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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!

Rising Concern Over Trucking Shortage and Tariffs

The potential trade war has been sparking considerable concern within the freight and logistics sector. With sanctioned countries threatening and even enacting their own forms of punitive retribution, many are wondering what the overall effects of the tariffs and trade restrictions will be on the industry as a whole.

The growing shortage in the trucking industry is also becoming a more significant problem.

Tariffs aren’t the only problem, however. The growing shortage in the trucking industry is also becoming a more significant problem. As a large portion of the trucking community is approaching retirement age, trucking companies are scrambling to find new bodies to take up the wheel. Despite these issues, the economy is enjoying a period of solid growth for the start of the third quarter, but according to a series of surveys conducted by the government, we might be looking at a hard cap on performance in the future.

“Responses from the Federal Reserve’s Beige Book and data from regional business surveys continue to point to an economy that is growing at a healthy pace, as a pickup in consumer spending and continued strength in business investment have sustained activity in the 2nd quarter. However, a, look at the details within the surveys suggest that demand in the economy is actually stronger, and the inability to find carriers to move the available freight has led to production delays and unfilled orders,” says FreightWaves.

Same Report from Around the Country 

The upshot is that the Beige Book shows a continual, albeit modest, growth in the economy across the country. However, there are a number of regional business centers that have concerns about the new tariffs and the trucking shortage. The surveys highlight that each of the 12 major business districts is seeing higher levels of consumer spending through June and early July. This has created a talent shortage, leaving many companies scrambling to find qualified workers to fill the required positions to sustain the growth.  

Among the top tariff concerns is the potential for escalation into an all-out trade war with China. The announcement of the tariffs and China’s response to them have increased the pressure for manufacturers over the past several weeks which are cutting into profit margins as companies have yet to start passing the bill to their customers. “Respondents in each district called attention to the tariffs, with one respondent from the Philadelphia district noting ‘that the effects of the steel tariffs have been chaotic to its supply chain—disrupting planned orders, increasing prices, and prompting some panic buying.’ Several districts noted that the tariffs had not had a material effect on demand or business activity, however, with respondents from Boston citing ‘concerns about tariffs but none cited trade issues as affecting demand or hiring and capital expenditure plans,’ FreightWaves explains.  

The Effect of Capacity on Performance  

Half of the Federal Reserve districts have cited the shortage of trucking capacity. Specifically, the shortage of commercial drivers has caused a disruption in supply chains and business in the past few weeks.  

Given how connected the supply chain is to all aspects of the commercial industry, the driver shortage is causing a cascade effect for a number of businesses.

Given how connected the supply chain is to all aspects of the commercial industry, the driver shortage is causing a cascade effect for a number of businesses. The Boston retail sector, for example, notes that due to their own labor shortages combined with higher freight costs caused a 10 percent increase in labor costs compared to the rates over the same time last year. “Results from all three districts also showed that manufacturers continue to struggle to fill orders in the sector. Data from the regional indexes showed that unfilled orders were rising in all three districts, with the Philadelphia district reporting almost a 14-point jump. This continues the recent trend of rising order backlogs and orders that cannot be processed and would suggest that growth in the economy would be even stronger if only companies could find the workers, supplies, and capacity to meet all of the existing demand,” FreightWaves concludes.  

Demand for freight is high, and the economy is continuing to grow which means a potential opportunity for the industry as a whole, so long as the can overcome the challenges ahead.  

Many firms in the trucking industry are looking for ways to help mitigate the hardships brought about by the driver shortage including higher wages for drivers. Until they can better tap into the younger generations for new drivers, the driver shortage will continue to grow as more drivers reach retirement age. As for the tariffs and the potential for a trade war with China, the best option is for manufacturers to begin sourcing other suppliers for materials or decide how best to negate the increased costs. While this all seems rather dire, there is a considerable upside to this. Demand for freight is high, and the economy is continuing to grow which means a potential opportunity for the industry as a whole, so long as it can overcome the challenges ahead.  

Preparing For Upcoming Challenges

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!

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

Is Your Supply Chain Ready for NAFTA Changes?

The North American Free Trade Agreement (NAFTA) is about to be on the block for renegotiation. Possible changes from the renegotiation can take on many forms including, but not limited to: 

  • Adjustments to the Rules of Origin for Product Content  
  • More-stringent Labor Standards,  
  • Possible withdrawal return to World Trade Organization most-favored-nation tariffs.  

These potential changes to NAFTA will all have serious and important implications for the supply chain as well as the profitability of U.S. based manufacturers and exporters. However, as negotiations are still ongoing, a lot is uncertain about the outcome of these negotiations including the outcome and possible consequences for companies. As these changes can be offset or made worse by currency adjustment, there are more than a few company executives that are watching the events with bated breath.  

One of the biggest changes is the “border adjustment” which could cause such a currency fluctuation.“The proposed “border adjustment” that is part of a tax reform package Congress is debating could cause the U.S. dollar to appreciate relative to other currencies. Under the plan, companies would not be able to deduct the cost of imports from their revenue, a move that today enables them to lower their overall tax burden. At the same time, exports and other foreign sales would be made tax free,” according to the Harvard Business Review. 

Unfortunately, the uncertainty is causing a great deal of hesitation among U.S. business leadership teams as no one is quite certain how these changes are going to play out.  

He who hesitates, is lost.” Joseph Addison’s Cato 

As the old maxim goes, waiting for a more clear picture of the future could have disastrous results for the supply chain and the bottom line for many companies. So what steps should you be taking to prepare your operations for the NAFTA renegotiation?  

Hope for the Best and Prepare for the Worst 

“Successful companies thrive in uncertainty by incorporating change into their strategy. Leadership teams can limit the negative consequences of a possible NAFTA withdrawal and currency moves by adopting an approach that anticipates several future scenarios. This approach also applies to companies based in Mexico and Canada, as well as other countries, such as China, with trade agreements that may be vulnerable to U.S. political upheaval,” HBR advises. This is doubly true given that the Trump administration has been implementing trade tariffs which are being met with equally difficult conditions from U.S. trading partners.  

As with most aspects of the supply chain, flexibility and agility are going to be the key to success.

As with most aspects of the supply chain, flexibility and agility are going to be the key to success. Companies will need to focus on the risks that matter most to their operations and engage in a continual cycle of execution, monitoring and, most importantly, adaptation. Continuing to progress and evolve during these volatile times will prevent stagnation and allow companies to react to challenges rather than trying to run damage control.  

Actions to Consider 

There are a number of ways that these changes and uncertainties can be mitigated. Companies with a better reaction time will fare better than those who are slow to react, giving them an edge over their competition. Companies should develop and have plans to implement a response to any of the aforementioned changes to NAFTA.  

These are the three main directives suggested by Bain and Company, a Global Management Consultancy based out of Boston, Massachusetts.  

  • No-regret moves. Some actions will increase a company’s competitive edge, no matter what scenario plays out. They include improving cost management or operational effectiveness in procurement, supply chain, and inventory management. NAFTA renegotiations heighten the urgency to look for new operational efficiencies, as they give companies greater flexibility to face new treaty restrictions. For example, a retailer that becomes more efficient will have the option of not passing on cost increases to consumers — without hurting its profit margins. 
  • Options and hedges. Leadership teams that develop strategic options and hedges for a variety of future scenarios navigate better when new developments unfold. These could include expanding procurement options or increasing volume sourced from competitive local suppliers. For example, back when NAFTA was being negotiated, several Mexican companies, such as auto parts supplier Rassini, seized the opportunity to invest in modernizing their operations so they could expand beyond their local customer base to compete globally. One option today is automating operations to some degree. If NAFTA is repealed, it would be easier to move a partially automated production line back to the U.S. than a highly manual line. The option value lies in the cost of moving, relative to paying the border adjustment and higher World Trade Organization import tariffs that would kick in under the withdrawal scenario. 
  • Big bets. The most challenging balancing act involves large-scale investments that have different payoffs depending on how future uncertainties play out. Any company that keeps its supply chain and manufacturing footprint plans for North America may be making a big bet, and management teams should assess their investment plans from this perspective. Companies could go even further by expanding production capacity or switching suppliers from foreign- to U.S.-based companies. Or they could make a contrarian bold bet, as is being contemplated by Ammex, a disposable-glove distributor based in the U.S. that sells to labs, hospitals, and other companies around the world. Ammex is looking to invest in e-commerce and double down on Mexico, a key developing market for the firm, while nervous competitors draw back from the country. If a big bet looks too risky to take immediately, companies can wait for greater clarity and move quickly once changes look likely. 

Given that most companies have the technology in place to monitor such changes, they should also be able to map out appropriate responses to them as well. Armed with the right intelligence at the right time, a savvy company can make moves to put them ahead of the game and still come out profitable even with the incoming tariffs. 

Quick response and right thinking strategies will win out the day as these new trade deals are brought into the light.

The full effects of NAFTA changes are unknown and will be for a time. Mexico is pushing to have the deal finalized with the Trump administration by the end of August, but the long-term effects on supply chain speed, costs, and inventory could take years to manifest fully. Between changes to NAFTA and the tariffs, successful companies will need to embrace radical change as part of their day to day operations. They will need the tools in place to anticipate and respond to a multitude of possible outcomes faster than the competition and before any such outcome can be finalized. Quick response and right thinking strategies will win out the day as these new trade deals are brought into the light.

How Can A 3PL Help?  

No matter the situation, we are the experts here to simplify your freight needs and give you the visibility needed to stay ahead of the game.

BlueGrace helps our customers navigate through the many obstacles that can occur in their supply chain. No matter the situation, we are the experts here to simplify your freight needs and give you the visibility needed to stay ahead of the game. If you have any questions about how a 3PL like BlueGrace can assist, contact us at 800.MYSHIPPING or feel free to fill out the form below to speak to one of our freight experts today!

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.

Bluegrace Logistics Begins Hiring for New Downtown Chicago Office

FOR IMMEDIATE RELEASE

JULY 23, 2018

 CONTACT:

Michelle Damico michelle@michelledamico.com 312.423.6627

Bluegrace Logistics Begins Hiring for New Downtown Chicago Office

Opening date for new Chicago Board of Trade Building office is set and hiring search has begun

CHICAGO,ILLINOIS — BlueGrace Logistics, a nationwide third-party logistics (3PL) provider, announces the official July 23, 2018 opening of their new Chicago office in the iconic Chicago Board of Trade Building, 141 W. Jackson Blvd. 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 Chicago market, which the industry’s Journal of Commerce described as a high-tech logistics magnet.

BlueGrace Logistics is grateful to Mayor Rahm Emanuel for his warm welcome as we establish our downtown presence to best serve new and existing customers.

“In opening their Chicago office, BlueGrace Logistics recognizes that they will have access to world-class talent,” said Mayor Rahm Emanuel. “Chicago’s innovation and talent pipeline ensures that companies doing business in the city can benefit from our globally-connected, diversified economy.”

Applications are being accepted for 80 new employees who will be occupying the Chicago Board of Trade office over the next year, more than doubling BlueGrace’s workforce in the Chicago metropolitan area. These sales professionals will support the nationwide operations for the company. BlueGrace Logistics’ Itasca, Ill. office will also remain open and currently has 65 employees.

“We’re excited to be downtown and bullish on Chicago because it’s a rich source of talent and resources for BlueGrace Logistics,” said Bobby Harris, CEO. “Being in the Board of Trade gives us greater access to college grads who want to work and live in a vibrant city. Plus, as the nation’s logistics hotbed, Chicago has a deep pool of experienced tech and sales professionals to serve our customers and to fuel our growth, not just in the metro area, but nationwide,” he added.

The freight industry continues to increase in complexity with tightened capacity and other shipping requirements. Because of this, more companies are seeking BlueGrace’s industry expertise and ability as a 3PL provider to access to many different carriers, routes, and modes of transport at competitive prices. Increasing customer needs offer huge opportunities for talent in the logistics industry from sales to information technology. Chicago has long been a hotbed for both of these industries, making the downtown location perfect for their rapid growth.

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.

Mayor Rahm Emanuel

 

Bobby Harris, President and CEO

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

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.

What is Transportation Management Workflow and How Does It Work?

Transportation Management Workflow may be defined as a supply chain workflow that connects and links the various parties involved along the chain from, for example, the seller’s warehouse to the buyer’s warehouse. A professional and effective logistics services provider needs to have an efficient transportation management workflow which follows a logical sequence and has the most effective operational procedures. 

One of the primary requirements would be to operate an effective TMS or Transportation Management System. 

One of the primary requirements would be to operate an effective TMS or Transportation Management System.  The TMS used should be capable of handling various aspects of transport management including needs assessment, effective analysis, integration and management in addition to providing you visibility on inbound products, receiving, storing and distribution. An effective TMS will provide comprehensive data analysis on the current shipping costs and processes which offers you an opportunity to compare your costs and processes versus what is available in the market. 

These analyses can help you optimize your supply chain process and also provide overall cost reduction. Your TMS must also be capable of handling pick and pack operations, product consolidation, replenishment and also final distribution and delivery to the receiver. 

A well designed and effective TMS is of paramount importance in:
  • Reducing freight costs
  • Automating the routing and other internal processes
  • Consolidation
  • Freight audit
  • Improving visibility
  • Tracking costs and delivery

Using your transportation management workflow, you can analyze important business metrics such as class and weight breaks, shipment density heat maps, cost/ton and cost/mile metrics, carrier utilization reports, DC optimization results, on-time performance. 

An effective transportation management workflow will also be able to make recommendations on ways of reducing costs, identifying and controlling the costs per client which will also uncover inefficiencies, if any, in your business model. For example, you may be using antiquated routing methods with your current service providers that need some modernization in order to provide you with a more cost-efficient transportation management program. By conducting engineering reviews into your customer’s data, you will be able to identify inefficiencies within the existing strategy and adopt a more dynamic carrier routing which can result in significant cost savings and reduction in transit time. 

The transportation management workflow must always be evolving as trade is dynamic and there must be constant workflow audits along the various silos within the supply chain.

Tracking and tracing is an essential and vital part of the transportation management workflow

Tracking and tracing is an essential and vital part of the transportation management workflow and the TMS used should be suitably equipped to handle this vital component in the flow. 

While everyone likes to handle their own business especially if you are in the transportation business, sometimes it may just be more cost effective to outsource the transportation portion of the whole supply chain workflow. One needs to do extensive and thorough data analysis of all current costs within the transportation and logistics silos. Such analysis will allow you the opportunity to find ways to save money for your customers but also provide efficiency in operations. An efficient way to reduce costs would also be to negotiate accessorial charges because the various carriers may have different container sizes and types that they use for the transportation.  

You can also use the TMS to plan warehouse spatial planning as your business may need to accommodate various sizes and weights of cargoes arriving in LTL or FTL modes. Using the TMS effectively will also assist in reducing the truck loading and turn around times which in turn will reduce the warehouse overheads in terms of staff overtime, etc. It may also be used to consolidate the booking processes which in turn will result in a consolidated billing process,  reducing the overall time spent doing this activity manually by auditing, reviewing, paying and collecting each invoice. 

History is the best teacher

History is the best teacher they say and in line with this, one also needs to pay special attention to historical freight data. You can analyze the performance levels of the various carriers used, achieve cost savings, and have an edge when it comes to future rate negotiations. 

Conclusion

When effectively used TMS can assist customers to gain efficiencies in improving their service offerings while also allowing them to create scalability in their business processes. Customers, especially shippers, are always looking for ways to improve service delivery and efficiency while limiting the costs. By efficiently managing the transportation management workflow, shippers can address costly challenges like rate fluctuations, hidden charges, track and trace, visibility, etc. From both a functional and cost perspective, effective management of the transportation management workflow provides value to the customer. 

BlueGrace’s Proprietary Technology

Our 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. Our customers are especially impressed with the user experience, which is completely customizable and has real-time updates, giving them a single source tool for tracking, addressing, and product listing. To see a demo and speak to one of our BlueShip experts, fill out the form below or call us at 800.MY.SHIPPING.

A Growing Need for 3PLs

It’s been a rough ride for over-the-road freight transportation over the past few years. Higher levels of government regulations have created a strain for drivers including the Hours of Service and the Electronic Logging Device mandates. These both came at a time that trucking companies were struggling with the pre-existing issue with a severe shortage of drivers. With the median age of drivers approaching retirement age, the condition will likely get worse before it gets better. Additionally, there have been huge fluctuations in both spot rates and demand over the years which have left carriers in a rather precarious situation.  

Despite the difficulties, there is good news on the horizon. Spot market rates, according to DAT and Truckstop.com, have risen upwards of 20 to 35 percent and contract rates have climbed by an average of 8 percent, year-over-year.  

This is good news for carriers, but managing the influx of work could require some extra help from intermediaries and 3PLs. Already, the conversations are beginning about solutions for the generational workforce as well as the adaptation to the increasing levels of disruptive technology hitting the markets.  

Higher Brokerage Margins 

Last year, 3PLs made due with fairly low margins, about 10 to 15 percent for freight transactions. Mostly as a result of vying for the top spot as a low-cost option for shippers who were looking for a truck on the cheap without using a service in the first place.  

Now, in 2018, with capacity tightening, shippers are making a return to 3PLs which will cause third party margins to increase to as much as 15 to 20 percent.

Because of the availability of capacity in 2016 and the first half of 2017, most shippers were able to obtain reasonable rates with carriers, which means that 3PLs had to provide an array of other services to set themselves apart from the competition. Now, in 2018, with capacity tightening, shippers are making a return to 3PLs which will cause third party margins to increase to as much as 15 to 20 percent. Carriers are hoping this will result in a sustainable relationship with 3PLs.

A Spike in Demand is on the Horizon 

Freight demand was unusually high between January and February, with a slight slow down through March. Given that these volumes are much higher than they were over the same period from last year, it’s another sign pointing towards the growing health of the transportation industry.  

If shippers want to keep up with demand, they’re going to have to change the way they do business.  

While this is undoubtedly a good start to the year, produce season, April through July, has kicked off, which means an even bigger spike in demand as produce season will give way to other peak consumer seasons including the Holiday season. Considering that all of this is outside the continual rapid growth of eCommerce markets, 2018 is going to be a busy year, to say the least. If shippers want to keep up with demand, they’re going to have to change the way they do business.  

Sensing the growing demand, many trucking companies are beginning to double up on their orders for new trucks. “Trucking companies ordered 35,600 trucks in May, more than double the orders from the same month a year ago, according to preliminary figures by ACT Research. That leaves manufacturers with an order backlog of more than 200,000 trucks, or 8.4 months of production,” according to an article from WSJ.  

“This is an astonishing rate of order placement,” said Kenny Vieth, president of the Columbus, Ind.-based ACT. “What’s facilitating it is that truckers are absolutely crushing it on freight rates and profitability right now.”  

Shippers might Start Looking to 3PLs for Visibility 

According to a report released by TIA working with Project44 and 10-4 Systems, 3PLs can, in fact, offer the level of visibility that shippers are looking for despite contrary beliefs.  

“Significant advances in visibility technologies have created a wide range of perceptions and expectations among shippers, including some that are inaccurate. 3PLs in this report identified a complicated web of factors that affect those perceptions and expectations, such as the demands of data aggregation, the need for more education, and the accelerated pace of change that affects 3PL and shipper alike,” the report says.  

Over the past year, the importance and need for visibility have only increased as suppliers are dealing with ever-increasing customer expectations and delivery standards

The TIA hopes that their report will highlight 3PLs that have a product or service offering that will provide the necessary information to shippers regarding their freight. With each passing year, the number of shippers that use 3PL services to keep them updated on their freight during the transportation cycle is increasing. Over the past year, the importance and need for visibility have only increased as suppliers are dealing with ever-increasing customer expectations and delivery standards. Walmarts OTIF (On Time: In Full) policy is a perfect example of this, which can punish shippers for not adhering to a strict delivery schedule.  

Data and Tech will Pave the Way 

It’s more than just the growth of demand that is making 3PLs a tempting partner for shippers. With the influx of big data, analytics, blockchain technologies, and so many more innovations, attempting to keep pace can be difficult. As demand grows and capacity tightens, shippers and carriers alike need to be smarter about how they operate if they want to stay competitive in today’s marketplace. 

As the industry continues to change, it’s likely that we’ll only see 3PLs continue to grow in popularity.

A Better Way of Doing Business

At BlueGrace, we take your current freight data and get an inside look at what your team may be missing. Our carrier procurement strategists will help you meet tight deadlines, optimize your freight expense, and ultimately, find peace of mind. Fill out the form below to find out more about how partnering with BlueGrace can create more visibility and opportunities to simplify, overall helping you find a better way to do business.

Chicago — not just a hub, a high-tech logistics magnet

“No one’s coming to save us,” Bobby Harris, president and CEO of BlueGrace Logistics, tells shippers. He’s talking about the tight-capacity, high-priced, surface transportation market, which he expects will continue until late 2019. One BlueGrace solution — it is going to Chicago to hire help. (Above: Chicago, with Lake Michigan.) Photo credit: Shutterstock.com.

William B. Cassidy, Senior Editor | Jun 07, 2018

Chicago draws logistics business like Hollywood draws actors, or a lamp draws moths. The city’s importance as a logistics hub predates even Mrs. O’Leary’s cow, blamed, rightly or wrongly, for starting the fire of 1871.

As the United States and its people moved west, Chicago became the crux in America’s railroad backbone. Today, Chicago still is the most important rail center in North America, but it’s also a high-tech logistics hothouse.

“There’s just such a surplus of talent there, at a time when we’re looking for a lot of talent,” Bobby Harris, president and CEO of BlueGrace Logistics, said shortly after BlueGrace opened an office in downtown Chicago in May.

“The market we’re seeing now will be around for quite some time. We need to add a lot of capacity and a lot of professionals,” he said. Chicago “is a rich source of talent and resources, whether it’s truckload capacity or sales reps.”

Third-party logistics providers (3PLs) such as BlueGrace will need resources to guide shippers through the tightest, costliest freight market since the early 2000s. Harris’s advice to shippers: “Whatever you think you’re doing really well, think another step.”

At this point, “everyone knows capacity is tight,” Harris said in an interview. “The question is how long will it be this way? My belief is that it’s going to be a tight market, in truckload and less-than-truckload [LTL], into late 2019.”

Chicago — a booming logistics sector since mid-2000s

Since the mid-2000s, Chicago has experienced a logistics explosion, with non-asset, 3PL, and technology companies large and small opening shop and tapping a young, tech-savvy workforce.

Coyote Logistics, now part of UPS, and Echo Global Logistics were both founded in 2006 and now are billion-dollar-plus 3PLs. Along with several other Chicago 3PLs, they are the original third-party logistics “disruptors.”

Tampa-based BlueGrace is part of the tech-based logistics community that has grown rapidly over the past 10 years. The 3PL has been on the Inc. 5000 list of fastest-growing firms five times, including last year, ranked at 3,744.

Harris founded BlueGrace as a technology firm in 2007. Previously, he was a franchisee with freight forwarder United Shipping Solutions and worked at LTL trucking companies Southeastern Freight Lines and Yellow Transportation.

In 2012, BlueGrace ranked 20th on the Inc. 5000 list, with a three-year growth rate exceeding 7,000 percent. Last year, Bluegrace grew at a three-year rate of 79 percent, with $188.1 million in revenue in 2016, according to Inc.

That year, Bluegrace got a $255 million infusion of cash from private equity firm Warburg Pincus. The investment helped the 3PL expand in its core LTL trucking market and buy back franchised BlueGrace operations.

“We brought back virtually most of our franchises with the exception of a few,” Harris said. “We’re 95 percent direct-owned now.” In Chicago, BlueGrace’s new office is in the Chicago Board of Trade Building, a landmark skyscraper.

Eighty new hires will staff the office, which opens July 9. “We expect to make continuous investment [in the office] and we’re bullish on it. There’s a reason some of the biggest and most successful logistics firms are in Chicago.”

One reason is some of the biggest and most successful users of logistics services are there too. McDonald’s this Monday opened a new $250 million, 550,000-square-foot headquarters building in Chicago’s West Loop.

Online grocer Peapod on Tuesday opened its new headquarters at 300 S. Riverside Plaza in the West Loop, next to the Chicago River, relocating all of its corporate employees from the northern suburb of Skokie, Illinois.

‘Silicon Prairie’

Some 3PLs have made similar leaps. Several years ago, LoadDelivered Logistics relocated from North Grove, Illinois, to downtown Chicago. LoadDelivered founder Robert Nathan called the area “Silicon Prairie.”

Facebook and Google both plan to add more than 100,000 square feet to their Chicago offices and hundreds of workers, according to Built in Chicago, an online community for technology entrepreneurs, and the Chicago Tribune.

The tech giants compete with logistics companies for the same base of young, educated, technology workers. In Chicago, “We’ll have new hires out of college, and we’ll get supply chain professionals with experience,” said Harris.

They’ll need that experience, he suggested, in the year to come.

Harris foresees “continual tightening” of surface transportation capacity. “We’re entering produce season, we’re looking at hurricane season. We don’t see anything that’s going to relieve capacity in the next calendar year.”

He pointed to the Institute for Supply Management’s monthly indices, which showed the US economy expanding both in services and manufacturing in May. The good news is “we’re not finding the monster under the bed.”

Shippers need to put finding capacity “up on the top,” Harris said. “We’re getting a lot of business from people who just can’t get what they need and they’re worried about how it will look over the summer and next winter.”

“No one’s coming to save us,” he said. “We’re going to have to deal with this market for a long time. More drivers, that’s not going to happen, and automated trucks are way too far in the future in this time frame.”

Even so, for 3PLs and carriers, “there’s a lot of opportunity,” he said. “The very good firms will do exceptionally well, smaller firms with fewer resources not as much.” The question for shippers, he said, is “how to optimize what we do.”

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Lucrative Futures For Logistics Specialists

While Supply Chain Manager doesn’t typically make the top ten list of answers to “what do you want to be when you grow up” there is something to be said for positions in the logistics industry. Especially the salary. And when it comes to deciding on a career path, a heavy paycheck can go a long way towards attracting new talent.

According to the APICS’s premier annual survey, there is a very bright future for people working in the supply chain industry with both increases in pay as well as high levels of job satisfaction across the profession.

The survey revealed that in 2017, the average salary for supply chain professionals was $85,210. 90 percent of those surveyed said their raises were at least 3 percent. What’s more is that nearly all of the respondents said they were very happy with their professions and likely to stay with the supply chain industry.

“The data revealed in this report show that supply chain careers represent a fulfilling, dynamic and rewarding long-term career choice for professionals,” said APICS CEO Abe Eshkenazi, CSCP, CPA, CAE.

We foresee that this success will continue as supply chain professionals continue to become a more integral part of the overall business strategy.

“We’re excited to see that our members are well-compensated and continuing to advance in their careers. We foresee that this success will continue as supply chain professionals continue to become a more integral part of the overall business strategy,” Eshkenazi added.

The Path to Success: Education

Education plays a vital role in the salaries of supply chain professionals.

One of the biggest takeaways from the survey is that education plays a vital role in the salaries of supply chain professionals. According to the survey, even so much as one certification could lead to a 19 percent increase in pay over peers without any certifications. Beyond that, having 2 or 3 certifications means a pay increase of 39 percent and 50 percent, respectively.

Those respondents who had earned an APICS certification reported a median salary that was 27 percent higher than those without any certifications. Additionally the education, unsurprisingly, play a part in continuing the career. Even with the same level of tenure, the results of the survey show that more education in the field results in better pay and more chances for advancement.

A Need For Talent 

The pay alone makes the supply chain industry an appealing field for those who are deciding on their career path. Given the high levels of job satisfaction, an average of 8.4 out of 10 according to survey responses, it’s likely that we’ll see even more graduates coming out with degrees related to logistics and supply chain management.  

The industry needs new talents, given the rate that the supply chain is growing and changing.  

Which is a very good thing, as the industry needs new talents, given the rate that the supply chain is growing and changing. While tenure is still essential, experience trumps many other attributes regardless of the industry, there’s still a noticeable difference in pay for those with a degree in supply chain matters. Graduates with less than one year of experience are seeing a slightly higher level of pay than those with 1-3 years of experience. While this might be a move to help entice new people into the industry, it’s still an interesting side note.  

Those willing to take on the responsibility of a leadership role can expect even more jump in pay grade. Supervising a group of at least 50 individuals has reported a base salary that is 82 percent higher than those who do not manage. Even managing as few as 1 to 4 people will see a 13 percent increase.  

A Promising Future  

Given the levels of technological advancement that many industries are undergoing at this time, it’s important to consider the future of the supply chain industry as well as its longevity. Many jobs and careers are on the verge of becoming automated. While this does much for their respective industries, it does make deciding what career path to take a little more difficult. The supply chain and logistics sectors are prime examples of this technological revolution, with much of the industry being automated and digitized.  

There will always be a need for a human element within the industry, perhaps even more so with the deluge of automated processes being added on a near-daily basis.

Yet even with these changes being made, there will always be a need for a human element within the industry, perhaps even more so with the deluge of automated processes being added on a near-daily basis. Certified talent with a more up-to-date education will be vital for the industry which might be part of the reason why so many companies are upping the ante with higher pay, student loan assistance, and other incentives.  

Do You Want To Advance Your Career In Logistics?  

At BlueGrace, we’re growing at an impressive rate. We’re looking for logistics professionals in most of our offices across the country. If you would like to advance your current logistics career or start a new career in this fast growing industry, click the link below to access our list of available positions:

Careers

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