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GRI Season: The Importance and Benefits of Digitalization 

The arrival of fall marks the beginning of the biggest annual influx in demand for the transportation of freight. This is caused by the flurry of demand from shoppers that crop up in anticipation of the holiday season. While increased demand means increased business opportunity, it can also mean a headache for players in the logistics industry — shippers, forwarders, carriers and retailers alike — as they gear up to deal with the season’s intensity. Retailers hire on seasonal employees, while carriers brace for capacity to be pushed to the limits.

Carriers raise their rates to compensate for increased costs in fuel, equipment, technological investment, and the cost of paying their drivers.

Peak season manifests in the costs shippers pay to carriers in the form of General Rate Increases (GRIs). Carriers raise their rates to compensate for increased costs in fuel, equipment, technological investment, and the cost of paying their drivers. Depending on the current economic climate that year, GRIs can be higher or lower, but average at around 5 percent.

Which factors will be especially affected during this year’s peak season, considering the current economic climate?

Higher demand for e-commerce

Consumers’ love affair with online shopping is not going anywhere anytime soon. E-tailer juggernaut Amazon.com had their most successful Amazon Prime Day in history. International shoppers purchased over 100 million products on the website and the company saw more sign-ups for its Prime service on July 16, the Monday before the event than any day in company history.

With the boom showing no signs of slowing down, the rising costs to secure capacity are sure to remain a theme during peak season this year.

E-commerce directly affects the demand for logistics services, as it raises the demand for more routes and last-mile services. With the boom showing no signs of slowing down, the rising costs to secure capacity are sure to remain a theme during peak season this year.

The driver shortage

With the simultaneous driver shortage caused by a retiring generation of truck drivers and the somewhat unpopular ELD mandate, carriers are paying higher than average wages in order to attract good drivers. The domino effect through the supply chain means that this is another cost reflected in the GRIs that shippers pay, and ends up detracting from your company’s bottom line.

Continuously rising fuel costs

During the spring of 2018, diesel prices increased in every region of the country with prices above $3 per gallon in many key logistics regions of the United States, and in August, diesel fuel costs 23 percent more compared to the previous year. However, there is light at the end of the tunnel. According to the Journal of Commerce, U.S. contract truckload rates will likely cool down to a more modest 5 percent on average in 2019, but will still be higher than in years past; the overall increases are another major factor that will continue to play into rising GRIs.

In the Case Study, “Manual Cost Removal and Freight Cost Reduction for Hardware,” BlueGrace explores a scenario in which a big box client grapples to deal with increases in GRIs. The client was operating with a single national carrier model, which at a time, was working sufficiently enough for the supplier. However, as demand increased and their business had grown, the old-fashioned operational system began to prevent the company from reaching its full potential. Operations were becoming time-consuming, employees were becoming overwhelmed, and profits were suffering.

Negotiating GRI costs with carriers during times of unexpected rate increases was a major emerging problem for the company.

Negotiating GRI costs with carriers during times of unexpected rate increases was a major emerging problem for the company. Its lack of digital booking meant that there was no way for them to verify if the invoiced amount of the shipment was the same as the quoted amount of the shipment. In addition, the overwhelming amount of volume being moved was creating a bottleneck in the process, due to the time required to record data manually.

The supplier contacted BlueGrace to address these issues, agreeing to integrate its in-house Enterprise Resource Planning (ERP) system with BlueShip®, BlueGrace’s Transportation Management System (TMS). In doing so, they were able to negate the time-consuming process of manually booking shipments by digitalizing the process. Digitalization also enabled the client to access its own data with better transparency, allowing it to make better-informed business decisions.

Once processes are made electronic, companies like BlueGrace are also able to help businesses save by using their pre-negotiated contracts with all of the carriers whose GRIs don’t adhere to the standard set by larger companies and working with online service providers directly to handle complex negotiations so that the client doesn’t have to.

Once processes are made electronic, companies like BlueGrace are also able to help businesses save by using their pre-negotiated contracts with all of the carriers whose GRIs don’t adhere to the standard set by larger companies and working with online service providers directly to handle complex negotiations so that the client doesn’t have to. The result is a lower cost paid by the client, and a healthier bottom line; the supplier detailed in the case study ended up saving 13 percent of their yearly freight spend, which added up to $260,000 annually.

To find out how implementing can enable your business to achieve its optimal cost reduction surrounding issues like GRIs to reach its full profit potential during the peak season rush, contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today.

Picking up the Pace with the Supply Chain  

The global supply chain has been in the process of evolving over the past couple of decades. What was once a lumbering beast is now gearing itself into something decidedly more agile. It’s that evolution in the supply chain that is driving changes in business practices. The modern supply chain needs to be more agile, not only to keep up with consumer expectations but to keep abreast of fluctuations and disruptions as a whole.

As for retail stores, you can’t sell what you don’t have, and empty shelves mean missed profits, as well as running the risk of damage reputations and customer loyalty.

Fluctuations and supply chain disruptions can cost a company dearly. When a production line is shut down due to missing an inbound shipment, that could result in a loss of tens of thousands of dollars in both production time and man hours, not to mention shaving down precious lead time which can never be truly made up. As for retail stores, you can’t sell what you don’t have, and empty shelves mean missed profits, as well as running the risk of damage reputations and customer loyalty.

Cutting costs is just a matter of good business practice.

Efficiency will always have a place within the supply chain. Cutting costs is just a matter of good business practice. Building in agility, however, takes a bit more consideration and planning to do effectively. It’s a matter of balancing the need for cost-cutting, while being able to respond to new market conditions on the fly. It also means being able to overcome other challenges inherent within the supply chain, such as demand spikes, trade tariffs and more stringent trade agreements, as well as growing capacity shortages.

Agility Training

By putting agility in the forefront both shippers and 3PLs are able to position themselves to handle various market demands quickly and efficiently. Additionally, understanding the demands of particular customers, they can create “segmented experiential supply chains” to meet the ever-changing demands for a wide array of consumer needs. For most successful supply chains, third-party logistics providers are continuing to push upstream within the shipper’s supply chain to work directly with customers. This interaction allows a 3PL to help a shipper overcome the challenges that come with high delivery expectations and potential upswings or spikes in demand.

Cost will always be a determining factor for most companies, not just for shippers, but logistics providers as well.

According to the annual Third Party Logistics Study, many shippers say they understand the need for agility. However, “39% said they haven’t made changes to increase their inherent agility over the past five years and 15% reported decreasing supply chain nimbleness to reduce cost.” Cost will always be a determining factor for most companies, not just for shippers, but logistics providers as well. According to the survey, both parties said that it was the main factor in their decision-making process. “To help improve service and reduce costs, respondents said they are willing to try new approaches to the supply chain, with more than half of shippers—51%—saying nothing is off of the table and they are willing to evaluate all pieces of the supply chain.”

Breaking Away From Tradition

One of the biggest things that we need to realize is that we’re in the middle of a paradigm shift. Old business models are quickly burning out. Just look at retail stores like Toys R’ Us and Bon Ton, both of which have closed their doors for good. Retail stores that are willing to break away from the “tried-and-true” and willing to embrace the new way of thinking will thrive. This breaking away from tradition applies to more than just retail stores though. Even logistics companies will have to shake things up if they want to stay at the top of the food chain.

“The desire to reduce costs, improve delivery times and optimize networks is driving a willingness to eschew traditional business rules, particularly with tightening capacity in the trucking industry,” the Annual Report said.  “When there is no capacity, those conversations change. Today the focus is on maximizing utilization and resources as they are becoming more limited and moving products to the end user in the most economical way.”

Getting the most from current resources will be crucial in the near future, especially when it comes to freight transportation.

Getting the most from current resources will be crucial in the near future, especially when it comes to freight transportation. Capacity has been running tight and will only continue to do so. While that’s great for trucking companies, as they can pick and choose the loads they want to take, shippers are going to have a harder time meeting delivery deadlines all the same. As capacity continues to tighten and the driver shortage gets worse, shippers will need to take a long hard look at working with logistics partners who have a broad reach. “A shipper may have a wonderful supply chain department, but they’re not going to have the utilization. A 3PL will have a diverse set of customers and large bases they can work with.”

(Re)Examining the Supply Chain

One of the strategies that we’ve helped our partners to employ is understanding their distribution density, or “center of gravity.” The better you understand your customer base, the easier it is to make smarter decisions about how to move freight. One of the most efficient ways to cut costs while increasing the agility of the supply chain is to reconsider where your distribution centers are.

While a massive warehouse might hold more shippable goods and products, having to haul it a longer distance repeatedly ends up eating into profit margins.

While a massive warehouse might hold more shippable goods and products, having to haul it a longer distance repeatedly ends up eating into profit margins. To that end, many shippers are looking into smaller distribution centers located closer to their denser customer regions. Even Walmart is making some big moves to help back it’s online fulfillment orders, by turning many of it’s Sam’s Club retail locations into regional distribution centers. “Among shippers, the most common business events that trigger their firm to re-examine its supply chain include changes in performance (71%), mergers and acquisitions (54%), new market entries (54%) and new product launches (48%),” the annual survey said.

Whether it’s finding available capacity, collecting the necessary data to streamline the supply chain, or identifying your center of gravity, BlueGrace is ready to help. Contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today!

BlueGrace Logistics Continues Chicago Growth Trajectory

BlueGrace Logistics Continues Chicago Growth Trajectory

Doubles Hiring Plans and Footprint at Chicago Board of Trade

CHICAGO, ILLINOIS | OCTOBER 23, 2018 — BlueGrace Logistics, a technology-enabled logistics company that takes a progressive approach to transportation management, announced that it will add new jobs and nearly double its footprint in the Chicago Board of Trade (CBOT), 141 West Jackson Blvd, after opening its second metro area office last July.

BlueGrace is boosting its downtown presence from 8,000 sq. feet to 15,000 sq. feet and will grow its Chicago workforce from 40 employees to 150 when the Board of Trade expansion is complete. BlueGrace also has an office in northwest suburban Itasca, where 60 employees are based.

The company’s prime Chicago Loop location matches perfectly with BlueGrace’s aggressive hiring approach aimed at attracting young sales professionals.

“Chicago is rich with young, college-educated talent, and it is already an elite spot for professionals with deep expertise in the logistics industry,” said Bobby Harris, CEO, BlueGrace Logistics. “We couldn’t be more pleased with our central business district location which has helped us attract candidates from a deep talent pool that is lured to the vast amenities, restaurants, and vibrant work and night life offerings in the heart of downtown,” added Harris.

BlueGrace Logistics is experiencing significant growth and greater demands for its tech-enabled third-party logistics services. BlueGrace Logistics, a six-time member of the Inc. 5000 list of fastest growing companies, anticipates 70% year-over-year revenue growth in 2018.

BlueGrace hosted a Chicago Open House at the Board of Trade to celebrate its new home in the Windy City. CEO Harris led a ribbon-cutting ceremony that included 42nd Ward Alderman Brendan Reilly and Professor Hani Mahmassani, CEO of the Northwestern University Transportation Center (NUTC). Earlier this year, Harris joined the NUTC’s Business Advisory Council.

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 providing successful shipping solutions to over 10,000 customers, 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.

Top Causes for Delivery Delays and How to Use Data to Avoid Chargebacks

The must-arrive-by-date (MABD) was introduced to the logistics world back in early 2016 when Walmart set a new bar for suppliers. The program, discussed in-depth here, mandated that any late, early or improperly packaged shipment would incur a charge of 3 percent of the value of the cargo for the supplier to pay. Following Walmart’s new policy, other big-box retailers, like Target and Home Depot, released similar rules, pushing any inconvenience or associated costs with unplanned inventory management problems back down the supply chain. While 3 percent seems like a small enough marginal penalty to justify pushing delivery-time issues to the back burner, it is not a cost that any supplier should be resigned to paying, if it can avoid it. Consistent charges can rack up quickly, into the thousands — all money that should be enhancing your company’s bottom line.

Common Causes in Delay

Due to the complex nature of the supply chain, there are many bumps along the road that cause unnecessary delays to getting your cargo where in needs to go on schedule, and often, these problems do not have easy solution

Unfortunately, getting cargo on the shelves of a retail store is not as simple as allocating extra time into your freight transportation schedule because often, delays do not happen simply due to a misjudgment of time needed. Due to the complex nature of the supply chain, there are many bumps along the road that cause unnecessary delays to getting your cargo where in needs to go on schedule, and often, these problems do not have easy solutions.

Below are some common causes for delays in ground operations:

  • Disorganized inventory: At the fulfillment level, a disorganization of inventory, or a large, difficult-to-navigate warehouse can often add unnecessary time to getting orders ready. Simple changes, like putting thought and intention into logically mapping the layout of your warehouse can make a huge overall difference in reducing the time it takes to get cargo out the door and en route to retailers.
  • Low morale: This problem could be affecting your business at any and every point. Employees that are not motivated to keep operations running quickly and smoothly can be the make-or-break for getting your cargo to retailers’ shelves on time. Consider whether or not your employees are being properly incentivized to put in the extra effort to maximize their on-the-clock time, and ask them if there are any inefficiencies at the ground-level of your company’s operations that could be improved.
  • Old fashioned systems (manual data entry): Digital systems are a necessity in the modern world of commerce. Warehouse management systems can improve the speed of warehouse activities for people to perform and reduce generated efficiencies to improve the fruits of employee labor. For example, digital systems eliminate time spent completing tedious paper forms or manually transferring data from documents into spreadsheets or data-management applications.
  • Dock waiting times: Wait times at shipper docks area long-time problem for trucking companies. In research conducted last year by industry data firm DAT Solutions, 63 percent of 257 carriers and owner-operators said they or their drivers spend over three hours at a shipper’s dock waiting to load or unload. This is the time that could be spent driving to get the cargo to its final destination that is essentially wasted due to congestion. The two most common reasons for wait times are one, shippers schedule trucks to arrive early but don’t schedule enough staff to unload them, and two, the fact that shippers have a “first come, first serve” system to unload trucks in the order they arrive, which means drivers have to wait in long lines.

BlueGrace’s Solution to the Complex Equation

With the insight that BlueGrace provided, the client was able to reduce its chargeback rates by 90 percent within the first 60 days.

In BlueGrace’s case study, “Carrier Cost Reduction for Consumer Packaged Goods,” we explore a scenario in which a client, a cosmetics supplier, faces the challenge of keeping up with rapid growth in demand, struggling to get their product to retailers Walmart and Target on time to avoid early/late fees. BlueGrace helped the client by implementing an enterprise resource planning (ERP) system, BlueShip TMS, which is an electronic data management system. ERPs promote easier access and better transparency of a company’s data so that it can be properly utilized to identify where inefficiencies lie. With the insight that BlueGrace provided, the client was able to reduce its chargeback rates by 90 percent within the first 60 days.

Supply chain management is a tricky, complex equation. In order to optimize efficiency, you need to take a well-informed approach to target your supply chain’s areas of weakness, rather than just allocating extra days in hopes that the equation will balance out. The only way to do that is by understanding your company’s data. That way, you can continue to work with clients like Walmart and Target and bring them orders on time, promoting a professional company image and avoiding extra, unnecessary fees. To learn how you can optimize your supply chain, minimize costs, and maximize your company’s bottom line, contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today!

Driving Forces for Change in the Supply Chain  

The freight industry is in the middle of a revolution. We are seeing changes take place at an unprecedented speed, and showing no signs of slowing any time soon. To track these changes and how the industry is responding to them, Forbes Insights conducted a survey of 433 senior executives in the Supply Chain, Transportation and Logistics industries. Of those polled, 65 percent of the respondents acknowledge that there is a monumental shift in operations of the corresponding industries as a whole. Of those responses, a similar number, 62 percent, responded that they are experiencing those changes within their own companies.

“We’re at a point where there’s more change taking place in this instant than what I’ve seen in 25 years on the front lines,” says the president and CEO of a major transportation and logistics provider.

These changes are coming from the massive influx of new data that is being collected and collated between the industries, extracted via telematics and the Internet of Things (IoT). Conversely, the data is being driven by massive upgrades in computing power and data storage, as well as being enhanced by Artificial Intelligence and Machine Learning, which removes the tedious and often time-consuming process of human data processing. Transportation is also seeing some considerable advancements in technology, specifically in drones, driver safety technology, driverless vehicles, and blockchain data storage.

Supply Chains that are enhanced by these technologies will be the front-runners in the global market, having a competitive advantage compared to other companies.

Supply Chains that are enhanced by these technologies will be the front-runners in the global market, having a competitive advantage compared to other companies. 58 percent of the consumer base (retailers, manufacturers, etc.) recognize the importance of supply chain, transportation, and logistics for the success of their business. “Anyone whose success depends on their ability to fulfill orders of physical goods for customers is now caught up in this whirlwind of change,” says Mary Long, managing director of the Supply Chain Management Institute at the University of San Diego School of Business.

The Driving Forces

As we mentioned above, these changes are coming faster than we’ve ever seen before. We can attribute this to four driving forces behind the changes.
 
1. Technological Advancements

Half of the respondents say that advancing technology has a strong impact on their company’s logistics, supply chain, and transportation operations. The heavy hitters for technology are IoT/telematics, AI, Machine Learning, Blockchain, Driver technologies, and Automated Delivery Machines. According to Langley, though the transport industry has always been data-focused, today “We see all of this added computing power—IoT/telematic data collection, data mining, AI and ML—that can be focused on making better decisions, not only from an overall strategic and resource planning basis but in real-time decisions: which routes, which carriers?” says C. John Langley, a clinical professor of supply chain management as well as the director of development for the Center for Supply Chain Research at Penn State’s Smeal College of Business.

Automated delivery technology such as drones and driverless trucks are still in development before we’ll see a full release, but that implementation is certainly on the horizon. In the meantime, we’re seeing advances in driver safety technology such as lane control and safety-braking. As these technologies continue to develop we’ll see a continued evolution of the freight industries.

2. The U.S. Economy is on the Rise  


According to half of the survey respondents, there is a growth in the U.S. economy which is having a strong impact on their businesses. While this might fall under the purview of disruptive, the addition of trade tariffs from the Trump administration is changing demand and long-standing transportation patterns. 44 percent of the respondents say that lower U.S. taxes and other such reforms are helping to drive demand upwards.

“This resonates with the CEO of a major trucking carrier, who says, ‘We see it daily, the economy is rolling.’ But this is both a blessing and a curse. Indeed, ‘there’s heightened demand for our services.’ At the same time, however, ‘capacity is extremely tight, so the industry doesn’t always have the trucks it needs right where and when they’re needed.’ Piling on, the industry for some time now has been experiencing a driver shortage—an issue that’s only exacerbated by a strong U.S. economy. Overall, says the CEO, “there’s more freight and more trucks than there are drivers to drive them” says the report.

Nearly half of respondents, 48%, say they are experiencing the need to reevaluate warehouse locations due to shifting trade patterns resulting from changes in the U.S. economy: taxes, tariffs and, to some degree, the return of manufacturing.

Nearly half of respondents, 48%, say they are experiencing the need to reevaluate warehouse locations due to shifting trade patterns resulting from changes in the U.S. economy: taxes, tariffs and, to some degree, the return of manufacturing. All “impact the location of hubs and warehouses,” says Langley.

3. The Amazon Effect and Changing Consumer Expectations 

 
Changing consumer expectations are having a considerable effect on the industry, heavily impacting logistics, transportation, and the supply chain. Consumers now have the expectation of finding whatever they want, whenever they want it and having the order arrive within the next two days. Even the two-day window is beginning to shrink as Amazon rolls out with next day and same day deliveries. “The effect of Amazon is heightened expectations,” says Langley. “Next week is no longer good enough. It’s got to be on its way now and arrive at the destination within a day or two!” It’s not just consumer expectations that have changed because of the Amazon effect. Truckloads also experience a considerable delay because they require more touches before their final delivery.

“Loads used to see two, three, maybe four touches before the goods were in the hands of the end consumer,” explains an earlier-mentioned CEO. But today, getting goods to consumers faster means “seven, eight or nine touches [moving] the freight to a network of warehouses and forward positions.” In short, says the executive, “that final mile is being redefined almost every day.” Interestingly, this is spurring a veritable arms race between e-retailers like Amazon, and brick and mortar retailers by rewarding innovation and pushing advance in customer service and fulfillment.

4. Tighter Regulations  

 
The final driving force for change is the higher level of regulation and control from the U.S. government. Approximately 46 percent of the respondents say that regulations continue to push changes in transportation. The Electronic Logging Device (ELD) mandate is just one example of those regulations. By forcing drivers away from paper logs, there is a tighter restriction on the amount of hours a driver can be on the road. With the ELD, drivers cannot be on the road for more than 11 hours in a 14 hour period, even if it’s not a logical stopping point. It doesn’t always make sense to stop right at 11 hours,” explains an executive interviewed for the report (but preferring anonymity). “What if the driver is on a bridge or stuck in traffic or is only a few minutes away from a proper rest stop?”

That lack of flexibility is increasing the delivery cost.

The paper logs provided drivers a larger degree of flexibility, allowing them to decide when to stop and when to operate. The ELD’s are decidedly rigid, and the clock starts rolling once the truck moves, even if it’s just to move the rig across the parking lot. That lack of flexibility is increasing the delivery cost. “For example, as reported in the Chicago Tribune: For Pete’s Fresh Market, a 12-store grocery chain in the Chicago area, truckloads of produce from Mexico have roughly doubled in cost since the new [ELD] devices were mandated—from about $2,400 for 40,000 pounds of produce to more than $5,000,” Forbes Insights adds.

Surviving the New Era of Transportation

There’s no mistaking the fact that the freight industry is undergoing a massive evolution, scarcely resembling the industry that has remained virtually unchanged for the past several decades. As time and technology advance, these changes are only going to continue at an even faster pace than they’re happening now. This rapid pace of evolution will leave those unprepared off balance and at risk of collapse. Staying ahead of these changes will be essential to survival for the new era of transportation. This is where a 3PL like BlueGrace, will be crucial to your supply chain. To speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below.

Can Your Supply Chain Weather The Storm?

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

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

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

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

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

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

Transportation Breakdown

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

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

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

Temporary Regulation Repeal Should be Permanent Says Truckers

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

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

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

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

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

Help Your Supply Chain Weather Out the Storm

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

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

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

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

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

Understanding the Capacity Effects of the ELD Mandate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Analysis with BlueGrace 

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

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

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

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

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

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

How BlueGrace Can Help

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

6 Reasons Why We Must Appreciate Truck Drivers All Year

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

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

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

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

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

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

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

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

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

Take Time to Thank The Trucker Community!

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

BlueGrace’s Backpacks Of Hope Goes National

Imagine it’s your first day of school, and you had a wonderful summer filled with family vacations and playing with friends, but you can hardly contain your excitement for the new school year. Your parents bought you new clothes for your first day, and you’re feeling your best. You walk into your classroom, hang your coat on the back of your chair, and eagerly await your new teacher’s instructions. Her first request-pull out your notebook and number 2 pencil because you’re going to work on your writing. You pull these supplies out of your new backpack your mom bought you and quickly begin your assignment with the rest of your classmates.

Now, imagine your first day going slightly differently.

You’ve dreaded this day for weeks because you knew your parents couldn’t afford the supplies on the list your teacher provided at the open house. You arrive to school with only the clothes on your back and last year’s shoes that are slightly too small because you had another growth spurt this summer. You walk into your classroom and choose a seat in the back. You can feel the dread climbing from your stomach up to your throat. You’ll have to borrow some supplies from another child in your class as you did last year and are sure you will have to next year. A classmate sits down next to you, and you can see their excitement as they pull their notebooks and pencil out of their brand-new backpack. You lean over and whisper your request to borrow some paper and an extra pencil. You’re embarrassed, but it’s better than telling the teacher you don’t have the materials you need.

As of 2017, the cost of back-to-school supplies was equal to the average mortgage.

The second scenario happens more often than most realize, and it happens in our own communities. Millions of children here in the U.S. live in homes that can’t provide the school supplies needed, and each year the cost of these supplies increases. As of 2017, the cost of back-to-school supplies was equal to the average mortgage. With these costs continuing to rise, more children are sent to school without the materials needed to be successful each year.

Backpacks Of Hope Goes National

BlueGrace Logistics partners with local organizations each year to help the children of their communities with their “Backpacks of Hope” drive. The drive divides each office into teams who then compete to collect the most supplies. The winning team wins bragging rights or a fun prize of no monetary value, but the competition as well as desire to help those in need truly push the drive to success each year. BlueGrace’s headquarters in Tampa, FL has partnered with Metropolitan Ministries for many years, and as the company has grown and added regional offices throughout the country, these offices have found local organizations and schools to partner with as well. “This takes our ‘Giving Grace’ program to a national level and increases the impact exponentially,” Courtney Smith, Manager, Culture & Engagement explains.

BlueGrace Chicago

BlueGrace Chicago partnered with Chicago’s Children Advocacy Center for the second year in a row. The office’s two teams were able to collect donations through traditional fundraising. Robert Rogalski, a sales associate in the Chicago office, reached out to friends and family through social media and was able to raise almost 50% of his team’s funds. At the end of the 5 week drive, the office was able to collect 980 supplies for the CAC.

BlueGrace Richmond

BlueGrace Richmond partnered with their local Goodwill® to collect supplies this year. Sticking with BlueGrace Chicago’s tactic, employees collected supplies and donations individually and brought them into the office. Together they were able to collect 312 supplies for the children in their community.

With the consequences of losing looming over them, both teams put in a huge effort to raise money and supplies, and it paid off.

BlueGrace Los Angeles

BlueGrace Los Angeles truly tapped into everyone’s competitive nature and upped the stakes for their drive. Two teams competed, and the losing team agreed to line up for a nerf gun firing squad. With the consequences of losing looming over them, both teams put in a huge effort to raise money and supplies, and it paid off. The office was able to collect 2,028 supplies to donate to La Mesa Junior High School in Santa Clarita, California. “It is incredible the impact that these donations make,” Chris Kupillas, Regional Vice President for the Los Angeles office stated.

These fundraisers along with individual donations, made it possible for the office to donate 12,061 supplies, crushing their goal of 10,000 supplies and surpassing the donation count from 2017 of 7,757 supplies.

BlueGrace Tampa

BlueGrace Tampa, the company’s headquarters and largest office, relied on contests and raffles to raise money for supplies to donate to Metropolitan Ministries. This included some usual employee favorites like a 50/50 raffle and a dunk tank contest, but Michael Brown, Senior Manager Carrier Sales, shocked everyone when he donated a week of his vacation time to be raffled off. This was a first for BlueGrace’s drives, and it went better than anyone could have expected. With the raffle open to the entire company, donations came rolling in from all over the country for the chance to win the vacation time. It quickly became the largest individual, in-office fundraiser BlueGrace has seen in many years. “Thanks to the giving spirit and core value driven mentality of our employees, these drives continue to become more successful.” said Ken Galyon, Senior Specialist Risk Management and Backpacks of Hope captain in Tampa. These fundraisers along with individual donations, made it possible for the office to donate 12,061 supplies, crushing their goal of 10,000 supplies and surpassing the donation count from 2017 of 7,757 supplies.

Not only was BlueGrace Tampa able to surpass their goal, but the entire organization exceeded their goal of 15,000 supplies with 15,381.

Not only was BlueGrace Tampa able to surpass their goal, but the entire organization exceeded their goal of 15,000 supplies with 15,381. “While it’s amazing to see what one office can do, it’s even more astounding to see what an entire company can do across the country,” Halley Shapero, Senior Enterprise Development Representative and Backpacks of Hope Captain reflects. After all of the contests, raffles, and collaborative efforts, BlueGrace was able to provide over 1,150 children with filled backpacks and supplies, and that’s what it’s all about.

Customs Changes from Trade Tariffs

Trump’s trade talks have created a nervous atmosphere for manufacturers, suppliers, and freight companies. Unsure as to whether there will be an all-out trade war between the United States and China (not to mention other trade squabbles with long-standing trade partners such as Canada and Mexico) many in the industry are wringing their hands and wondering what’s going to happen next. Given the fact that these new tariffs could have a tremendous impact on the global supply chain, we could see a dramatic shift in business and growth in the next few years. 

With tariffs on the horizon, importers and shippers will need to increase the level of their continuous bond

One of the upcoming changes that will affect U.S. based importers is a change the importers probably aren’t even aware of. With tariffs on the horizon, importers and shippers will need to increase the level of their continuous bond. A continuous bond is set at a defined percentage (a minimum of 10 percent) of all duties, taxes, and fees that an importer is expected to pay over a 12 month period, and is required for all companies importing goods into the United States. If an importer is expecting to pay $1 million in duties, taxes, and fees over the span of a year, that importer would need to have a continuous bond of $100,000 in place to avoid detention and demurrage of freight. While the bond will self-renew so long as payment is received, failing to maintain a sufficient bond, less than the prerequisite 10 percent, can hinder an importers’ ability to retrieve their cargo from U.S. ports. This can also result in demurrage charges and fees as U.S. Customs and Border Protection (CBP) has the ability to redirect shipments that lack the sufficient bond to hold them.  

Increased Enforcement from the CBP 

Insufficient bonds can be rendered inactive by the CBP, requiring importers to apply for single transaction bonds which are more considerably more expensive as they take in the total cost of value of the shipment in addition to the duties, taxes, and fees. These are more designed for infrequent importers as they can be ruinously more expensive than a continuous bond. There is already evidence that the CBP is stepping up the watch for importers with insufficient bond levels for their shipments, having tripled the amount of notices sent out to importers during the course of June and July.  

This will likely create a hardship for small and mid-sized importers as many companies are having to reassess their exposure to duties.

Colleen Clarke, VP of Roanoke Insurance Group, which provides transportation-related surety bonds and insurance for the international trade community, also currently serves as president of the International Trade Surety Association, said that in July CBP sent 183 letters to importers notifying them they had insufficient continuous bonds, a sign that enforcement of the bond levels is rising. In the months prior, that number had been around 50 to 60, she said. “It is trending up, and certainly in the next few months it will trend higher,” Clarke said. This is especially true when considering the pending tariffs that are due to be assessed on almost $200 billion on imports from China as the next round of the Section 301 tariffs. This will likely create a hardship for small and mid-sized importers as many companies are having to reassess their exposure to duties. In many cases, an importer is having to increase their bond level by 20 to 100 times what it currently is in order to stay compliant with the CBP.  

Importers Need to be Mindful of Bond Levels 

From an assessment earlier this year, Sections 232 and 301 tariffs that apply to steel and aluminum respectively, will also apply to certain imports from China and increase the amount of duties payable. This can have a rather profound impact on importers in a myriad of ways. “On the steel tariff, we had one bond that went from $200,000 to $5 million,” Clarke says. “Another steel importer had a $200,000 bond and we have estimated they’ll now need an $11 million bond.” Higher bonds inevitably mean higher continuous bond premiums, which is a straight cost increase for importers. 

Harder Times for Smaller Companies 

The more serious consequence is that importers will need some type of collateral to stake against the bond, usually in the form of a letter of credit, when the total bond amount increases as substantially as it’s going to. Pulling a larger letter of credit can greatly cut into the finances of small and mid-sized importers. But potentially more impactful is that importers often need to provide some collateral — generally a letter of credit — when the bond amount increases so substantially. That increased bank exposure can significantly hamper the finances of a small-to-mid-sized importer. “It’s not just the bond premium, which is nominal in relation to the bond amount, it’s the underwriting and potential collateral requirements,” Clarke said. “It takes away from their available line of credit with their banks, and that might inhibit their ability to grow. That could happen.” 

Premium increases aren’t necessarily based on the increased bond requirements.

Fortunately, premium increases aren’t necessarily based on the increased bond requirements. If a bond requirement increases 20-fold, that doesn’t necessarily mean that premiums will be 20 times higher. The premium rate can fluctuate, sometimes going lower, and sometimes higher, it’s all dependent on the surety, the one honoring the bond, and the surety’s assessment of an importer’s ability to pay. That ultimately goes back to whether or not the importer has a strong enough balance sheet or the cash on hand to back an increased bond.  

Importers are Generally Unprepared or Simply Unaware

Another issue to consider is that there are many companies that trade with countries like Canada and Mexico, where there is an existing free trade agreement. In these situations, companies are maintaining the absolute minimum required a continuous bond level, $50,000. Even for companies that have their imports labeled as duty, tax, and fee free are still subject to the $50,000 minimum bond issued by the CBP.  

Where this gets more complicated is that many of these importers have been operating on the minimum bond and without duties, taxes, and customs fees are now staring down the barrel of multimillion-dollar bonds that will have to be calculated at higher duty rates every time a new tariff is added to the list. Given that the Trump administration is also putting Canada and Mexico in the mix to be tariffed, this will create considerably more expenses for these importers.  

Customs Brokers Have a Part to Play 

Customs brokers will be playing a key role during these uncertain times. As sureties are more likely to work with a broker, rather than directly with the importer, it will be the broker who alerts their clients about the potential for an insufficient bond. Proactive sureties and brokers do this preemptively, especially as many importers aren’t necessarily mindful about maintaining bonds themselves. There are other issues in which a broker will be a boon to importers. Bond requirements will start to stack for importers that bring in goods that are affected by anti-dumping or similar duty fees. These particular cases can take over a year to decide which means that multiple bonds can accumulate during this time which ties up importers assets and puts them at a great risk until the cases are settled.  

 The bond issue is undoubtedly going to get worse before it gets better.

The bond issue is undoubtedly going to get worse before it gets better, especially in the coming months as importers will have to determine whether or not the additional $200 billion round of tariffs on Chinese manufactured goods will affect their business. This is in addition to the $16 billion worth of Chinese goods that are already under tariff enforcement.  

All Hands on Deck

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

What Can Shippers Do To Stay Competitive?

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

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

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

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

How are shippers being affected? 

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

What is causing the shortage? 

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

Electronic logging devices 

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

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

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

Public perception & lifestyle 

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

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

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

What can shippers do to stay competitive? 

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

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

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

Stepping Towards a Digital Supply Chain

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

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

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

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

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

Understanding the Digital Vision 

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

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

Align the Supply Chain to Match the Vision 

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

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

Prioritizing Technology Investments  

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

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

Simplify Your Supply Chain

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

Growing A Green Supply Chain

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

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

The Lesser of Two Evils 

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

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

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

A Matter of Cost 

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

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

Three Big Reasons to Go Green 

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

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

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

It’s Not Easy Being Green  

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

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

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

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

Hunger Pains from Trucker Shortage

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

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

Shortage By the Numbers 

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

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

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

Shortage Hits the Shelves

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

The industry is struggling to get good, qualified drivers.

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

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

Added Complications  

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

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

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

How Can Your Business Adapt? 

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

Landed Cost & Vendor Compliance

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

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

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

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

How businesses normally measure cost

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

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

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

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

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

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

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

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

Measuring performance

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

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

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

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

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

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

Chilled Supply Chains

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

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

Here are some interesting cold storage stats provided by Quartz 

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

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

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

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

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

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

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

A Brief History of Cold Supply Chains 

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

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

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

How a Cold Chain Works 

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

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

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

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

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

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

How Can I Simplify My Freight Needs? 

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

Tight Capacity Ahead

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

Reinvesting in the Fleet Can Have Downsides 

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

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

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

Raising the Pay Grade 

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

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

A Continuing Problem  

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

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

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

Strengthen Your Supply Chain

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

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