Browse Tag

3pl

Transporting Perishable Goods? Some Important Factors to Consider.

Transporting perishable goods and fresh produce is fraught with higher risks than regular dry cargo. There’s a risk of spoilage and loss of freshness and quality.

Perishable goods need a specialized mode of transportation, refrigerated trailers, or reefers. It enables the movement of goods like fruits, vegetables, seafood, some medicine and other pharma products, dairy and bakery products, meat, and flowers and plants. Refrigerated trucking helps connect farmers, bakers, meat production plants, pharma companies with markets and ensures end customers even at remote locations get fresh and quality products.

While reefers are in use all year round, its demand increases during the fresh produce season.

While reefers are in use all year round, its demand increases during the fresh produce season. Given that the season is now in full swing, let’s take a look at what factors should be considered by both shippers and transporters while transporting fresh produce and perishable goods.

What important factors should shippers keep in mind while transporting fresh produce?

Each fresh produce or perishable product has a specific shipping requirement, like the mode of transportation to be used, type of container, temperature settings, and the transit time it can tolerate.

If even one of the transport requirements of perishables is not met, the goods can become unfit for consumption

If even one of the transport requirements of perishables is not met, the goods can become unfit for consumption or further processing. To ensure that this does not happen, here are a few points that shippers must keep in mind while transporting their fresh produce:

Complete Product Knowledge: This is non-negotiable. For safe and smooth transport of their perishable products or fresh produce, it is necessary for shippers to have complete knowledge about their product. Some important things that shippers and their teams should know about the fresh/perishable product they deal in are:

  • Packaging requirements of the product.
  • The best method and transport mode to ship it.
  • What is the coolant required for it – gel packs, dry ice, dry ice pellets?
  • The temperature needs of the product while in transit.
  • How long it remains fresh and fit for consumption.
  • Tolerable transit time for the product.
  • The documents/formalities required in both the importing and exporting state/country.

Conduct a Market Study: It’s important to find the right market for fresh produce, especially for those products that spoil easily.  It’s financially beneficial for the shipper if this product reaches the market quickly and in good condition. It’s also beneficial for the buyers as they get better quality and fresh products. So before you decide on a specific market, conduct a study to find out:

  1. Where all your product is in demand
  2. The rate at which you can sell the product there
  3. The transit time is taken to reach the destination
  4. Any specific customs formalities/documents required by the importing state for this product

Once you have this information ready, you can pick the best possible combination of market, rate, and transport requirements.

Choose the Right Transporter: If fresh produce is not managed correctly during transit, the quality and shelf life can be negatively affected. Thus, the choice of the transporter can make a huge difference in how your product is shipped. So, when you’re searching for a transporter, you must check the following:

  1. The track record of the transporter in trucking perishable goods.
  2. Do they have the requisite experience?
  3. Do they have the required vehicles and containers?
  4. Is the equipment well-maintained, cleaned, and serviced regularly?
  5. Are the drivers trained to manage the special equipment and carry perishable or fresh produce?
  6. Do they have tie-ups with service centers en route, in case the equipment or vehicle needs emergency servicing?
  7. Can they replace the container or the carrier in case of a breakdown?
  8. What is the transit time being offered?

In case you need multimodal transportation to ship your cargo, carry out this exercise for all the transporters in the chain.

Provide Clear Instructions: Once you’ve selected the transporter(s), it is important to communicate instructions specific to your product clearly to them. Make sure they know how the product is to be handled, the temperature to be maintained throughout the transit, and if it is an LTL shipment, then which products/goods can it not be carried with or kept close to. In the case of multimodal transportation, provide a set of instructions to each transporter and make sure each transporter knows who to hand over the cargo and onward shipping instructions to.

Communication with the Buyer: It’s often observed that while the goods reach the destination safely, they get spoiled at the buyer’s facility for lack of proper instructions on how to manage/store the goods. Hence, it is necessary to make sure that proper instructions have also been communicated to the buyer.

Get Adequate Insurance Coverage: Transporting perishables and fresh produce is expensive. There is also a risk of spoilage on the way. This is why insurance is critical in such cases. So before you put your cargo in transit, make sure you have the right insurance coverage for the cargo. This will ensure that you have financial support in case the cargo does not reach the destination in the best condition.

What Important Factors Should the Transporters Keep in Mind When Transporting Fresh Produce?

The transporter is responsible for the fresh produce while the goods are in transit. Hence, it is necessary for transporters to also have a checklist for perishable goods and fresh produce. Here are some important points that they should keep in mind when accepting fresh produce goods for transportation:

  1. Communicate Clearly with the Shipper: Transporting perishable goods is a serious business. Make sure you share the correct information regarding transit time, the route to be taken, contingency plans, documentation requirements, and payment terms with the shipper at the time of inquiry. This not only helps the shipper make an informed decision but also makes your business look professional and trustworthy. And, it’s great for building long term business relationships in the industry.
  2. Get All Required Details from the Shipper: The transporter should double-check if the shipper has supplied all the required information or not. In case any crucial detail regarding the product is missing, he should proactively ask for it from the shipper.
  3. Discuss Packaging Requirements: Check with the shipper how the goods will be packed and labeled. In case there are any specific requirements for packaging and labeling at your end, communicate the same to the shipper. It is important to get the packaging and labeling right in case of perishable goods as they need to be handled with care and can spoil easily.
  4. Understand Handling and Temperature Instructions: For perishable goods, the transporter needs to understand how the goods are to be handled and what temperature is to be maintained while the goods are in transit. Also, check if there are any specific guidelines on how the temperature is to be managed while the cargo is being loaded/unloaded.
  5. Assist the Shipper with Documentation: Fresh produce and perishable goods often have more documentation needs than regular cargo. Sometimes shippers, especially those new to the trade, are not aware of the cross-border documentation. In such cases, it becomes the transporter’s duty to make sure the shipper completes all documentation requirements in the right format. This not only helps complete the shipment formalities but also helps the trucker while crossing the state borders.
  6. Service the Refeers Before Allotting: The transporter should make sure the reefer is properly serviced, cleaned, and checked before it is allotted to the shipper. He should also check if the temperature required for the fresh produce being transferred can be maintained in the reefer throughout the transit.
  7. Train Your Drivers to Handle Perishable Goods: For transporting perishable cargo safely, it is essential to have experienced and trained drivers on board. The driver should understand the handling instructions of the fresh produce and be able to manage temperature settings of the reefer container.
  8. Update the Shipper Timely: Share regular status updates with the shipper while the goods are in transit. In case there are any issues with the container or temperature monitor, inform the shipper immediately, and seek alternative solutions.
  9. Deliver On-Time: It’s a good practice for logistics and trucking service providers to deliver goods on time. In the case of perishable goods and fresh produce, on-time delivery is crucial as even a slight delay in transit can affect the quality of goods, spoil them or make them unfit for consumption. Hence, it is necessary to make sure that the entire team handling the cargo understands the importance of on-time delivery!

If you’re looking for a reliable partner to transport your fresh produce and perishable goods, get in touch with our team today! We not only take responsibility for delivering your goods on time but also ensure that you get access to an online platform powered with advanced technology to plan and monitor your shipments more effectively!

Is Your Supply Chain Ready For Weather Disruptions?

To a large extent, Supply Chain and uncertainty go hand in hand. Driver delays, transportation failure, strikes, hike in fuel prices, carrier capacity shortage, vendor hold-ups, thefts, and fires at warehouses are all common issues in the supply chain ecosystem. Most supply chain leaders are not only aware of them but also have alternate plans or solutions ready to tackle these issues as and when they arise.

However as supply chains become increasingly global in nature, businesses not only have to contend with minor uncertainties but also have to manage larger global disruptions that may threaten their very existence. These disruptions are like black swan events which no one can forecast or plan for in advance. They arrive on the horizon suddenly and upset the status quo, often requiring a rearrangement of how the business functions and manages its supply chain in the future.

What Global Disruptions does the Supply Chain need to be aware of?

Globalization has added a layer of complexity to business operations. Now businesses have to keep an eye on what’s happening around the world and be able to identify possible threats to their business in all the countries that they operate in or source raw materials from.

Natural Disasters:

Natural disasters are the most common global disruptors. Wildfires, earthquakes, hurricanes, storms, and floods can interrupt regular operations for a long time in the country that they happen in. It can take years to rebuild factories and get them operating at optimum capacity. For example, according to reports, the 2011 earthquake and Tsunami in Japan had caused grave damage to infrastructure and manufacturing facilities in the country. Given the wide scope of Japanese companies’ operations, the impact of the earthquake and Tsunami was felt by their business partners around the world.

Political and Trade Relations:

Cordial political and trade relations amongst the governments of the originating country and the nations that the organization wants to do business are a must for smooth operations. If there’s any change in the relationship either political or trade, it can become difficult for the business to carry out its business activities without disruptions. A recent case in point is the ongoing trade war between China and the US. This has not only soured relations between the two nations but has also created a tumultuous situation for other nations involved in international trade with the two countries.

Similarly, an unfavorable change in foreign trade policies – without the threat of a trade war – due to political fallout or change in the growth strategy can make it hard for foreign businesses to sustain long term in the country.

Economic Factors:

Another factor that can derail supply chains across the globe is an economic recession. If any of the major economies of the world like the US, China, Germany, India, France, and the UK experience an economic downturn it is bound to impact the nations that it does business with. A major economic failure can also lead to a global recession like the 2008 global recession which led to many businesses closing shop or limiting their reach to certain geographies only.

Cyber Threats:

Since digitalization and technology have become an integral part of the supply chain, another threat that can cause great damage to not only the business but also customers are cyber attacks. These attacks on technology and systems can impact a business’s reliability, trustworthiness, and endanger the trade and even personal data.

Unlike the regular supply chain disturbances, these threats are unforeseeable and due to their unpredictable nature, not easily manageable. Each event – even if it is of the same kind – requires a specialized and unique response.

The better prepared a supply chain is to respond to a sudden event, the more likelihood of it overcoming the challenge and sustaining its operations. Hence, now more than ever it has become critical for supply chains across the globe to assess themselves against invisible threats and prepare to deal with black swan events as and when they occur.

What can you do to make your supply chain ready to weather disruptions?

While there is no fixed roadmap on how to deal with these kinds of threats, there are a few steps that businesses can take to safeguard their interests and bounce back with minimum possible damage.

  1. Imagine the unimaginable: Organizations now need to think ahead and plan for events that may or may not happen. It is critical to simulate scenarios that can disrupt your business and find solutions to overcome them before these scenarios play out in the real world. Create a contingency plan for what-ifs: for example – what would you do if an earthquake struck your manufacturing facility or if one of your vendors had to temporarily close down business because his unit was in the eye of the storm? Do you have an alternative option? If not, then that’s where you start your planning.
  1. Find substitute suppliers: We have often highlighted the importance of having multiple trusted vendors on board. There’s no better time than now to reiterate this point. Find vendors in different regions when the business and the world is functioning in normal conditions. Try out a few transactions with them and work on building a relationship with them. Access to vendors in different regions can help keep the business running  even if there’s some disturbance in one region or country. This will enable you to keep your supply chain functioning.
  1. Build alternative service providers and business partners: It’s not just the suppliers that you need to keep your supply chain up and running. Along with a roaster of trusted suppliers you also need to build a repository of other service providers and business partners such as transporters, shipping lines, warehousing facilities in all the regions where your business operates. This is critical because if you have to shift your business from one sector to another due to some contingency, you will know who to hire and partner with.
  1. Identify the pain points of your supply chain: No business or supply chain is perfect. Some have a strong inventory management system but a poor relation with transporters. Others have a rigorous forecasting procedure in place but struggle with people management or may have customer issues. Any of these weak points have the capability to be further aggravated during an emergency. Hence, it is critical to know the pain points of your supply chain and work on finding viable solutions.
  1. Make data security a priority: In the current scenario where technology is a part of every function and system within an organization, data security has become critical. It’s not just your business data that is at risk, but also the information that your customers and vendors share while doing business with you that is in danger. Even a small breach of data can put your and your customers or business partners at risk. So make technology and systems audit an integral part of your organization.
  1. Learn from past disruptions: Maybe the earthquake in Japan did not impact your business or the hurricane Katrina did not affect your region, but it did cause damage to other businesses and regions. Observe what they did to get their business and supply chain up and running. Find out what were the difficulties they faced, learn from them, and find solutions for such situations that are viable for your business.
  1. Analyze, Analyse, and Analyse: We can’t emphasize the importance of carrying on an ongoing analysis of your supply chain. This is the only way where you can not only find out the risk to your business, but also identify threats and challenges, and work on solutions to mitigate them before they become unmanageable.

Will the analysis help in mitigating risks from black swan events? If you keep these threats in mind while conducting analysis, then it will help build awareness among your team and urge them to work on finding viable solutions.

If you need any assistance in starting your supply chain analysis journey, then get in touch with our team of experts today!

Truckload Freight Contracts: Understanding Contract & Spot Rates

Throughout 2020, truckload carriers felt the burn of the China-U.S. trade war, declining capacity, and low spot rates. In general, markets with lower spot rates are more beneficial to shippers, keeping carrier profitability in check. The opposite applies when contract rates are lower, allowing carriers to retake control and reap greater profits. In addition, the risk for a resurgence of higher spot rates and renewing interest in truckload freight contracts is an area, shippers should understand and keep their eye on in 2020. According to William B. Cassidy of JOC.com, he describes this chance:

“After six consecutive quarters of deflation, the market is rebounding, heading back towards an inflationary environment, the spot market will reach an inflationary environment by Q1 2020.”

To combat that prediction and also consider the influence of the coronavirus, shippers need to understand the driving forces of change in the truckload market, what is already happening with the coronavirus, and a few tips to better underscore and improve use of both truckload freight contracts and spot rate shipping. 

Driving Forces of Change in Contract and Spot Rate Markets

The biggest driving force of change in the market involves available capacity and its influence on capacity. As explained by Cassidy:

“DAT noted that freight demand, in terms of total spot and contract volumes, has been increasing, with spot volumes rising 7 percent in 2019 year over year and contract volumes 4 percent. The American Trucking Associations (ATA) predicts a 1 percent increase in contract truckload volumes for 2019, down from annualized growth of 3.2 percent in 2018 and 3 percent in 2017.”

How much capacity must exit the market before supply and demand move back to a closer alignment? Some experts believe truckload capacity and freight demand already are closer to equilibrium than they’ve been since 2017 and that a surge in demand could tip the balance. Others think trucking’s supply-demand gap will take more time to close.”

Unfortunately, that prediction and driving force now hangs in the balance with a likely swing away from the prediction. That’s right. Capacity is rapidly increasing overseas, and it will likely lead to changes in the U.S. truckload freight contracts’ market.

The State of Truckload Freight Contracts Will Retract Due to the Coronavirus

Capacity is dependent on the demand in the volume of imported raw materials, finished products, and other supplies from around the world. Many electronics, automotive, and medications and medical equipment arrive in the U.S. from China. In addition, the flow of exports from the U.S. to the APAC region, including the iPhone and agricultural products, are at risk. There is a near-stop to the flow of freight in the region due to the coronavirus. So, what happens in other areas abroad and in the U.S.?

The freight that would have filled trailers and help carriers push spot rates upward vanishes. Now, carriers have too much capacity, too many drivers, and too few lanes to travel that make a profit. As a result, the spot rate market is on the verge of bottoming out, and shippers will benefit to an extent. The real problems for shippers will not become evident until their favored carriers start to close lanes and begin to exhibit signs carriers are looking to gain profitability when more reweighs and reclasses occur or accessorial fees tick up. At this point, shippers will face the uncertainty of limited carrier availability, if any, and an inability to move freight to their customers as cost-effectively.

The only way to maintain operations lies in creating a balance between the use of contract and spot rates to get the best deal to benefit everyone.

The only way to maintain operations lies in creating a balance between the use of contract and spot rates to get the best deal to benefit everyone. As carrier operations begin to suffer the effects of continued drops in the spot rate market, it will be time for shippers to start looking for more carriers and fulfillment options to fill the void.  

How to Better Understand Contract and Spot Rates

Shippers that wish to create a successful balance between the use of spot rate and truckload freight contracts need to follow these steps:

  1. Connect your supply chain assets to a centralized supply chain control tower. 
  2. Leverage the full scale and scope of the BlueGrace TMS. 
  3. Take advantage of managed services, including invoice auditing and accounting services.
  4. Rate shipments across all modes and potential trade lanes to determine the best-case, not the cheapest, shipping option. 
  5. Always consider the “other” factors in tendering freight, including claims’ insurance and management needs.
  6. Diversify your carrier network to include the small and local carriers that have expertise in both truckload and last-mile delivery.
  7. Extend your TMS and order fulfillment systems across your whole supply chain, including brick-and-mortar stores.
  8. Remember to integrate new systems with existing platforms to enable omnichannel capabilities and take advantage of all available inventory. 

Gain Better OTR Rating With an Advanced, Customizable TMS at BlueGrace

The freight rate market is continuously changing to reflect the risks and opportunities in the market. As the year rolls on, shippers need to take the steps necessary to shore up their operations against the industry’s top risks, including market volatility and the coronavirus. Moreover, applying the functions and wide-ranging benefits of a dedicated TMS and 3PL’s lineup of managed services will provide a protective barrier against risk and help your organization succeed. Find out how more information and visibility can improve your use of spot rates and truckload freight contracts by calling BlueGrace at 1.800.MY.SHIPPING or filling out the contact form below. 

Outside-In: The Future of Supply Chain Planning

Supply chains are evolving fast. To keep up with the fast pace of supply chain evolution it is important for supply chain planners to upgrade their skills and step up their business planning and forecasting techniques. If the planners lag behind, it will have an adverse impact on not only the supply chain but also on the organization as a whole. 

The Gartner Supply Chain Planning Summit held in Denver, USA, in November 2019, emphasized this very aspect. According to Marko Pukkila, Vice President and Team Manager, Gartner, who shared his views during the summit:

“The job description of SCP leaders today looks totally different than 10 years ago. It’s no longer enough to provide copious amounts of data — planners must use the data to draw conclusions about future risks and opportunities. It’s all about supporting business objectives. Gartner calls this an outside-in mindset.”

What is the Outside-in Mindset? 

As Gartner defines it, the outside-in mindset is about being

aware of what is happening around you — be it a business objective or an upcoming recession — and use the capabilities of the planning function proactively to set up internal processes that are optimized for whatever will happen in the future.”

In simple terms, the outside-in mindset is about understanding external factors and the impact they will have on the business objectives. It is about creating a system that can not only take into consideration the impact of these outside forces but can also respond quickly to the ever-changing global economic-social-political environment. It is about creating a planning process that is agile and flexible enough to integrate future events. 

What are some situations where the outside-in approach would help? 

Let’s take the US-China trade war situation. This scenario has been in existence since 2018. It has impacted the trade relations between the two nations. Needless to say, it has had an impact on the supply chains of the organizations of the two countries. For example, Chinese organizations that were exporting to the US may have seen a decline in the orders due to tariffs or the US organizations would have had to reduce quantities of goods imported from their Chinese counterparts. In this situation, the US companies would have to find another source (country) to fulfill their requirements and the Chinese would have to find alternative buyers for their finished goods. 

While the trade war is an anomaly, as a concept is not unheard of. In this situation, organizations that may have researched and identified alternative buyers or sellers ready to do business with them in case of a change in the trade relationship between their countries would have suffered less of a set back as compared to those who may have neglected to take this factor into consideration.

A current situation that is creating havoc on supply chains is the Coronavirus virus outbreak. An article published on February 14, 2020, in The Wall Street Journal which quotes Lars Jensen, head of Denmark-based maritime research group Sea-Intelligence, saying:

“Substantially less cargo is being moved between China and the rest of the world.  Last week we had an additional 30 sailings canceled, with 23 across the Pacific and the rest to Europe.” The article further states that “Mr. Jensen said the canceled trips, which have topped 50 since late January, will delay or reduce shipments into the U.S., where retailers may see a slowdown in their traditional restocking of inventories for the spring.”

Another article titled The new coronavirus could have a lasting impact on global supply chains published in The Economist shares the example of Apple supply chain which manufactures a bulk of its iPhones in China, being impacted by the virus outbreak.

According to the article, “Analysts reckon that the virus could lead to Apple shipping 5-10% fewer iPhones this quarter and could scupper its plans to ramp up production of its popular AirPods.”

These are just two instances that are coincidently related to one of the major economies of Asia and will have an impact on US businesses. But there are many other situations that may not have a far-reaching, global effect but can disrupt the supply chain at a local level. For example, labor strikes can impact day-to-day operations and create a backlog in the supply chain. Supply chain planners need to factor in local incidents as well while making supply chain plans. 

The Gartner outside-in approach suggests that it is important for supply chain planners to be able to read the data and information available to them and identify possible outliers – roadblocks, challenges, and opportunities, in the future. They should then incorporate solutions or plans to be able to navigate their supply chain should those outliers become a reality in the future. 

How to incorporate the outside-in approach in supply chain planning? 

To incorporate the outside-in approach in supply chain planning, Gartner advises a 3-step process: 

1. Realize that the time to transform is now: Citing the 2008 – 2010 economic recession, Gartner says that organizations that were ready with planning processes in place that provided forward-looking insights fared better during and post the recession than those who tried to streamline their supply chain after the recession hit. To put it simply, there’s no time like the present to streamline the supply chain with the evolving global business, economic, political and social scenario. While the change may seem to be in the distant future, it is wiser to prepare the supply chain for it today. 

2. Refocus the planning team to business outcomes: Organizations need to understand that supply chain planning and business planning are not independent of each other. Explaining this point, Gartner says: “It’s no longer enough to just provide a forecast — planners must use the forecast to find pathways that guide the business to where it wants to go. Think of an advanced navigation system that doesn’t only plot the best route, but also foresees roadblocks and traffic jams and navigates around them.” Further adding, that the planners need to be able to convince the other stakeholders why this plan is good for the business and how it will help them succeed. 

3. Become the orchestrator of success: The supply chain planners need to take the lead on creating cohesion between the different departments of the organization and their business plans. Explaining the point, Marko Pukkila, Vice President and Team Manager, Gartner, says: “The whole is more than the sum of its parts when all parts of the business go into the same direction. This is what planning should accomplish”

Today supply chain planners have data available to them from every touchpoint of their business. This data, if used effectively can form a strong foundation for supply chain plans. But data is just the starting point. As the Gartner three-step process suggests, supply chain planners should use this data in a constructive manner to create actionable insights, solutions, and bring all the stakeholders on board to follow through the plan. 

We know implementing an outside-in approach in supply chain planning is easier said than done. That is why our team of experts not only helps you analyze your supply chain with the help of advanced technology but also guides you in finding effective and efficient solutions to address the issues in your supply chain. Get in touch with our team to know more! 

Diversification Is The Lifeblood Of Your Supply Chain

In the current economic scenario where businesses are shutting shops with alarming regularity, it has become necessary for organizations to diversify their supply chain. Given the importance of the subject, we hosted a webinar on the topic – From Chips to Dips in Service? Supply Chain Impact of Diversifying Chris Kupillas, VP Sales, at BlueGrace Logistics discussed the topic. They talked about why it was crucial for businesses to bring in variety in their supply chain, what factors were needed to be considered and the challenges that businesses might face in the process. 

Below, taking reference from the article, we discuss why this is good for the business and how it can benefit them and other stakeholders in the ecosystem. 

How does a diversified supply chain help the business? 


Source: BlueGrace Logistics Webinar: From Chips to Dips in Service? Supply Chain Impact of Diversifying.

As the quote from Greg Foran suggests, diversifying the supply chain helps businesses stay relevant. There are multiple ways in which businesses can do this. They can offer variants in their current product offering, introduce new products, introduce the business to different regions within their country or go global.    

Variants and new products will allow businesses to retain customers by enabling them to cater to their ever-changing needs and demands. And entering new regions or countries will widen their customer base. A business with more products and/or serving multiple regions or countries tends to have a better chance at survival in times of economic recessions or downturns or political strife. 

Is diversification only for the demand side of the supply chain? 

No. For a business to be prepared for different cycles of the market, it is also important to introduce options on the supply side of the business. This means identifying new sources for raw materials, spare parts, and alternative manufacturers where they can outsource the manufacturing of their products if required. They also need to identify service providers like transporters, warehouse operators and 3PL service providers who can work with them when needed. Having these alternatives on standby or in a working relationship will ensure that in the event the regular service provider cannot fulfill the business requirement, the business will not suffer. 

Diversification is great for other stakeholders in the ecosystem 

A manufacturer is just one of the beneficiaries of a diversified supply chain. Other stakeholders in the business ecosystem also benefit from it. For example wholesalers, retailers, e-commerce websites, also benefit in the form of more saleable goods to offer their customers. For them, the wider the range of products, the higher the probability of making a sale. This means more business for them which ultimately generates more business for the manufacturer. 

Similarly, it provides transporters and other logistical service providers with more business and regular work opportunities. Take, for example, a small transporter who is working with a company that produces only seasonal goods – let’s say woolen garments. The transporter will only get work from this organization until the woolen garments season lasts. After that, it may have to search for another client until the season rolls back again. Now, if the same company started to also produce summer wear, the transporter will not have to engage another client if it doesn’t need to. It will have year-round work from one source. 

That’s not all. Diversification also empowers customers. It gives them multiple options to choose from. Since diversification also creates competition, it provides customers not only with quality options but also competitively priced products, making sure businesses work on creating better products within a set budget. 

What are the benefits of diversification for the supply chain? 

Now that we know why diversification is crucial for businesses, let’s look at why it is the lifeblood of it benefits the supply chain of your business. 

  1. Risk mitigation: As mentioned earlier, a diverse supply chain helps businesses sustain in less-than-ideal circumstances. It provides alternatives to continue the business even if the demand for a product goes down, or a supplier discontinues service or there is a disruption – political, nature-based, social, economic or cultural. For example, take the case of the coronavirus outbreak in China. If companies selling their products in China do not have a presence in other markets, it will adversely impact their business. Or if a company is only sourcing from China then it’s supply of material or products will be affected which would again create an untenable situation for their business. 
  2. More flexibility: A diverse supply chain provides opportunities to optimize available supply options with the demand side of the business. It gives the opportunity for businesses to divert their manpower, funds, and efforts to products or regions that are doing well.  If the business operates in a single product or serves a single market, this flexibility is not available.
  3. Negotiation power: Cost is an important factor in supply chain. A supply chain that can control its costs has a higher opportunity to improve its bottom line and earn profits. A supply chain that works with multiple suppliers and service providers has more room to negotiate better rates and service contracts as compared to the one that works with a single source or service provider. 
  4. Promotes out of the box thinking: To diversify one has to continuously be on the lookout for new opportunities to differentiate. It can be for a new product mix, design, packaging, supply, or go-to-market strategies. This helps employees develop curiosity, find creative solutions to operational problems and creates a culture of innovation in the organization.

This is just the tip of the iceberg of supply chain diversification. To know more about the topic listen to our webinar: From Chips to Dips in Service? Supply Chain Impact of Diversifying, hosted by Chris Kupillas, VP Sales where they talk about the importance and the challenges of diversifying the supply chain. 

To know how you can improve your supply chain and transportation to keep up with your customers demands, get in touch with our team today! 

The Rise of the 3PL for Managed Transportation Services

Managed transportation services have widely become an integral function of modern supply-chain. As reported by Steve Baker of Forbes, the outsourcing of managed transportation services to other entities has different terminology depending on location. For example, managed transportation or transportation management might be the ideal terms to use in the US. Meanwhile, Europe will refer to the effective outsourcing of transportation management as “fourth-party logistics services (4PL).”

Outsourcing transportation management has the added benefit of taking advantage of external resources and physical assets.

In addition, outsourcing transportation management has the added benefit of taking advantage of external resources and physical assets. However, the aspects of managing transportation are much more profound when looking at the topic from a software standpoint. To understand the rise of the 3PL for managed transportation services, shippers need to understand how managed transportation services became a global power, why 3PLs in managed services work well together, and how 3PLs enable better management of transportation.

Why Managed Transportation Services Grew to Permeate the Global Supply Chain

Take a moment to define managed transportation. According to Chris Cunnane of Logistics Viewpoints, “in a managed transportation services arrangement, a shipper contracts with a third party to plan and execute their moves for them. In other words, instead of having internal planners plan and execute moves, those planners are employed by the MTS supplier, but work on the shipper’s behalf.”

As shippers face the need to ship more and keep costs under control, managed services through a 3PL is the easiest path forward. 

Unlike traditionally maintaining independent transportation management programs in-house, outsourcing the process allows companies to reap a stronger return on investment. In a 2014 survey of supply chain professionals, 9% of respondents saved more than 12% on freight costs through managed transportation services. That number rose to 32% by 2016, and preliminary reports indicate the continued growth of savings. That’s the distinction and primary driving force. As shippers face the need to ship more and keep costs under control, managed services through a 3PL is the easiest path forward. 

3PLs and Managed Services Go Well Together

Part of the rationale for the increased use of 3PLs for managed transportation services surrounds technology and capabilities. In a traditional logistics management approach, an individual shipper must contact carriers, request quotes, understand billing practices, validate invoice details, submit payments, share information from the carrier to this customer and so on.

Leveraging the technology of the 3PL to automate logistics management and effectively outsource the whole process of managing transportation is the gold mine.

While the process works great when the entire supply chain resided in a small town, it becomes grossly ineffective in the modern, e-commerce driven world. With more customers and volume than ever before, shippers need real-time visibility, advanced shipping notifications, increased responsiveness, and faster ways to handle logistics. Working with a 3PL for its basic premise of securing more capacity and lower rates is great. However, leveraging the technology of the 3PL to automate logistics management and effectively outsource the whole process of managing transportation is the gold mine.

Ways 3PLs Excel in Managed Service and Value

Using a 3PL for managed transportation services also allows third-party entities to effectively manage more freight, connect with more carriers, improve supply chain responsiveness, and work together without sacrificing the proprietary information of individual shippers. The various ways 3PLs excel in managed service and value is nothing short of remarkable. In fact, some of the largest managed service providers tend to rely on a unified transportation management system (TMS) that enables continuous growth and power. For those 3PLs that have lagged behind in offering a TMS, recent acquisitions around the industry indicate all larger 3PLs are now looking to deploy better, more reliable TMS capabilities to give all shippers an equal opportunity to leveraged managed services, such as the BlueGrace TMS combined with managed services.

Of course, the real value of managed services lies in the value-added services, such as auditing, accounting management, billing, compliance record keeping, load matching, big data analytics-driven insights, and more. It’s an endless pool of improvement, and 3PLs will continue to maximize service and value without adding to the costs of individual shippers. 

Tap the Value of Managed Freight Transportation Through BlueGrace

BlueGrace is a 3PL that understands the value of managed transportation services. With a strong history of working hand-in-hand with shippers to create customized solutions, and using our BlueShip™ TMS to transform logistics management into a turnkey, automated process. As the value of using a 3PL for managed services increases, BlueGrace will see an influx of more shippers and carriers that are willing to look beyond the company walls and realize stark benefits of using a TMS. Find out more about how to take advantage of BlueGrace’s managed transportation services by calling 800.MY.SHIPPING or completing the form below.

The Key to Managing Disruption? Outsourcing.

Crises such as the COVID-19 outbreak and the subsequent disruption to our economy and supply chains have truly brought to light the importance of effective risk management. In a world where normally reliable trade partners are shutdown for weeks or ports are closed or workers are furloughed, companies that were one minute functional are now scrambling for solutions to move goods from manufacturing to warehouse to distribution center to retail outlets. What once seemed like a well-oiled machine is now full of chaos or emptiness. 

Hiring a 3PL can help companies work their way through tough times.

Hiring a 3PL can help companies work their way through tough times. A lack of resources to maintain and improve growth, lack of experience coping with crises, a deficient organizational structure or insufficiently trained or available staff are all hurdles that can be overcome by outsourcing logistics operations. 

86% of Fortune 500 companies are outsourcing to 3PLs, and with good reason. 

A 3PL Allows You to Focus on What You Do Best 

Handing off some or all logistics operations to a Third Party Logistics (3PL) provider allows companies to focus on the product or service(s) they provide without dealing with the, well, logistics of it all. Whether a company is looking for help managing their entire logistics operations or simply needs help putting together a tech stack that serves their needs and goals, 3PLs can tackle the operations that are out of their wheelhouse. 

It Can Cut Costs 

Because of their industry knowledge, access to top tech, highly developed networks, and the potential for bulk discounts, 3PLs may be able to help companies cut logistics costs and manage their budgets more effectively. Outsourcing can lead to the development of smarter, more efficient processes tailored to a specific business’ needs. 

Reducing logistics spend through better deals with carriers and/or improved operational efficiency opens up opportunities for growth.

Reducing logistics spend through better deals with carriers and/or improved operational efficiency opens up opportunities for growth. It leaves room in the budget for improvement, whether that be through expansion, R&D, or hiring on top talent. 

3PLs Provide Scalability 

When you hire a 3PL to handle logistics, you’re gaining a modicum of scalability that you simply can’t get with an internal department or positions dedicated to logistics. A 3PL can provide the staffing you need during every season. A 3PL may also allow for scalability in a new location without the upfront expense associated with opening a physical location, providing expertise and connections in new shipping lanes without a dedicated staff.  

Outsourcing Isn’t Without Risk 

As with just about any business endeavor, outsourcing to a 3PL isn’t risk free. When a company is spending money, it’s inevitable that things could go sideways and they won’t receive the return on investment they’d hoped for. Risks involved in outsourcing to a 3PL include unexpected costs, trouble during the transition of operations from your company to the 3PL, and reduced customer service. 

Mitigating the Risks 

Discussions on expectations, service requirements, budget, and other pertinent details should occur before hiring a 3PL.

There are certainly ways to reduce the risks listed above. Choosing a 3PL with extensive knowledge and experience in your industry and in the type of operation you’re hiring them to carry out is critical. Look at references and reviews of the company and speak with companies who have used the provider if possible. Discussions on expectations, service requirements, budget, and other pertinent details should occur before hiring a 3PL, plus continued effective communication is important to ensuring key players are on the same page. 

In Conclusion 

When times are tough, whether due to extraordinary market conditions like the ones today, or just about any other circumstances, a 3PL can help companies work through problems without the large capital outlay often required with internal operational improvements. Wondering how a 3PL could help your company through a crisis? Contact BlueGrace today to get a free supply chain analysis from one of our experts! 

What Matters Most When Choosing A 3PL: Cost Or Customer Service?

While there are many factors to consider when choosing a 3PL service provider, cost and customer service are two of the most critical factors. 

Finding the right balance is the ultimate chicken and egg situation for all logistics managers. If they can crack this, they can get a step closer to creating a better and more effective supply chain.

Why The Conundrum?

On the one hand, organizations have a set budget to spend with a 3PL partner on transportation, warehousing, and related activities. On the other hand, the logistics partner is not only accountable to provide precise, efficient, and affordable logistical services to the organization but is often the face of the company for the end customers – regardless of the organization operating in the B2B or in the B2C space.

For both sectors, the 3PL is the first point of contact with the customer and more often than not, it has multiple contact points in the end-to-end supply chain. 

This is why, for logistics managers, choosing a 3PL partner is the crux of their job.

This is why, for logistics managers, choosing a 3PL partner is the crux of their job. The right decision may make the difference between success and failure. The wrong choice wrecks havoc not only in the logistics department but company-wide. When negotiating a contract with a 3PL starts logistics manager should: 

  • Conduct a thorough cost-benefit analysis of the proposal sent by the 3PL
  • Understand and calculate an estimate of the lost opportunity cost of choosing a low priced service at the expense of efficient customer service. 
  • Find out if the lost opportunity cost would be less or more than than the cost of hiring a 3PL which provides a premium customer service 
  • Understand the management’s position on overshooting the logistics budget

They should also ask the following questions: 

  • Can the organization accommodate an increase in logistics cost?
  • How will it impact the bottom line if the costs were to be absorbed by the organization? 
  • Is there a scope to increase the product price? How will it affect sales? 

Now that we know why the decision is critical and why it poses a challenge, it’s also important to know why both of these factors are individually critical. 

Why Is Cost Important? 

The cost of hiring a 3PL forms a part of the complete product cost and thus impacts the pricing. While a slight increase in the pricing for high-value goods may not affect a customer’s purchasing decision, it may impact sales of fast-moving consumer goods (FMCG). Sometimes even a slight increase in the price for FMCG goods can negatively influence its sales, giving the competition room to gain market shares. 

Why is Customer Service important? 

Like cost, customer service also plays an important role in the complete packaging of the product. How long can an organization sustain its business with a transporter who delivers goods late or in damaged condition? Or a warehousing facility that is not able to maintain the goods in a sale-able condition? Not for long. Sooner or later, these aspects – late delivery and poor product condition or damaged products will start to impact the product image in the market, and thus start to adversely impact its sales. 

How a 3PL handles customer queries related to product delivery, or processes returns also form a part of customer service and affect the overall perception of the customer about the product and the company. 

In addition to the above aspects, how a 3PL handles customer queries related to product delivery, or processes returns also form a part of customer service and affect the overall perception of the customer about the product and the company. Thus, both of these factors have the ability to influence the success or failure of the product or an organization. Then how does a logistics manager choose on which factor to focus on and where can he take a little leeway? 

So, What Is More Important? 

As we have seen, if the cost for a 3PL goes up, it will to some extent affect the product pricing. And depending on how the company chooses to deal with extra cost, it can also have a bearing on its profit margins and the bottom line. 

An article in CMO by Adobe shares that according to a survey by PwC titled Experience Is Everything, “52% of the respondents would pay for speedy and efficient customer service”. For 73% of the respondents, “a good experience is key in influencing brand loyalties”, and “60% said they would stop doing business with a company if they experienced unfriendly service”.

survey carried out by Capgemini in 2017 talks about consumer willingness to pay for a better service. According to the survey, 81% of the respondents are “willing to increase their spend with an organization for a better experience”. According to an article in Multi-Channel on a 2018 PwC survey titled: Future of Customer Experience, “customers across a wide variety of industries said they were willing to pay as much as a 16% premium for better service”.

The importance and need for good customer experience are only going to become more critical. 

These statistics spread over a couple of years adequately highlight the growing importance of good customer experience. In the interconnected global business environment, the importance and need for good customer experience are only going to become more critical. 

The above survey results also highlight two very crucial points related to customer service: the first, if it is good, it can help retain customers and even bring in new ones; the customers are willing to pay for quality customer experience and service. The second point that these surveys bring forth is that customers can discontinue business based on even single poor customer experience. In the long term, poor customer service will tend to have a larger impact on the bottom line than a slightly higher cost of the 3PL’s service. 

If you choose the right 3PL, in addition to good customer service you get many other benefits as well.

And if the surveys on customer service are anything to go by, efficient and timely customer service will be able to persuade the customers to bear a slightly higher product or service cost. If you choose the right 3PL, in addition to good customer service you get many other benefits as well. 

BlueGrace knows both these aspects are critical in creating a winning product proposition. We help build a cost-efficient and customer friendly supply chain, get in touch with our team today!

Supply Chain Technology 2020: What to Expect?

Technology has become synonymous with supply chains. It’s not only creating new and innovative products to support global supply chains,  but is also rapidly changing how the industry operates. These new technologies are being leveraged by both traditional and tech-first logistics companies in the freight and logistics space to help build digital and integrated supply chains that provide end-to-end visibility to all the stakeholders.  

According to this report by Gartner, released in January 2019, the top technology trends for the year were artificial intelligence, advanced analytics, IoT, robotic process automation (RPA), autonomous things, digital supply chain twins, blockchain, and immersive experience.  

Others like artificial intelligence, autonomous things, blockchain, and robotic process automation are comparatively new and yet to be explored fully.

While all the above technologies are gaining ground in the industry and are being used to solve supply chain problems, some of them like IoT and advanced analytics have been around for a while and are familiar. Others like artificial intelligence, autonomous things, blockchain, and robotic process automation are comparatively new and yet to be explored fully. However, 2019 did see some of the newer technologies making big strides and are expected to be in trend in 2020 as well. They are:  

  1. Autonomous trucks: We’ve been hearing about autonomous trucking for a while now. In 2019 autonomous trucking gained a lot of ground with a few companies in the sector ready to roll out their self-driving trucks on the road. Some companies making news in this sector are TuSimple which got funding at the beginning of 2019 and Plus.ai, a Cupertino, California-based startup, that has already tested its autonomous truck on the road. Plus.ai’s autonomous truck has made the world’s first cross-country trip to transport butter to a town in Pennsylvania. The autonomous trucking industry is expected to keep up the momentum in 2020 also. According to an article in Supply Chain Digital, Allied Market Research has forecasted that the global market for autonomous trucks is expected to cross $1 billion this year and show a growth rate of 10.4% every year up to 2025.  
  2. Blockchain: While Blockchain technology has been around in the logistics and freight industry for a few years, there’s still a lot of scopes to explore this technology. Last year, TradeLens – a blockchain shipping platform developed by Maersk and IBM finally started picking up after a lackluster start. According to a news release on Maersk’s website, the platform will now be used by MSC, CMA-CGM, Hapag-Lloyd, and ONE. The success of platforms like this will help in getting more companies in freight and logistics to explore blockchain technology. More supply chain partners on a single blockchain-enabled platform will help facilitate the timely and safe exchange of data among the various stakeholders, even competitors, and enhance traceability, reliability, and transparency in the system.  
  3. Artificial intelligence: The Gartner report had listed artificial intelligence as one of the promising supply chain trends of 2019. Since all technologies that require a certain level of responsiveness and user interaction are empowered by artificial intelligence, this is one technology that will evolve with new technologies and needs of the industry. So in 2020 also one can expect AI to be an important part of the technological revolution in multiple supply chains.  
  4. Robotic process automation: Robotic process automation (RPA) is an artificial intelligence software that helps program robots to carry out standard processes without intervention. It is also useful in programming robots to collect data while they are doing their set activities. According to a 2019 Gartner press release, in 2018, the global market for robotic process automation grew 63%. The research firm expected the revenue in 2019 to reach $1.3 billion. Similar to AI, the RPA software demand will grow along with the deployment of robotics in supply chains. 
  5. Digital supply chain twin: A digital supply chain twin has been defined as a replica of the real-world supply chain function. The digital platforms that helped integrate all organizational functions and manage and monitor the processes digitally have now given way to more sophisticated systems that present a mirror image of the on-ground supply chain functions. These digital replicas are making it easier for organizations to simulate the real-time supply chain, identify plausible issues and take preemptive actions. This kind of technological representation of the supply chain is expected to be one of the top trends in 2020.  

While technology forms a critical part of understanding where the logistics and freight industry is headed, it is not the only factor.

These are just some of the main technological trends of 2019 that are expected to continue getting focus in 2020 and probably even in the next few years as well. While technology forms a critical part of understanding where the logistics and freight industry is headed, it is not the only factor. There are other aspects like regulations, laws, economy, and freight rates that help determine the fate of the supply chain. To know how the industry fared on these counts on the year gone by and how these aspects are expected to impact the logistics and freight community in the new year, register for our webinar: State of the Logistics Industry here

In addition to connecting with industry experts and gaining insight into where the industry is headed in the new year, all registered webinar attendees will also have the option to get a free supply chain analysis and optimization study based on their current data! Get in touch with our team at 800.MY.SHIPPING or fill out the form below to find out more.  

What you can do to help “Weather-proof” Your Supply Chain?

Weather events can put a drastic slow down on your operations and unfortunately, it’s practically impossible to predict exactly when these events will happen. Sure, there are seasonal weather events like snow and hurricanes, which gives us a reasonable timeframe in which to expect these types of events. But even then, it still becomes a matter of “wait and see” as to whether or not the event will come to pass. And what about the events that we don’t expect such as nor’easters, polar vortex, or wildfires? There are certain catalysts that can create a potential for these events, such as an extended drought, but there’s no way of knowing for sure until the event is actually happening.  

In the event of something truly catastrophic, such as a hurricane, there’s even more pressure for the trucking industry to keep rolling on schedule.  

For most businesses, bad weather simply means staying home for the day and waiting for the weather to pass. Trucking companies, on the other hand, don’t have that luxury. Drivers are still expected to maintain their routes and delivery schedules, in spite of bad weather conditions. In the event of something truly catastrophic, such as a hurricane, there’s even more pressure for the trucking industry to keep rolling on schedule.  

Severe weather events can disrupt the supply chain causing lag and bottlenecks, especially during a true black swan event in which trucks are rerouted for emergency relief.  

For shippers and manufacturers, weather events can wreak havoc on delivery schedules, even when the weather event is thousands of miles away from you. Severe weather events can disrupt the supply chain causing lag and bottlenecks, especially during a true black swan event in which trucks are rerouted for emergency relief.  

So what can you do to prepare your supply chain against such events? 

A Reason for the Season 

Winter or summer, springtime floods or tropical storms in the fall, Mother Nature has predictably unpredictable conditions to throw at us. Plan in advance for alternate routes and parking locations if the regular road is closed and the usual truck parking is filled. Know in advance where road construction is planned. Always carry emergency gear appropriate to the season. Have a reliable response ready when faced with unreliable weather conditions. 

Part of preparing that reliable response is having good resources to turn to for accurate information. Every truck driver and every motor carrier dispatcher should have a list of phone numbers and websites for up-to-date reports on local weather, road closures, road construction and emergency notifications, such as during floods and storms. There are, of course, excellent commercial websites, products and services available. 

Here is a guide to begin building your own list of resources:

Always pull off the road and park in a safe location before checking websites or placing a phone call. Predictable responses and resources will help you meet the unpredictability of Mother Nature. 

Dealing with Sudden Spot Rate Hikes

One of the major aspects to keep in mind when you’re planning for weather events is how truckload rates can be affected by the weather. Since supply chains have become a global engine, a disruption in one location can cause problems in another. For shippers, that disruption can mean unexpectedly higher rates for shipping.

Here are a few best practices to dealing with a sudden surge in spot rates.  

  • Consider working with a third-party logistics (3PL) provider to augment your available capacity and carrier options: Outsourcing eliminates the burden of completing work in-house, but it still relies on efficiency in operation. 3PLs holistic approach, buying, and negotiating power can help augment your operations year-round.  
  • Explore intermodal and multimodal shipping options when the first chances of a storm’s arrival become apparent: Intermodal and multimodal shipping are usually used interchangeably, but both offer unique advantages to getting around after a major weather event.  
  • Increase the shipping budget through proactive, cost-saving measures through year-round operations: Cost-saving measures, such as improved dock management and load planning will naturally lead to savings in the budget. Such savings must not be 100% logged into the company profile. Instead, a percentage should be allocated for use in handling stretches in the freight budget after a disaster. More importantly, gains in efficiency will build resiliency and agility, allowing the supply chain to flex to meet the demands after a disaster.  

Batten Down the Hatches at HQ 

Spot rates are one way to deal with weather events abroad, but what happens when the storm is on your doorstep? Trucks being diverted can slow down your supply chain but when your base of operations is out of commission, everything comes to a grinding halt. Having a robust plan in place is necessary, especially if you operate in a location where inclement weather events is a yearly risk.  

Having the right infrastructure in place should be your first step.

Having the right infrastructure in place should be your first step. Does your main office have a contingency for backup power? How about internet access? Can your employees remotely access your company’s phone and operating systems? Something so simple as backup generators and remote desktops can keep operations moving despite external factors.  

Consider your personnel as well. Flexibility and cross-training of your staff mean that everyone on your roster is capable of handling a wider array of responsibilities. This is especially crucial during situations of crisis management when your A-team for customer service might be occupied with other necessary tasks.  

The better prepared it is, the more efficient it will be when it really counts.  

Having the right infrastructure in place is only the beginning, it’s important to have a plan in place for when the weather turns awry. More importantly, your team should know and understand the procedures for when such events take place. The better prepared it is, the more efficient it will be when it really counts.  To speak to one of our freight experts, contact us at 800.MY.SHIPPING or fill out the form below

Trucking Isn’t Going Away Any Time Soon

There is absolutely no doubt that we have entered into a new era of technology. As computing is getting more powerful, many technologies that were once science fiction are now either on the horizon or already here. Artificial intelligence, machine learning, and automation are three of the biggest hot tech topics out there.

While there is certainly a potential for job loss as this technology reaches maturity, that’s not likely to happen any time soon.

Of course, whenever new tech starts to hit the market, there is speculation as to what it means for the already existing framework of our reality. In this case, what do automated vehicles and AI mean for the truck driving industry? Currently, truckers move over 70 percent of all U.S. freight, by weight. The speculation is that we’ll see some 2-3 million jobs fall to the wayside as a result of emerging tech over the next few years. While there is certainly a potential for job loss as this technology reaches maturity, that’s not likely to happen any time soon.

According to the study: Industrial and Labor Relations Review, there is always a measure of attrition in terms of job loss when a new technology is introduced to an industry. However, there are three key reasons why truck drivers won’t be going away any time soon.

There’s More to Trucking than Just Driving

While it might seem like a truck driver has a fairly simple job of driving the truck from point A to point B, there’s a lot more to it than just that. Truck drivers also perform a number of other tasks in their daily routine. Everything from checking the status and upkeep of their vehicle and securing cargo, maintaining logs and invoices, and perhaps most importantly, customer service. While some of these tasks such as logs and vehicle status might be automated in the future, the technology isn’t there yet and some of those tasks aren’t even close to being ready for automation. For example, a smart sensor in the truck might be able to detect an imbalanced load or a flat tire, but it falls to the driver to fix that issue before rolling on down the road.

Customer service is also an incredibly important task of the truck driver

Customer service is also an incredibly important task of the truck driver, especially when you consider that customer service is one of the key distinguishers between companies today. Service needs a face, a smile, and a friendly voice and it’s that human interaction between the driver and the company that provides those necessities.

Fully Autonomous Trucks are Still on the Horizon

Just looking at the task of driving itself we can see that there are still quite some ways to go before trucks no longer need a driver. The Society of Automotive Engineers has developed the current standard to define automated vehicles on a scale of 0 to 5 with 0 being no automation and 5 being a fully automated and capable self-driving vehicle. Obviously, the amount of necessary human interaction/control goes down the higher up you go in the scale.

In fact, there tends to be a bit of sensationalism when it comes to headlines for automated vehicles. What we end up seeing is the full level 5 tests being touted as broad-scale implementation. These tests are very rare and conducted under carefully controlled conditions. In actuality, what we will see is somewhere between levels 2 to 3 where a human driver’s capabilities are augmented by robotics and automation. For example, the autonomous drive feature could take over for highway driving but for rural or city driving, it would be under human control.

Assume for a moment that level 4 automation was target for the trucking industry, how many jobs would that actually affect?

“Most of this development is focused on automating the long-haul/interstate portion of a truck trip, not short haul or local truck moves. We estimated the proportion of trucks in the U.S. that are used for long hauls, using the Vehicle Inventory and Use Survey (VIUS), last updated in 2002,” says an article from HBR.

“According to our computations, roughly one-quarter of all heavy trucks are used in long hauls of 201 miles or more, compared to roughly half of all heavy trucks used in relatively short ranges of operation (50 miles or less). Given that truck automation is currently targeted at these longer hauls, we are looking at potential job losses for roughly one-quarter of heavy truck drivers, or about 450,000 drivers, as the technology becomes more sophisticated and reliable over time and as regulatory obstacles are overcome,” HBR adds.

That is still a fairly significant number, but it is far from the millions of jobs lost that is being predicted now.

There’s Actually Fewer Drivers than People Think

Many of the sensationalized articles that are proclaiming the untold job loss at the hands of automation are also exaggerating the actual amount of human truck drivers employed in the United States. Most of the articles put the number around 3 million drivers when, in fact, that number is quite a bit smaller, meaning there are less jobs that can be lost due to the “total automation” scenario.

The federal government’s Standard Occupational Classification (SOC) system has a category called “Drivers/Sales Workers and Truck Drivers”, which is then divided into three smaller groups: “driver/sales workers”, “light truck or delivery services drivers” and “heavy and tractor-trailer truck drivers.”

The total pool employed within the broad heading is where most of these articles are getting the 3 million driver figure from. However, many who fall under one of these employment categories aren’t actually drivers or, if they are drivers, don’t fall under the risk of job loss due to automation.

Truckers Will Stay on the Road

Even if the technology for consistent level four technology was here, there would still be a heavy amount of government regulation to get through in order for it to be fully adopted throughout the industry. As there are so many variables to consider, there would likely need to be a massive infrastructure change for trucks to reach a level of autonomy that would completely remove human drivers from the picture.

It is fair to say, however, that as the technology continues to develop, we’ll likely see the amount of human drivers start to change roles.

It is fair to say, however, that as the technology continues to develop, we’ll likely see the amount of human drivers start to change roles. Instead of being phased out entirely, we’ll likely begin to see re-skilling of drivers into a different role that will continue to support the trucking industry. In light of all the challenges the industry is already facing, this could be a turn for the better.

CEOs Should Be Focusing on Their Supply Chain

As Jeff Bezos, CEO of the e-commerce juggernaut once said, “When [executives of other companies] are in the shower in the morning, they’re thinking about how they’re going to get ahead of one of their top competitors. Here in the shower, we’re thinking about how we are going to invent something on behalf of a customer.”

As a CEO, the path forward will be through optimizing your supply chain while keeping an eye on the goal; your customers.

That alone shows an interesting shift in the perception and could explain why Amazon is so wildly successful. It is that customer-centric focus that is going to pave the way for success going forward. Sure, it’s still going to be good business to be ahead of the competition, but the way we do that is measured by the way we serve our customers. That’s going to be vital going forward, especially when you start to consider all of the challenges facing the supply chain today. As a CEO, the path forward will be through optimizing your supply chain while keeping an eye on the goal; your customers.

With that in mind, however, there are some very uncertain times on the horizon, as the current administration continues to press its trade war with China, ensuring tariffs could bite some manufacturers hard.

Moreover, according to a survey conducted by the National Association of Manufacturers, there are plenty of other areas of concern, including; attracting and retaining a quality workforce and increasing the cost of raw materials.

There are no shortages of concerns for the manufacturing industry and all of these issues will have some effect on the supply chain for most industries.

If that wasn’t enough to contend with, there’s also the challenge of rising transportation costs and the overall challenge of managing a smooth-running supply chain. Simply put, there are no shortages of concerns for the manufacturing industry and all of these issues will have some effect on the supply chain for most industries.

For CEO’s the big question is this, “Is your supply chain ready for the road ahead?” Supply chain optimization will be crucial for the success of any manufacturing industry as failure to do so will mean missing out on growth opportunities as well as the inability to fulfill current customer orders and expectations. A flexible and well-structured supply chain will mean the difference between addressing new challenges appropriately or being knocked off balance by unexpected disruptions in the future.

A Changing Future for the Supply Chain

It’s not all doom and gloom on the horizon, and that’s part of what is keeping the levels of optimism high in the manufacturing industry. Many positive changes and developments are driving us towards a breakthrough in the way we do business. The new levels of technology and advancements in the Internet of Things are moving us closer to Industry 4.0 which will drive the levels of visibility and efficiency across the supply chain to new heights. The applications of these new technologies and advancements will separate winners from losers, survivors from the deceased, often in just a few years.

It will no longer serve to think of the supply chain as an isolated aspect of your business.

For the CEO of the Industry 4.0 company, you’ll have to keep in mind that supply chains are only going to get more complex going forward, especially when you start to consider the potential impact of tariffs. Think about manufacturing which is expected to be spread across the world as parts outbound China are hit with punitive tariffs. What kind of confusion will this cause within the industry? Within your own organization? What sort of opportunities will this create? As a leader, your approach will also have to become more sophisticated, using data-driven analytics to probe deep into your supply chain. It will no longer serve to think of the supply chain as an isolated aspect of your business. Instead, you’ll need to work on expanding your business philosophy. Who are your suppliers’ suppliers? Who are your customers’ customers? It is that total end-to-end level of thinking that will allow for the necessary insight into the supply chain to avoid potential disruptions to your business.

Is Your Supply Chain Ready?

Even at the best of times, the average supply chain is packed with pitfalls and bottlenecks, any of which could be the event that prevents an organization’s ability to maximize growth. At the worst of times, those hangups could cause a drain in cash and capital when the economy is in a downturn. This is why optimizing for growth now is important. It creates the environment and opportunity for critical improvements when times get tough. There is no mutual exclusivity in this, high performing supply chains and operations excel in either condition.

So is your supply chain ready? As a CEO, here are the three big questions you need to ask:

  1. How will my suppliers respond to a rapid increase or decrease in demand?
  2. How well are manufacturing and operating distribution facilities prepared to cope with an increase or decrease in demand while still maintaining quality and service with appropriate cost and cash levels?
  3. Do our logistics capabilities have enough capacity and responsiveness to accommodate a change in demand?

If your company can’t keep pace with the change, it’s as good as leaving money on the table, as your competition will likely be more than able to pick up the slack.

The answers to those questions are critical when estimating how well your company can perform in the event of an economic shift, in either direction. If your company can’t keep pace with the change, it’s as good as leaving money on the table, as your competition will likely be more than able to pick up the slack. Responding to these opportunities goes beyond simple, and BlueGrace can help with that. To speak to one of our experts, call us at 800.MY.SHIPPING or fill out the form below:

Shippers Growing Success With 3PLs 

The 24th Annual Third-Party Logistics Study for 2020 has been released and it shows a growing success between shippers and their 3PL partners. 

“The majority of shippers, 93%, report that the relationships they have with their 3PLs generally have been successful. A higher number of 3PLs, 99%, agree that relationships have generally been successful,” the study says.  

As 3PLs continue to offer a wider array of services, shippers have been eager to leverage what they have to offer.

The study continues to find that shippers and their 3PL partners are developing a much greater awareness and synchronicity of goals, as well as how data sharing and new technology can help them advance those goals. As 3PLs continue to offer a wider array of services, shippers have been eager to leverage what they have to offer. The result is an optimization of the supply chain, reduced costs, and the creation of overall value within the supply chain.

“This year’s study once again proves that shippers and their 3PL providers are strengthening their relationships and continually moving toward meaningful partnerships. They are collaborating to accomplish their supply chain goals and improve efficiencies. The available evidence confirms that both parties are creating reliable solutions and improving the end-user experience for the customer, which is allowing shippers to use the supply chain as a strategic, competitive advantage.” 

3PLs Are Rising to the Occasion 

Currently, both shippers and 3PLs have been enjoying favorable economic conditions both at home and abroad. That is not to say that it has been a perfectly smooth road as both continue to face challenges in transportation capacity and facility-based resources. However, the relationship has proven to be beneficial to both parties as they’ve worked together to overcome tight customer deadlines and raise both customer and consumer satisfaction levels. 

Another advantage to the relationship between 3PLs and shippers is the ability to adapt to and overcome challenges .

Shippers, of course, have higher expectations of their service providers and third-party providers have responded by increasing not only their service offerings but also their innovations when it comes to overcoming challenges within the current market environment. Simply put, transportation and logistics companies are realizing that the focus needs to be placed on digital capabilities, cost and asset efficiencies, and a broader range of services to meet their customers’ needs.

Current Global Market Challenges

The logistics and freight industry is in a state of flux currently. New technologies, tighter regulations, and growing customer expectations are all forcing necessary changes to the supply chain. According to the 2020 study, here are some of the biggest challenges shippers and 3PLs are facing to date. 

Growth of e-commerce: E-commerce and the “Amazon effect” have had a tremendous impact on brick and mortar retailers. The result is that many of them are branching out into omni-channel marketing and distribution to meet customer needs. This adds a whole new layer to existing logistics and supply chain structures.  

There are both domestic and global economic changes that are putting pressure on supply chains to adapt and react.

Economic uncertainty: There are both domestic and global economic changes that are putting pressure on supply chains to adapt and react. Many of these include sourcing new suppliers and improving cross border relationships with trading partners. There are also signs of slowdowns within certain major global economies which will soften demand and create new challenges for shippers.   

Driver shortage: This problem is not unique to the United States, but it’s certainly one of the most prevalent locations. With the average age of the American truck driver approaching retirement, there is a decided lack of interest in younger generations to get behind the wheel. ATA’s chief economist,  Bob Costello estimates that the current 60,000 driver deficit could reach 160,000 by 2028.  

Disruptive technologies: While disruptive technology breeds innovation within the industry the difficulty of adapting and integrating these new technologies also increases. Some of the disruptive technologies impacting supply chains include the use of drones, autonomous vehicles, cloud-based capabilities, artificial intelligence (AI), internet-of-things (IoT), blockchain.  

While dealing with all the above challenges, there’s also the challenge of keeping pace with the competition.

Competitive challenges: While dealing with all the above challenges, there’s also the challenge of keeping pace with the competition. Especially as there is a new start-up for every day that is poised to disrupt businesses, business models, or even entire industries. This applies to all, trading and manufacturing companies, as well as logistics providers, who are attempting to differentiate themselves from a growing number of startups backed with millions of dollars worth of venture capital investments. 

The take away from the survey is that shippers and third party providers are growing and prospering together.

The take away from the survey is that shippers and third party providers are growing and prospering together. As new challenges arise, shippers are looking to 3PLs for answers, innovations, and solutions. Conversely, 3PLs are looking to build long term and steady relationships with shippers as the number of providers continues to grow.  

With growing uncertainty in the geo-policitical arena, new technologies, and the explosive growth of e-commerce, it’s likely that we will continue to see growth in the relationships between shippers and 3PLs. For more information on how BlueGrace can be the partner to help strengthen and bring visibility to your supply chain, call us at 800.MY.SHIPPING or fill out the form below to speak to one of our experts.

The Definition of Transparency

As companies mature and the market changes, our understanding of crucial operating components of any industry has also grown. Supply chain transparency, in particular, has come a long way over the past twenty years. Transparency within the supply chain has gone from an unrecognized concept to a focus item for the C-Suite across a vast number of companies and industries. Given the current state of the market, it’s no small surprise either.

So in order to begin understanding transparency in the supply chain, we first need to define it.

Many, if not all, companies are facing increasing pressure from governments, consumers, non-profit / activist groups, and stakeholders to provide more information about their supply chain. Failure to do so could mean some serious damage to the company’s reputation. Slave or forced labor conditions, health and safety violations, animal exploitation, and child labor are all becoming hot button topics of the growing consumer conscience. While the reasons for explaining a higher need for transparency are clear, what is less clear is how to get there. Some companies are struggling to make a meaningful change to their operations to provide the much-needed levels of transparency.

As it is with most problems there is a lack of a clear and concise definition, according to an MIT study which conducted a survey of the apparel industry only to find wildly different results. So in order to begin understanding transparency in the supply chain, we first need to define it.

Understanding the Need Transparency

At its core, supply chain transparency is understanding what’s happening within the supply chain and being able to communicate that knowledge both within and outside the organization.

As we mentioned earlier, there is an increase in customer demand for insight into the supply chain, but it’s not without benefit. The researchers at the MIT Sloan School of Management found that consumers are willing to pay between 2 and 10 percent more for products produced by companies that have better supply chain visibility. The study showed that consumers place a higher value in a company that can prove the ethical treatment of their workers. What’s more is that this growing consumer base is seeking more information about product ingredients and materials, where the product is coming from, and the conditions in which it was produced.

As the demand for visibility continues to increase, so too will the potential fallout for companies that fail to provide it.

As the demand for visibility continues to increase, so too will the potential fallout for companies that fail to provide it. Over the last decade, there have been a number of scandals that have had a significant detrimental impact on company image and reputation. Slave labor in the Thai seafood industry and deforestation in Malaysia and Indonesia are ample examples of this.

The backlash created from these scandals has forced the creation of new transparency laws around the world. Australia the UK have created new regulations to combat forced labor. The state of California has also created supply chain transparency laws (California Transparency in Supply Chains Act.) The U.S. Food Safety Modernization Act is targeting food safety and ingredient fraud. There are also further regulations to come from the Netherlands and Switzerland, with other countries to follow suit.

What this means for companies is that a lack of supply chain transparency can stop operations dead in their tracks.

What this means for companies is that a lack of supply chain transparency can stop operations dead in their tracks. Something as simple as missing origin documents could cause a shipment to be either held up or even turned away at ports which can result in a costly delay throughout the entire supply chain.

So Why Aren’t All Companies on Board?

You would think that with the new levels of consumer consciousness and the growing global regulations that all companies would be scrambling to build transparency into their supply chains. Yet, there are many companies that are either slow to act or not act at all.

One reason for the delay is that the supply chain itself was never designed to allow for transparency. Manufacturers and suppliers alike fear to expose their sources as they might lose the edge against their competition. Another explanation for being slow to act is inaccurate data coming from upstream, assuming there is data to be had at all. Lastly, there’s also considerable concern about the ROI for investing in supply chain transparency.

Despite the challenges, there are plenty of reasons to get on board with supply chain transparency.

The Benefits of Supply Chain Transparency

The returns gained from efforts made on improving supply chain transparency will vary by business model and industry but overall there are a number of benefits that are applicable to most companies.

One of the most straightforward benefits is that increased transparency means keeping in compliance with the new regulations that are being enforced. Operational risks drop as a result as companies no longer have to worry about being able to get freight through customs.

There are also considerable benefits to a company image that come with higher levels of visibility. Consumer conscience is a huge market factor right now. Customers are happy knowing that their products are made with care and concern towards the environment and the people working to make their products. As a result, they’re willing to pay more, which can help offset potential higher supply chain costs. Additionally, consumer trust and satisfaction also rise, which creates stronger brand loyalty and a larger customer base.

Better visibility means better, more actionable data, which in turn can help drive a company’s growth and profitability.

Of course, there are also operational benefits to be had by utilizing a highly visible supply chain. Better visibility means better, more actionable data, which in turn can help drive a company’s growth and profitability. That data also highlights areas of improvement, meaning a company can run leaner, cleaner, and a whole lot greener.

This isn’t a trend in the sense that we’ll see it fall out of fashion any time soon. Supply chain transparency is becoming an industry standard and will continue to flourish. If your company isn’t working towards transparency, it might be time to get started. For more information on how BlueGrace can help give you the visibility you need to gain efficiency, feel free to contact us at 800.MY.SHIPPING or fill out the form below:

Making your Warehouse, Worthy

For a logistics player to be successful, it is imperative to regularly check if every aspect of the supply chain process is working at optimum capability. The surest way to ensure this is to keep a checklist. Tom Peters, the author of In Search of Excellence, says, “Almost all quality improvement comes via simplification of design, manufacturing, layout, processes, and procedures.”

In this article, we delve into the details of making a warehouse future-ready and examine the steps required to achieve warehouse excellence.

The Bigger Picture – Before getting into the nitty-gritty and finer details, it is first important to have a macroscopic view and understanding of the warehouse as a whole. This entails mapping the warehouse, studying the building & area and checking the surfaces for damages and weak areas. All these actions ensure that before the warehouse is stocked, and equipment such as forklifts are brought in, it is capable of handling the capacity and regular operations.

Goods that are easily visible, make them easy to locate when timelines are short and add to the smooth functioning of the supply chain process.

Light, Ventilation & Drainage — A well-lit warehouse makes it easier to navigate and work in. Goods that are easily visible, make them easy to locate when timelines are short and add to the smooth functioning of the supply chain process.

Ventilation goes a long way in combating dust and fumes that may arise when moving equipment within the warehouse. A well-designed ventilation system will make a huge difference in maintaining the longevity of the warehouse. 

In a similar way, a disaster-proof drainage system can make all the difference in the preservation of products during a natural disaster such as a storm or a fire or even areas that are exposed to the elements. Paying due attention to designing these crucial details improves efficiency and adds immensely to not just improving daily operations, but also, preserving the warehouse in the long term.

Cleanliness is the Key — Keeping the warehouse clean entails a number of practices that contribute to the overall hygiene of the warehouse while making it easy to maneuver on a daily basis. Ensuring that trash cans are placed at convenient locations, emptying trash cans periodically, keeping the area clean, all play a part in the overall maintenance and upkeep of the warehouse. Additionally, keeping the floors clean afford clear visibility of the exit signs and protect against accidents that could occur due to spillage and obstructions that may happen during daily operations.

Safety is the most important factor in any industry and must be prioritized above all else.

Safety is Paramount — Safety is the most important factor in any industry and must be prioritized above all else. This includes various aspects from regular fire drills and ensuring the equipment is serviced and up-to-date for any contingency to giving employees access to adequate training and gear for safe operations. Staff handling forklifts and heavy machinery must be provided with certified hard hats, gloves, and other protective gear to protect against any mishap that might happen. Labels and handling instructions on products must be visible all the time. Continuous training of staff about the correct and expected ways of protecting themselves, others, and assets is essential. In the event of an emergency, staff must have easy access to all the tools necessary to not just protect themselves but any other persons that may be in the warehouse. These competencies can be the difference between life and death in times of crisis.

Regular checks and inspections are essential for maintaining the standard of a warehouse.

Miscellaneous — Apart from taking care to examine that the above aspects are in order, regular checks and inspections are essential for maintaining the standard of a warehouse. From checking the storage racks and vehicle inspection processes at the loading dock, to inspecting elements such as the quality of the railings, uniformity of the stairs, access areas, aisles etc. on a regular basis must be taken into due consideration and set within processes that should be part of a cycle within organizations.

Apart from the above, Everything Warehouse lists a warehouse audit checklist that demonstrates what an audit should include:

  • Facility current and optimum capacity and throughput
  • Logistical layout and material flow
  • Safety, security, and housekeeping
  • Systems functional capabilities and performance
  • Customer service performance metrics
  • Productivity analyses
  • Storage and handling equipment
  • Inventory accuracy
  • Identification of opportunities for improvement
  • Comprehensive warehouse audit report with recommendations

In conclusion, there are many aspects that go into making a warehouse and in turn, the whole supply chain process efficient and future-ready. If done periodically, this ensures smooth operations, regular maintenance & review and better planning.

Want a Free Supply Chain Analysis?

Regaining Lost Customers in the Digital Age 

Let’s be honest, there are few things that feel more rewarding than securing a new customer. It’s incredibly important for business growth and development and at the end of the day, more customers mean more money. With that being said, no business should ever operate on a model where the acquisition of new customers supersedes the importance of advancing old or preexisting customers. More specifically speaking, winning back profitable old customers that you might have lost. 

In the business-to-business (B2B) world, reacquisition is incredibly important. Losing customers happens more often than you might expect, especially given the current market, where customers have more options than ever to evaluate and re-evaluate their suppliers, find new ones, and make changes. 

Losing a customer can be a costly endeavor, and that cost is only going up.

Losing a customer can be a costly endeavor, and that cost is only going up. For some firms, long-standing customers are also their best customers.  As recently as 2014, for example, “the average publicly traded manufacturing firm received over 25% of its revenue from large buyers, up from 10% in the early 1980s.”. Any company, regardless of size, would be leery at the prospect of losing a customer like that. 

Former customers already have a certain expectation about your company and capabilities, and it’s almost impossible to change the first impression.

The reacquisition process, however, is a bit different than acquiring fresh customers. The most obvious difference is former customers already have a certain expectation about your company and capabilities, and it’s almost impossible to change the first impression. The other side of the coin, however, is you also have your own set of criteria and history, so you know if that customer is worth pursuing. 

Fortunately, when it comes to winning back a lost partner, it’s less about wining and dining, although that’s certainly a part of it in some cases. Realistically it comes down to this, can your company get the job done this time better and in a most cost-effective way? The good news is that a lot of what customers are looking for, both new and old, can be found from within your supply chain.

Rebuilding Relationships in the Digital Age

Assuming you’ve done the math, you’ve come to realize that Customer ‘X’ is definitely an asset to your roster and is worth romancing back into a partnership. Where do you begin? This isn’t necessarily an easy question to answer as not only does it depend on the specific customer, but it is also prone to change due to the current state of flux in the market. Everything is shifting, getting technological upgrades, and becoming digital. Even customer expectations are starting to trend towards digital solutions. Having said that, finding the right way to move forward is like trying to find the needle in a haystack, in the back of a moving truck. 

What many businesses are looking for today is visibility, flexibility, and assurance that they’ll get what they need, when they need it.

What many businesses are looking for today is visibility, flexibility, and assurance that they’ll get what they need, when they need it. The ability to provide those things to a customer not only marks you as a good business partner, but it’s also a key differentiator amongst the competition. The digital “olive branch” in today’s market is what kind of data and information you can provide your customers, and overall accountability of your services and, most importantly, the strength of your supply chain.

Managing Customer Expectations

Customer expectations are constantly growing and changing. Walmart is a prime example of this. The superstore is locked in a battle of epic proportions against Amazon. Every empty spot on a shelf means a potential missed sale. A sale that could end up going to Amazon or even a different competitor. 

As a result, Walmart started stepping up their expectations from their suppliers, hitting those that don’t hold up their end of the bargain with charge-backs and other fees. However, given the size and reach of a retail giant like Walmart, business potentials for suppliers are enormous. If you make the supplier list, they tend to be the kind of customer you don’t want to lose. To that end, suppliers have little other choice but to pull up their bootstraps and live up to Walmarts expectations.

No doubt, the bar is set high, but this may also present the opportunity for those who are able to demonstrate that they have been developing and evolving their business practices. Showing your former customer that you can get the job done and done right is a sure fire way to win that customer back. 

You need to be able to prove that you have a robust plan to meet their needs as well as the capability to follow through. If they have a tight delivery schedule, then you’ll need to have a plan in place to accommodate it.  Those accommodations are made through shoring up your supply chain to create the flexibility and visibility necessary to handle the freight, even when capacity and other elements are against you. 

Controlling Costs 

Controlling costs and optimizing the supply chain also means that you can provide your customers the visibility, flexibility, and the overall assurance that they will have what they need, when they need it. 

Costs are a big factor in any working relationships. A lot of partnerships have dissolved simply due to an inflating price point, which can be caused by any number of reasons. Unfortunately, it tends to be either a knee-jerk reaction to pass the buck when times get tough and for some customers, that cost is simply too much. Controlling your costs goes a long way towards repairing broken relationships, especially when it means that you can regain a former customer at the expense of your competition. Controlling costs and optimizing the supply chain also means that you can provide your customers the visibility, flexibility, and the overall assurance that they will have what they need, when they need it. 

The benefit to this approach is two-fold, really. First, you’re gaining back a lost customer as well as proving that your business solutions have grown and matured from the last time you’ve worked together. This not only opens the door to regaining a lost customer but could also provide opportunities to gain new ones. The other is that controlling your costs, via your supply chain, also increases overall efficiency which extends to all of your customers and your operations as a whole. Ultimately, the bulk of costs comes from transportation and the supply chain. As freight rates are prone to fluctuate wildly, the cost of shipping goods can also vary to a great degree making it hard to manage. For manufacturers shipping goods to customers, this needs to be managed effectively to keep costs low and both parties happy.

There are a number of different factors to consider when you’re trying to evaluate your supply chain. The good news is, you don’t have to do it alone.

Making these corrections and changes on your own can be a difficult proposition at the best of times. There are a number of different factors to consider when you’re trying to evaluate your supply chain. The good news is, you don’t have to do it alone. Having a 3PL partner like BlueGrace can help get your supply chain where it needs to be, not only win back former customers, but to also help you win over future prospects. Call us at 800.MYSHIPPING or fill out the form below to see how we can help!

Middle of the Road for the Trucking Industry

Of all the industries that American consumers have come to rely on, perhaps the most underrated, and subsequently complex, is that of the transportation industry. While the laws of supply and demand will affect every form of business it is perhaps the most volatile and fluctuating when applied to the transportation industry. Last year was a great year for trucking companies, demand was high, capacity was low, and it allowed them to more or less pick and choose the jobs they wanted to do.

With so many wild swings in one direction or another, we’re entering a period of “new” balance that no one is quite sure of.

Shippers, for their part, have accepted the higher rates as an understood cost of business, but with so many wild swings in one direction or another, we’re entering a period of “new” balance that no one is quite sure of. Shippers that turned to contracts to escape the high rates are now making a return to the spot market as there’s plenty of available capacity currently on the market.

Aptly put, this “muddy middle” for the trucking department is a rare moment when supply and demand have reached something of an equilibrium, something that hasn’t been seen for years. Spot rates for FTL have dropped upwards of 12 percent from this time last year while contract rates, on the other hand, have climbed up 14 percent in 2018 according to data from DAT Solutions and Truckstop.com. Shippers that turned to contracts to escape the high rates are now making a return to the spot market as there’s plenty of available capacity currently on the market.

Given such a high volume of transference, it might have actually created an overly strong demand on contract rates which would have caused them to increase.

It’s rather reasonable at this point to speculate that the current shift towards the muddy middle was caused by overcompensations. Beneficial cargo owners (BCOs) reacted to the rate spike mid 2017 by shifting over to contract rates. Given such a high volume of transference, it might have actually created an overly strong demand on contract rates which would have caused them to increase.

Going into 2019, carriers and 3PLs were using terms such as “balanced” and “equilibrium” to describe the current state of the market. However, that might not be entirely accurate, or, at least not strong enough of a prediction to hold fast in the days to come.

The transportation industry is precariously balanced amidst two slippery slopes and it could go one way or the other.

“With contract and spot rates currently headed in different directions, it’s unclear exactly how this will all play out. IHS Markit chief economist Nariman Behravesh put the odds of a recession in 2019 at around 30 percent but upped that chance to 50-50 for 2020. A recession would mean lower cargo volumes, which would drive down both contract and spot rates, creating a buyer’s market,” according to an article from the JOC. Hence, the muddy middle. The transportation industry is precariously balanced amidst two slippery slopes and it could go one way or the other.

Hitting Bottom

Given the nature of the industry, balance doesn’t tend to last overly long. Eventually, rates will break either one way or the other to someone’s advantage (or disadvantage depending on your perspective.)

“A lot of shippers who started the process in the third or fourth quarter, they saw the rates [moving] in the right direction for them, so they actually held out on releasing the awards until mid-January or even into February,” said Mark Ford, our very own chief operating officer here at BlueGrace Logistics. “Shippers are trying to figure out where that bottom is, throwing out their routing guides, and going to the spot market depending on the cost differential.”

Shippers aren’t the only one that has a card or two up their sleeve.

Given that time is such a commodity, shippers have the power to drive rates in either direction, depending on what value they attribute to their time. However, shippers aren’t the only one that has a card or two up their sleeve. Given a recent downturn in the trucker pool in addition to more stringent regulations that make it harder to operate, carriers might have a little more say about carrier rates than one might expect.

A Drop In the Trucker Pool

While shippers can garner some power to affect rates, that doesn’t mean that carriers aren’t without an answer. A recent report from the Wall Street Journal states that carriers have cut payrolls by 1,200 jobs last month, owing largely to a softening of demand at the tail of a profit-boosting hot streak all through 2018. The drop in demand for new trucks is also a good indicator of a softening in the trucking sector.

“Orders for Class-8 trucks – the heavy trucks that haul consumer goods, equipment, commodities, and supplies across the US to feed the goods-based economy – plunged 52% in April compared to April last year, to 16,400 orders, according to FTR Transportation Intelligence on Friday. It was the lowest April since 2016 when the industry cycled through its last transportation recession. This comes after orders had already plunged 67% year-over-year in March, 58% in February and January, and 43% in December,” reads a recent article from Wolfstreet.

The flip-side of that particular coin is that warehousing and storage company job positions have been on the rise, up 1,700 in March alone, likely due to the continual increase on online consumer shopping. Same can be said for courier and messenger companies that make last mile deliveries.

In general, the transportation market, which has been ramping up over 2017 and 2018 is beginning to slow down, allowing them to control their overall available capacity and their spot or contract rates as a result.

Utilization seems to be the key to determining which way the rates will go. Shippers should be using this time to consider how they can vastly reduce their load times and what sort of effect that would have on the available capacity in the market. Given that there’s no clear indication of which way the market winds will blow next, focusing on optimization and utilization could be the necessary elements to not only help drive rates down, but to keep them down.

For carriers, the means of reaching a perpetual middle of the road would be to find alternative service offerings as well as increasing their focus on last mile deliveries. Doing so allows them to provide more value to their customers and increase their profit margins as a result.

Navigating Through Industry Changes

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

Want A Free Supply Chain Analysis?

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

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!

There are a number of other benefits that can come from working with and outsourcing your logistics to a 3PL. If you would like to speak to one of our experts, call us at 800.MYSHIPPING or fill out the form below.

Be Sure, Be Insured. Why Carrier Liability Is Not Insurance

Insurance is an important part of risk management. It helps businesses mitigate financial loss arising from unforeseen events that may disrupt their supply chain. Transporting goods from one location to another is a crucial part of the supply chain. It is what keeps the business running. Hence, transport or cargo insurance should be an essential part of a shipper’s supply chain risk management strategy. 

While most shippers understand the importance and the need for cargo insurance, there’s a debate on whether to rely on carrier liability or to get a separate insurance policy.

In the webinar titled  Be Sure, Be Insured, Brian Blalock, Senior Manager Sourcing Strategy, BlueGrace, and Tyffany Gunn Kelley, Senior Manager Strategic Partnership and Channel Partner Program, UPS Capital, discuss: the difference between carrier liability and real insurance importance of insurance insuring solutions how organizations can manage risks to their supply chain

  • the difference between carrier liability and real insurance
  • importance of insurance 
  • insuring solutions 
  • how organizations can manage risks to their supply chain

Here are a few important pointers from the webinar:

UPS Capital appointed Harris Poll to survey U.S professionals who supervise shipments or are key decision makers for their company to understand their views on cargo insurance and how they manage risks in their supply chain. For the study, Harris Poll surveyed more than 600 professionals.

Why do shippers need insurance?

Setting the direction for the webinar, Tyffany shared some of the findings from the survey which highlights the risks to shipments during transit and explain why shippers need insurance: 

  • 1 in 10 shipments face a glitch 
  • 92% of the respondents said they experience some delay, loss, or damage in transit each year
  • 15% of shipments can be affected due to in-transit incidents 
  • Approximately a loss of USD 56 Billion is reported annually due to cargo and freight movement (National Cargo Security Council)
  • No mode of transport is free of incidents like lost shipments, damages, or delays
  • Full truckload shipments report a loss of 12.8% annually 
  • LTL shipments show an annual loss of 10.8%  
  • Loss from ocean freight stands at 9.9% annually
  • Air freight reports a loss of 9.5% annually 

What is the impact of lost, damaged or delayed shipments?

To provide some perspective on the kind of damage such incidents can cause, UPS Capital asked the respondents to list down the areas that they thought were adversely affected due to lost, damaged, or delayed shipments:

  • 52% respondents said it hurt customer relationships 
  • 51% respondents said it resulted in financial loss
  • 46% respondents said it cost them in terms of employee time and cost
  • 36% respondents said it had a negative impact on company reputation

What is shippers’ view on carrier liability?

Do shippers, logistics professionals, decision makers understand what carrier liability is and what kind of coverage it provides to their valuable shipments? The survey provides some alarming results.

  • According to the results from the survey, almost 90% of the shippers rely on carrier liability to manage risks to cargo while in transit. 
  • Approximately 39% of the respondents thought that carrier liability is the same as real insurance. 
  • While 61% of the respondents believed that carrier liability and insurance were not the same, only a few of them were able to pinpoint the difference between carrier liability and insurance and the extent of cover each provides. 
  • Almost 25 – 50% of the participants thought that their carrier liability provided cover for incidents or events that it actually did not.

Why is carrier liability not enough?

Since a majority of shippers rely on carrier liability, it is necessary to understand what carrier liability is and how much coverage it actually provides. 

The Business Dictionary defines carrier liability as “Air and ocean carriers are normally liable for all damage, delay, and loss of cargo except those arising from the act of God, act of the shipper, and the inherent nature of the goods from acceptance of cargo through its delivery or release. Air carriers are usually liable under Warsaw convention, and ocean carriers under Hague convention.” 

The definition of carrier liability, also explained by Tyffany, itself provides a list of instances where a carrier cannot be held liable for loss to shipment during transit. Apart from the given instances, as Tyffany shares, the law allows carriers to limit their exposure and exempt a variety of situations thus further limiting their liability. To cite a few examples from the webinar that carrier liability does not cover:

  • Cross-border shipments getting damaged by a customs agent or other government agency during inspection
  • Pirates, hijackers or other “assailing thieves” stealing ocean containers  
  • A fire breaking out on a cargo ship that destroys cargo on board

What are the benefits of real insurance?

Along with providing a variety of policies which may be customized to suit the shipper’s requirements, real insurance also offers a host of benefits that can mitigate financial loss, help maintain the market reputation and customer relationships. Some of the benefits highlighted in the webinar include:

  • Claims are settled based on the real valuation of the shipment
  • It provides insurance coverage for all modes of transportation 
  • It covers door-to-door, so no separate policy is needed in case of multi-modal transportation 

However, getting a cargo insurance policy is not a complete solution. It is also necessary to record the information about your supply chain so that you can understand the consequences in relation to claims. One of the best ways to do it is in a transportation management system, says Brian. 

To know more about why you need real insurance coverage, insurance solutions and how a transportation management system can help keep track of and manage insurance claims, make informed business decisions for your supply chain, and mitigate risks to your supply chain watch the complete webinar HERE.  

Want to know more about UPS Capital’s insurance plans offered to BlueGrace customers or our transportation management system? Connect with our team today by filling out the form below, or call us at 800.MY.SHIPPING.

Intelligent Automation, the Future of Supply Chain. Is the Logistics Industry Ready?

It is a well-known fact that supply chain is increasingly becoming digital. But is simply adding a digital component to the complex supply chain network enough to make it efficient? Will it provide the edge that companies need to win in the current cut-throat and ever-changing global business environment?

What more is required?

According to a study conducted by IBM and National Retail Federation (NRF), the retail and consumer goods industry is designating intelligent automation, also known as artificial intelligence, as the future of supply chain. For this, IBM and NRF surveyed 1,900 retail and consumer products company executives across 23 countries.

The survey revealed that “intelligent automation capabilities help increase the annual revenue growth by up to 10 percent”. It found that of all the respondents surveyed, around 85 percent from the retail sector and 79 percent from the consumer products sector “plan to use intelligent automation for supply chain planning by 2021”. The study also found that 79 percent of the retail industry respondents “expect to use intelligent automation for customer intelligence by 2021”.

Combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.

According to IBM, integrating supply chain with customer insight is essential for the success of the omnichannel. It further added that combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.

When the retail and consumer goods industries, who have the most complicated supply chains, are envisaging intelligent automation as the future of the supply chain, then can logistics – the core of supply chain be left behind?

Definitely not. In fact, the current logistics landscape which is highly fragmented and complex will benefit immensely by leveraging the power of intelligent automation in its day-to-day functioning.

How Intelligent Automation Will Benefit Logistics

Better planning: Intelligent automation can integrate and streamline transportation planning, route planning, warehouse network, and inventory planning. It will enable data sharing among all functions, highlight errors and outliers in the data, and speed up data analysis thus increasing efficiency, improving accuracy and lowering operating costs.

Increased Transparency: The global nature of the industry, different rules and regulations across countries and multiple stakeholders has made transparency in operations and business transactions mandatory. Intelligent automation can be used to add checks at all data entry points to make sure that only verified and correct information enters the system and is available to all stakeholders on demand. This will improve decision-making, reduce incidents of miscommunication between users (internal and external), and decrease dependency on other departments for data.

Enhanced Visibility: A system empowered with smart technology like GPS and RFID can enable users to track shipments from pick up till the final delivery location. This can improve multimodal transportation planning and also keep the customers updated with a more accurate expected time of delivery. Visibility of shipments and other aspects of the supply chain also supports the planning function, highlights possible issues before they become roadblocks, and allows better control over the process.

Improved Efficiency: Adopting artificial intelligence to empower systems and processes will greatly reduce duplication and monotonous tasks. This, in turn, will improve both human and machine efficiency and reduce the turnaround time for each task to be completed.

Refined Analytics: Logistics is a data-intensive function. A large amount of data is used as the base for making strategies and taking decisions. An intelligent automated reporting system can reduce the time taken to collate, clean, format the data and minimize errors, thus leading to better, informed and quicker decision making.

Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution.

These are just some of the benefits of using intelligent automation in logistics. Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution. In a statement by the company, Luq Niazi, global managing director of IBM Consumer, explains the care organizations working with intelligent automation need to take. He says “The entire value chain operational infrastructure of B2B and B2C commerce, there has already been an increased adoption and demand for intelligent automation. This also brings forth the need for stronger transparency, ethical practices and business prioritization to evaluate and deploy AI responsibility.”

We at BlueGrace understand the importance of an intelligent tech-enabled ecosystem. Hence we have leveraged intelligent automation to build our transportation management system. The BlueGrace TMS provides its users with high-tech tools, visibility, visual analytics, speed, reliability, and it easily integrates with other systems and technologies. Along with performing all the regular functions, it also empowers you to identify opportunities to reduce costs and optimize your supply chain. To connect with our team to know more about BlueGrace’s TMS and how it can support your business growth, contact us at 800.MYSHIPPING or fill out the form below, and one of our experts will contact you today!