution in place is one thing, but being able to afford it is something else entirely. Finding the right solution should help to save your company money, not put it in the red.  

Fast, Flexible and Safe Deployment: A total systems overhaul can create some serious issues. Deploying a solution needs to be able to be performed quickly and seamless so as not to disrupt the day-to-day operations that keep your company running.  

How BlueGrace Can Help 

Of course, there are numerous systems and solutions out there that all promise to meet your needs when it comes to improving your supply chain. But not all of those solutions are created equal, and no one fits all. Also bear in mind, when the system fails or is unable to handle your requirements efficiently and professionally, your operations can come to a screeching halt.  

BlueGrace offers a different approach to upgrading the supply chain that is both innovative as well as easy to integrate. When you’re looking to keep freight moving, BlueGrace is there to help. With our TLC approach, we take the time to make sure that your supply chain is flowing smoothly and you’re turning your operation into the best, most efficient business it can be. To speak to one of our experts and find out more about BlueGrace and how we can help provide you with the solution to your supply chain needs, fill out the form below or contact us at 800.MYSHIPPING

Produce Season and How It Affects Capacity

 

Food items are something that will always be in demand. Consumers expect fresh produce and other food products year around. As such, FTR Transportation Intelligence expects 154.5 million truckloads of food and kindred products this year, up 5% from 2017. Moreover, truckloads of food are expected to rise by an additional 8% to 166.9 million by 2020. This, in turn, results in an increased demand for refrigerated and dry vans. 

However, regulatory requirements including the recent Food Safety Modernization Act, which includes new rules covering shippers, receivers, loaders and carriers that transport food is having an impact on the industry. One part of the act on food transportation spells out requirements on issues, including adequate temperature controls for trucks, food contamination prevention, and vehicle cleanliness.  

Additionally, individual food, beverage, and perishable suppliers are feeling the heat from rising transportation prices.

Additionally, individual food, beverage, and perishable suppliers are feeling the heat from rising transportation prices. During their most recent earnings calls, Kellogg Co. noted that freight is causing its most “acute” cost pressures, while General Mills Inc. issued a full-year profit warning due to increasing costs associated with the shortage of truck drivers. While Kellogg is looking towards its supply chain to achieve cost savings, other food companies such as Hormel Foods and Smithfield Foods, have started to build out their own private trucking fleets. 

Produce Season Is a Busy Time 

While holidays have a substantial effect on freight capacity, produce season can cause one of the biggest crunches of the year. This year, produce season is kicking off with a bang, which might cause some strain on both carriers and shippers. “US wholesalers and shippers stocking shelves with produce are grappling with steep truck rates up as high as 30 percent from last year — as prices out of California and Mexico surge with the produce season kicking into high gear after Memorial Day,” according to the Journal of Commerce 

 “Refrigerated truck rates have followed the same industry-wide trend: spot market prices are up about 20 percent to 30 percent on a year-over-year basis. Load-to-truck ratios are elevated because there aren’t enough trucks capable of handling the demand, which gives the truckers leverage to prioritize shippers paying a higher rate.” 

Truckers Feeling the Weight of The ELD 

The Electronic Logging Device (ELD) mandate, which was passed last December, is starting to put some extra pressure on carriers. The mandate has effectively lowered productivity while increasing the transit times, as carriers have to contend with the mandatory rest period. According to the Cass Freight Index, shipments have risen upwards of 12 percent over the last month, meaning more trucks are needed to handle the same freight volume. This, of course, needs to happen before a carrier can consider taking on new freight.  

Fortunately for the produce season, the Federal Motor Carrier Safety Administration (FMCSA) has made certain allowances for agricultural carriers. So long as the carrier is operating within 150 air-miles of the loading site, be it a farm, silo, or processing facility, they won’t have to start the clock. Leaving the radius would cause to the clock to resume, but the added flexibility is essential for agricultural businesses to survive the produce season.  

Supply and Demand: A Double-Digit Rate Spike  

Even with the added flexibility softening the blow from the ELD, market conditions remain largely unchanged. The rise in capacity demand for the season is resulting in some hefty transportation fees. According to data from the USDA, national refrigerated spot rates were up 28 percent (25 percent not counting diesel costs) over the same week last year. These rates are being seen fairly consistently, ranging from 22 to 29 percent on the U.S. west coast. “At one point this year, I paid $12,000 for a truck. Last year for the same load and same route, it would’ve cost me $9,000 [33 percent hike],” said Peter Pelosi, director of transportation for A&J Produce Corp. 

Kurt Schuster of Texas’s Val Verde Vegetable Company told KRGV, “They tripled or even quadrupled. What would normally be a $2,000 ride turned into an $11,000 ride? One of the main drivers was actually in the big freeze that hit the U.S., but these freight rates aren’t helping at all.” 

Roadcheck Week Had Carriers Scrambling 

To further add to the complication, the month of June is when the Commercial Vehicle Safety Alliance conducts it’s Roadcheck Week. While it’s only a period of 72 hours, most carriers are scrambling to make sure their ducks are in a row. The focus for this year’s road check: Hours of Service Violations. “The Commercial Vehicle Safety Alliance’s (CVSA) International Roadcheck takes place June 5-7, 2018. Over that 72-hour period, commercial motor vehicle inspectors in jurisdictions throughout North America conducted inspections of commercial motor vehicles and drivers.

Thirty-two percent of drivers who were placed out of service during last year’s three-day International Roadcheck were removed from our roadways due to violations related to hours-of-service regulation.

This year’s focus was on hours-of-service compliance,” says the CVSA brief. “The top reason drivers were placed out of service during 2017 International Roadcheck was for hours-of-service violations,” said CVSA President Capt. Christopher Turner of the Kansas Highway Patrol. “Thirty-two percent of drivers who were placed out of service during last year’s three-day International Roadcheck were removed from our roadways due to violations related to hours-of-service regulations. It’s definitely an area that we needed to call attention to this year,” the CVSA added.  

Work Smarter Not Harder  

If the capacity crunch and rate hike proves anything, it’s the fact that shippers and carriers alike are going to have to work smarter if they want to operate at peak efficiency. The ELD mandate is slowing road freight down considerably.  

A transportation management system can help make the most of a ripe transportation season while avoiding the pitfalls that come with higher transportation costs and reduced capacity.

This is one of the big reasons that shippers and carriers are looking to 3PLs to help bridge the gap. A transportation management system can help make the most of a ripe transportation season while avoiding the pitfalls that come with higher transportation costs and reduced capacity.  BlueGrace partners with an extensive list of carriers, providing you with the resources needed to ease the affects of the tight capacity crunch.  If you would like more information on how BlueGrace can help  simplify your supply chain and reduce transportation costs, fill out the form below to speak to one of our experts today! 

The Inner Workings of Overnight Shipping

E-commerce has radically changed the way we look at shipping. When Amazon first got off the ground back in 1997, waiting a week or two for a book was par for the course, and that was assuming that the item was being shipped domestically.

Now, waiting a week or more is almost inconceivable. The modern consumer expects rapid deliveries that border on the level of impossible back in the inception of e-commerce. Even now, the two-day delivery is breaking way for the next or even the same-day delivery.

Warehouses and order selection are being automated. Deliveries are being made by ride-sharing companies, drones, and delivery robots. Parcels are moving through the stream from start to finish at break-neck speeds, and all the while e-commerce continues to push the envelope for delivery times.

While this means that there has been considerable growth and evolution of the supply chain, there are certain aspects of the old school methodology which are still in play even now.

How Overnight Shipping Actually Works 

Package delivery is kind of like a race. When a customer places the order, the starting gun is fired and the clock starts ticking. But rather than a marathon or a cross-country run (even though most packages are, in fact, going cross country), it’s more like a relay race.  

As it stands, most major packaging companies use what’s known as the hub-and-spoke method for deliveries. A package gets dropped off at a drop point (Post office, FedEx or UPS locations, etc.) and is transported to the nearest cargo-shipping airport. From there, the package is flown to the nearest hub where it is unloaded, sorted, and reloaded back onto the next plane to continue its journey. Once the package reaches the target airport (sometimes requiring a third and final flight for truly rural locales) it’s loaded onto a truck and either sent to a sorting facility, or straight on to the last mile of the delivery.  

While it all seems fairly standard practice at this point, we have to consider that this hub-and-spoke method really only came about in the 1970’s when FedEx founder, Frederick W. Smith proved the efficiency behind the concept.  

Memphis: The Super Hub 

Interestingly enough, the biggest hub in the United States is Memphis, Tennessee. So much so that Memphis is home to the second busiest airport in the world, second only to Hong Kong. This is due largely to the fact that FedEx has set up shop for their super hub in Memphis. With 30,000 employees, the super hub is able to process and ship about 3 million packages a day with an average air traffic flow of 150 planes taxiing and departing nightly.  

Cargo departing Memphis can reach just about anybody in the United States in the optimal shortest amount of time — making it the perfect sorting site for overnight shipments.

So, why Memphis, with a population of 650,000? “Because it’s just a short jaunt from what’s called the mean center of the United States population (located in eastern Missouri). In other words, cargo departing Memphis can reach just about anybody in the United States in the optimal shortest amount of time — making it the perfect sorting site for overnight shipments.

For packages making the trip across the pond, Anchorage, Alaska is the chosen hub of departure for packages going to and from Japan, making it the fourth busiest freight hub in the world.  

What makes Overnight Shipping so Affordable? 

As the idiom goes, a plane in the sky is worth two on the tarmac. Simply put, airlines make money from planes that are in use, but that actually only works for passenger flights. To that end, commercial planes are in constant use.  

Domestic overnight cargo flights, on the other hand, don’t need to be in constant use. Why? Because carriers use much older planes.  

“Many cargo planes fly just one dedicated route every night, basically like a bus in the air. Sometimes they spend just a couple hours in the air each day, and the rest of it they sit around at one end of the spoke or the other. It sounds inefficient, but in fact, the economics of this work out for cargo couriers because they haven’t shelled out huge investment in the first place. They’ve bought retired commercial aircraft—basically a fleet of used cars,” says Quartz.   

The savings alone from repurposing retired aircraft is considerable. According to Avitas, an airline consulting firm, a brand new 767-300ER can run upwards of $200 million. The same model of the plane after 20 or so years of service? Around $9 million. That savings alone means that a cargo plane can be used as needed, waiting to be loaded with cargo to make the run back and forth, and causing considerable less wear and tear in the process versus a passenger plane that has to keep moving for the airline to recognize a return on investment.

Creating a Strong Foundation 

The transition of point-to-point delivery systems into the hub-and-spoke have brought e-commerce a considerable distance, but much in the same way that we don’t want to reinvent the wheel, there’s no sense in getting rid of the things that do work. As the future of the supply chain continues to evolve through this new industrial revolution, we will see more advancements. 3D printing taking the place of manufacturing for on-site building and delivery. Drones that can make drops to your own personal location, be it a park or a parking lot.  

 The demanding future of shipping will be built on the scaffolding created in the past.

The demanding future of shipping will be built on the scaffolding created in the past. As it continues to evolve, the elements that withstand the test of time will not only be evident, they will become foundational for your supply chain. BlueGrace’s freight specialists work with you every step of the way to understand your requirements and set up a solution that’s tailored to your needs. For more information on how we can help you prepare for the future and simplify your supply chain, contact us using the form below: 

The Supply Chain Manager of The Digital Age

 

The supply chain has long been held as the lifeline for any company’s operations. It is the flow of goods and materials necessary for the company to continue to function and operate at peak efficiency. Because of that, supply chain managers understandably need the most accurate information in real-time about what’s happening within the chain. Armed with up to date data, a manager can make decisions about how to proceed in the event of problems, delays, and overall operations.  

Legacy systems that have sustained the supply chain for the past several decades are no longer valid.

However, in the face of new and disruptive technologies, the legacy systems that have sustained the supply chain for the past several decades are no longer valid. They lack the ability to provide the necessary end-to-end visibility required for high speed, lean operations. But it’s not just the tech that’s getting outmoded. Soon the position of supply chain manager might be a thing of the past as well.

“New digital technologies that have the potential to take over supply chain management entirely are disrupting traditional ways of working. Within 5-10 years, the supply chain function may be obsolete, replaced by a smoothly running, self-regulating utility that optimally manages end-to-end workflows and requires very little human intervention,” according to the Harvard Business Review.

“With a digital foundation in place, companies can capture, analyze, integrate, easily access, and interpret high quality, real-time data — data that fuels process automation, predictive analytics, artificial intelligence, and robotics, the technologies that will soon take over supply chain management,” HBR adds.  

Making the Shift 

Some companies are already experimenting with different ways to make the shift into an automated supply chain. Robotics and artificial intelligence (AI) are already being used to digitize and automate the more labor heavy and repetitive tasks within the supply chain. While this applies to warehouse and distribution center mechanics, such as order picking and selecting, it also applies to front-of-the-house tasks such as purchasing, invoicing, accounts payable, and various facets of customer service.   

The use of predictive analytics is giving companies better insight into upcoming demand which is vital for shoring up in times of demand volatility, as well as making better use of in-house assets, and cutting costs for customer service functions without sacrificing quality.   

Intelligent Design Leads to Smarter Operations  

One of the big aspects of this technological shift is sensor data. The data collected can better monitor machine use and maintenance which can reduce downtime by providing real-time alerts on upcoming maintenance reducing the chances for machine breakdowns.   

Blockchain technology is also growing in both popularity and utilization as a means to radically optimize how different parties collaborate and communicate within supply chain networks. Instantaneous and complete data chains can provide users, end-to-end, with complete visibility of the entire supply chain process from initial components and raw materials to completed products slated for delivery.  

Transportation procurement should also be digitized in order to keep the pace.

Transportation Management Systems (TMS) will also be playing a role in the supply chain shift. Given the newfound agility of the digitized supply chain, it makes sense that transportation procurement should also be digitized in order to keep the pace. Many companies are looking more to 3PLs and intermediaries to find capacity and book freight, trusting in their systems to reduce the time and effort previously required to perform this task.  

As we mentioned before, robotics are seeing a heavier implantation rate for warehouse and fulfillment center operations. Rio Tinto, a global mining consortium, has been exploring automated metal mining operations for the past several years. This would make use of driverless trains, automated trucks, cameras, lasers, and tracking sensors, all of which would allow the supply chain to be managed remotely while improving safety and the need for personnel in remote locations.  

Less Personnel: More Control 

One of the concepts set forth by Rio Tinto and other companies who are taking the automated approach to supply chain management is the “digital control tower.” This is, in essence, a virtual decision center which is equipped to provide necessary end-to-end visibility in real time across the global supply chain. For smaller companies, these control towers have become the command center for operations. For those working in these control towers, it is their job to keep their thumb on the pulse of their supply chain, monitoring the influx of data 24/7 for any inventory shortages, bottlenecks, or literally anything else that could disrupt their supply chain operations.  

The control towers serve as the front line for a supply chain, allowing planners to quickly adapt, change, or reroute the supply chain to correct any of these potential issues before it becomes an actual problem. This works not only for retail companies but for industrial companies as well. “One manufacturer’s complex network moves more than a million parts and components per day. The control tower flags potential supply issues as they arise, calculates the effects of the problem, and either automatically corrects the issue using pre-determined actions or flags it for the escalation team,” says HBR.  “Similarly, a steel company built a customized scenario-planning tool into its control tower platform that increases supply chain responsiveness and resilience. The tool simulates how major, unexpected equipment breakdowns — so-called “big hits” — will affect the business and points to the best risk mitigation actions,” they added.  

Is This the End of the Supply Chain Manager? 

As more and more things turn towards automation, there is always the concern that human positions will be replaced and outmoded. This has, typically speaking, only affected the lower end of the spectrum, those positions that perform the menial and repetitive tasks. However, as the supply chain itself is becoming more and more automated, will we see a need for supply chain managers in the future or will they too be replaced by AI and computers?  

Rather than simply managing people to do the repetitive work, they’ll have to manage the data flows.

 Ultimately, the answer is no. Much like any position that could be replaced by a robot or a computer algorithm, there will always be a need for some human intervention. For supply chain professionals, this will mean focusing on different skill sets in the future. Rather than simply managing people to do the repetitive work, they’ll have to manage the data flows. Analyzing and interpreting the data to make the best possible decision when handling a potential issue. This skill will require learning how to make the most of digital tools, analyze and validate data sets, and make an effective forecast from the data provided.  

It will be the companies and the specialist who can adopt and adapt to the new technologies that will come out on top.

Companies will have to change their approach from the tried and true to the new order. Supply chain management, as we’ve known it from the past is on it’s way out. It will be the companies and the specialist who can adopt and adapt to the new technologies that will come out on top.  

As manufacturing and decision making become more automated, transportation will also be a vital area of focus for companies. Both the supply chain and transportation are in the process of evolving into something completely different from what we’ve seen in the past. Companies will have to adapt, and quickly, to these changes if they want to keep their supply chain flowing smoothly. While the digitization can help with that to some extent, there are some areas in which it will fall short.

A Vital Asset 

Third-party logistics providers will become vital in this disruptive era, helping companies navigate the shifts and changes within transportation logistics as they occur. BlueGrace not only provides clients with the bandwidth to create transparency, operate efficiently, and drive direct cost reductions, but our proprietary transportation management system, BlueShip, is free!  For more information on how we can help give you the visibility you need and adapt to the future, feel free to contact us using the form below: 

 

Bricks and Mortar: 5 Real Applications of AI To Improve Bottom Line

Many applications of Artificial Intelligence (AI) for brick and mortar retail seem far off, or too futuristic. We picked 5 of the more accessible applications of AI that could help improve your bottom line this year.

1. User accounts

Brick and mortar stores have often felt disadvantaged when it comes to AI compared to e-commerce retailers. Stores simply do not have the same depth of customer behavior tracking data that Amazon does, for example. However, many AI applications for e-commerce could transfer to physical stores.

With store user accounts, retail brands better synchronize offline and online retail.

The mingling of brick and mortar with online shopping occurs in many ways – such as relying upon location-based services or the use of a universal cart that can be used whether you are shopping on a mobile, desktop or voice-powered device. Omnichannel commerce covers many forms of customer experience – the many touch points a customer has with a retailer. Brick and mortar retail can rely on online data when shoppers set up a user account at the store, or from using click and collect or delivery services. With store user accounts, retail brands better synchronize offline and online retail. This reduces the “separateness between these channels [that] poses a threat to operational efficiencies and adds friction to customers hoping to shop in a seamless and consistent fashion.”

2.Recurring billing

A shift towards recurring orders and subscription shopping services is taking place. Retailers can immediately think of ways to encourage clients to consider their habitual, recurring purchases (laundry soap for instance) and plan for them. In that way, habitual orders can be delivered “on repeat.”

Smaller companies might consider subscription programs to expand customer reach and deepen relationships.

Smaller companies might consider subscription programs to expand customer reach and deepen relationships. With subscriptions, member incentives increase visitors to physical locations (Special offers). An example of a “masterful combination of a subscription program and a sophisticated store network”, is Sephora. Cosmetics are especially suitable as sampling products. Those interested want to try out new products – plus they are small and easy to ship. “Sephora’s PLAY! program offers subscribers access to new products through home deliveries while also encouraging them to shop at their local stores to build up points they can redeem for exclusive prizes and experiences.”

3. Style assistants

AI Style assistants in stores are not too far off, as well as other forms of augmented reality, like voice-activated assistants. Expect changes in the store environment, such as is already happening at Zara. “At Zara’s new flagship store in London, shoppers can swipe garments along a floor-to-ceiling mirror to see a hologram-style image of what they’d look like as part of a full outfit. Robot arms get garments into shoppers’ hands at online-order collection points. iPad-wielding assistants also help customers in the store order their sizes online, so they can pick them up later.”

4. What’s Old is New Again

What is AI really anyway? Retail AI is simply mimicking the original experience of a country store (when an associate would help you, care about you, and talk with you) (personalization), with empathy (care for the customer) and manners.

The bulk of retail revenue continues to be derived from brick and mortar stores. The tactile nature of shoppers’ needs is one of the most important factors of this and why physical retail remains. AI can improve empathy, or sensitivity and understanding of a customers’ point of view – and needs – to scale. As observed by many, “It’s no longer about segmenting customers based on general characteristics such as gender or age. Knowing a consumer’s attitudes and sentiments towards things, favorite day of the week they like to shop, the associate they like to deal with, the price points that they buy at, etc., will help retailers better target their consumers and deliver a great experience.”

Using AI options can begin today, even in the way we remember the original needs of the customer.

5. Logistics & Inventory Management

AI addresses out of stock product head on. With AI solutions, a notification that an item is out of stock, running low or out of place in the store is sent out right away to an in-store associate. Currently, Home Depot’s website offers “a vast array of local store data, such as stock levels down to the number of SKUs carried in a store. If you need 10 items of a specific SKU, you want to know a store has that many before you go. It’s no good if we only have two,’” explains Dave Abbott, the retailer’s vice president of integrated media.

Also, data-driven insights on the logistics end, such as offered by BlueGrace, increase operational efficiency

Also, data-driven insights on the logistics end, such as offered by BlueGrace, increase operational efficiency. Using BlueGrace proprietary technology connects retailers with AI possibilities. After companies undergo a review with a BlueGrace specialist, they are presented with new opportunities for cost savings, such as opportunities to implement predictive analytic technology with certain partners that will factor in weather and inventory levels. This will help direct trucks to different stores as part of an overall supply chain improvement. BlueGrace’s enhanced shipment visibility and business intelligence pave the way for AI initiatives.

For more information on how BlueGrace can help you create visibility and operational efficiency, feel free to fill out the form below or contact us at 800-MY-SHIPPING.