Trucking is a cyclical business. There are periods of intense growth followed by a lull and then there are periodic seasonalities which may vary from one industry to another. How long each period lasts depends on the internal and external factors that greatly impact the trucking industry.
International trade policies and volume, capacity, manufacturing industry’s performance, local Government policies, fuel prices, and driver availability all impact the trucking industry’s growth
International trade policies and volume, capacity, manufacturing industry’s performance, local Government policies, fuel prices, and driver availability all impact the trucking industry’s growth. For example, all of 2016 was a difficult year for trade which also affected the trucking industry. However, when business picked up at the start of 2017 and soared till September 2018, the trucking industry also benefited. From there onwards, trucking growth has been showing a declining trend, suggesting that another slump is in the offing.
What are the reasons behind this slump? Is it a short term decline or a repeat of the low experienced in 2016?
What are the reasons behind this slump? Is it a short term decline or a repeat of the low experienced in 2016? These are the two questions plaguing the trade and analysts since the start of 2019.
What Factors are Contributing to The Industry’s Concerns?
The trade war with China: The standoff between the US and China is being highlighted as one of the main factors that may impact the trucking industry in the country. There is fear of freight volume reducing due to the tariffs put up by the two countries on each other. However, according to Transport Futures Principal and Economist, Noel Perry who spoke to this article in TTNews.com on the decline in trucking growth, this fear might be unfounded. Noel Perry suggests that this problem may not be as severe as it is currently being made out to be. He feels that due to the prevailing state of the manufacturing industry in China, the Chinese may be amenable to work out a compromise with the US.
Reducing truck orders: A common factor used to judge the health of the trucking industry is the number of orders placed for new trucks. According to industry news sources, the orders for new trucks has fallen considerably in January 2019. However, while sharing the numbers, Truckinginfo.com also puts forth a plausible explanation for the reduction in new orders. According to the news in Truckinginfo.com, orders reduced by 26% in January 2019 as compared to December 2018 and were 68% less than the truck orders placed in January 2018.
Going by this forecast, it is quite possible that the transport sector may also experience a slow year.
Economic growth slowdown: 2019 began with some concerns regarding the growth of the economy. In a Wall Street Journal article published in January, leading financial institutes shared their forecast for the year. Goldman Sachs predicts a growth rate of 2% for the first 6 months of the year and a rate of 1.8% for the rest of the year. Morgan Stanley presented a slightly more pessimistic view with a forecast of 1.7% growth rate for the year which could go down to 1% for the third quarter. The article also shares a quote from Jake McRobie, Economist, Oxford Economics, “We have been looking for a gradual slowdown in manufacturing activity amid headwinds from trade uncertainty, reduced fiscal stimulus and weaker global activity, but the risks of a sharper deceleration have increased”, to provide some explanation for the low growth forecast. Going by this forecast, it is quite possible that the transport sector may also experience a slow year.
Even if one is to consider the lower number, the driver shortage is a critical issue.
Driver shortage:According to this piece in JOC.com, the American Trucking Association found a gap of 50,000 drivers and the FTR Transport Intelligence has reported a shortage of 300,000 drivers. Even if one is to consider the lower number, the driver shortage is a critical issue. The article further highlights that hiring companies are finding it difficult to get drivers onboard even after offering a pay increase. This is one aspect that can hamper the supply chain even when all other factors seem to be positive.
The Silver Lining
Even the worst of situations tend to have a silver lining, so does the trucking slowdown. While the cost of operating and maintaining trucks is not likely to come down, the slump in business and the extra capacity built over the last two years may provide the shippers with a little leverage when negotiating freight rates.
Apart from the driver shortage, all other reasons leading to fear of a trucking slump are a part and parcel of the dynamic global business environment. As FTR Vice President of Commercial Vehicles, Don Ake suggests the lull in business is felt because the industry is comparing the exceptional peak experienced in 2018 to the current scenario.
Hence to get the best results irrespective of the prevailing trade cycle, it makes business sense think strategically, collaborate and maintain relations with well-established business partnerswho can help manage volatility in the current business environment.
That said, the freight market is fickle in nature and can unexpectedly turn into a carrier-led market from a shipper-led market and vice-versa. Hence to get the best results irrespective of the prevailing trade cycle, it makes business sense to think strategically, and collaborate and maintain relations with well-established business partners, like BlueGrace, who can help manage volatility in the current business environment. If you would like to speak to one of our freight experts, call 800.MYSHIPPING or fill out the form below.
Congratulations! You made it this far – you’re a Walmart supplier. To achieve this, you’ve provided all your information, proven that your products are a good fit for Walmart’s customers and demonstrated that you are the sort of business Walmart wants to work with. You’ve filled in the forms, shared your certificates and completed the 11 step onboarding process.
It’s a fantastic achievement. According to Walmart, you’re now one of 100,000 businesses worldwide supplying products to its customers. That number demonstrates just how much Walmart is the “800 lb. gorilla” in the supply chain, and it’s also a mark of how highly regarded you are, as a CPG company, to have it agree to distribute your products.
We know that all your distributors, all the retailers you sell wholesale to, are important to you, but Walmart is possibly just that little bit more special. Whether you’ve just started, or have been supplying it for a few years, it’s a different business to the one we all grew up with. The pressure Walmart faces are the same as the rest of the retail sector. Its size is a double-edged sword – its footprint of stores and operations means there are more places to be affected by market disruptions, yet it has the resources to not only weather the storm, but profit from it too.
Just being big isn’t enough, however. What marks Walmart out is its commitment to innovation. In July 2019 it opens its first high-tech consolidation center — a 340,000-square-foot dock in Colton, California that will use automated technology to receive, sort and ship freight. According to the announcement, this ‘will enable three times more volume to flow throughout the center’.
Walmart innovates to maintain its position. Why does it need to do that?
The Situation Today
Walmart needs to continually innovate because it faces a very real threat.
Amazon has been at the forefront of the consumer shopping experience revolution. One-click payments, same-day delivery in certain geographies, multiple delivery and collection options, dash buttons – all features that are shaping customer expectations. Its dominance of the retail landscape is such that it has gone from driving 15 percent of core US personal consumption expenditure (PCE) growth in 2013 to 69 percent in 2017, according to Morgan Stanley Research.
This has forced many retailers, including Walmart, to revise how they serve customers. For Walmart, that means a switch from building stores to focusing more on e-commerce to drive growth. In September 2016, it acquired e-tailer Jet.com, accelerating its online sales and helping it to outperform the retail sector within a year. It consolidated its e-commerce position with the purchase of Indian online retailer Flipkart in 2018.
In much the same way that Amazon purchased Whole Foods to acquire physical presence, Walmart acquired Jet.com to give it a credible e-commerce function.
That does not mean that Walmart is abandoning its bricks and mortar business. Those stores mean that it is closer to more people in the US than any other retailer, with 90 percent market penetration, versus Amazon/Whole Foods’ combined 74 percent.
So, Walmart is closer to you, but Amazon can offer a great experience. This is where Walmart’s innovation switches from automation technology in vast consolidation centers to delivering efficiencies in its extended supply chain. A customer can find anything in Amazon and get it the next day. With a Walmart down the street, if a product is in stock, that same customer can walk away with it on the day.
It is here that suppliers come in. Products have to be in stock. As Steve Bratspies, the chief merchandising officer for Walmart US, told the Wall Street Journal, “When we receive the product that we ordered, we see better sales.”
In other words, if a customer can not find what they want, they will go somewhere else. Not only does the retailer lose that sale, it also loses the opportunity to sell complementary products, or perhaps something that simply catches the shopper’s eye on the way to checkout. According to Greg Foran, Walmart US CEO, five percent out of stock at Walmart’s scale translates to 5,000 orders.
So, Walmart will do everything to make sure that its shelves stay full, that customers can find what they want, when they want it. If insufficient stock is ordered, that’s a retailer issue. If insufficient stock is delivered at the right time, that’s a supplier issue.
At the same time, as Walmart and other bricks and mortar retailers look to economize, they’re looking at where they hold stock. They want stores to sell, not to act as warehouses – the price of retail square footage simply does not allow that in the current market. That’s why Walmart is introducing these consolidation centers – to collate from hundreds if not thousands of suppliers, before using their own distribution networks to get the stock to stores.
That’s the retail landscape suppliers are entering into when they become part of the Walmart supply chain. Alongside this are rising fuel and transport costs – the US Energy Information Administration (EIA) May 2019 update forecasts that regular gasoline retail prices will average $2.92 per gallon (gal), up from an average of $2.85/gal last summer.
It’s an additional cost that both suppliers delivering to Walmart and the retailer itself, through shifting products from consolidation centers all the way to stores, are going to have to take on board. This ultimately impacts margin across the supply chain.
Ramifications: they say jump, you say how high
An environment of ruthlessly seeking efficiency, with fluctuating transportation costs, dominated by 800 lb gorillas.
What that means for suppliers is that they have to deliver when Walmart wants, not when the suppliers feel like it. It’s where OTIF comes in – on the actual due date, exactly the right amount. There is no grace period, limited leeway. That’s because flexibility eats into the margin.
Struggle to comply and chargebacks kick in – currently three percent on all shipments below the threshold. Amazon, with MABD, may appear slightly more lenient, but it has a similar level of chargeback on both late and early deliveries. On top of that, purchase order (PO) and advanced ship notice (ASN) violations (such as failing to confirm a PO or not sending an ASN in good time) levy a two percent charge
It’s just got stricter, as well. From May 2019, suppliers that ship full trucks must hit a specified window 87 percent of the time, up from the previous 85 percent previous target. For less than truckload (LTL) shippers, the jump is that much higher – up to 70 percent in that window, from 50 percent before.
It gets trickier. Historically, suppliers were judged on how consistent deliveries were on time and how complete they were. Now, those two parts will be evaluated separately. It’s all about having data that can be fed back into a stringent evaluation process to identify further efficiency opportunities.
Then there’s the challenge of Walmart as an international operation. As you grow within Walmart, there may become opportunities to supply its Canadian subsidiaries, or even further overseas. That brings its own challenges as you will need to comply with local regulations and legislation, both in terms of your products and your business practices.
What you need to think about if you are
So far, what we’ve discussed applies to all shippers. Yet every business is different, and there will always be specifics that only certain types of suppliers need to focus on. In this section, we’ll take a brief look at three types in particular: newer CPG companies, LTL shippers and those dealing in perishables (such as fresh food).
…a newer CPG shipper
With the introduction of consolidation centers, and the end of stores holding inventory, the onus of predicting consumer demand is passed on to CPG companies. That means knowing who your end customers are, how they shop and when there might be spikes in demand, even if you do not sell direct. This is a challenge for all CPG shippers, but whereas more established brands may have the resources to store spare stock, for newer businesses that capacity may not be available. This is where really clear insights into customers, coupled with efficient internal processes and a lean supply chain of your own, come into play. Falling foul of chargebacks will quickly eat into profits, making it vital that shippers can accurately predict consumer demand.
If you’re LTL, the positives are savings in not paying for half-empty trucks, but the drawback is less control over how the carrier gets to your distributor than if you were a full-truck shipper. The carrier may pick up your pallets, then go to another shipper for their products. It might head to a regional dock to unload your pallets to go on another truck heading somewhere else, before being cross-shipped on to a third truck with everyone else heading to Walmart. That means you have to build in additional time to your shipment planning to ensure that you comply with OTIF, which will have ramifications for your own production processes and supply chain.
…dealing in perishables
While targets may be tight for long-life or non-perishable goods, for suppliers that deal in products that have a limited shelf life, OTIF goals are even stricter. That two-day window becomes one, which puts the emphasis on the shipper to be absolutely accurate with their deliveries. All retailers that stock food and drink, particular that which needs to be kept in controlled, refrigerated environments, need it to be able to stay on the shelf for as long as possible, in order for it to be as attractive as possible to customers. Get closer to use by or best before dates, and consumers are less likely to buy, leading to last-day discounting and wastage.
It might seem like becoming a Walmart supplier is nothing but hardship and the constant threat of chargebacks. Yet it is challenging because Walmart is such a golden opportunity to get your products into the hands of millions of consumers, both in the US and further afield.
It isn’t all about the sales opportunity, however. With retailers like Walmart looking for efficiencies, it forces their suppliers to either follow suit or fall off. By aligning your own systems and processes with the demands of OTIF, you will end up a leaner, meaner machine. This means less wastage in your operations, resulting in less outgoings and more profit.
At a time when all sectors are undergoing huge disruption, this streamlining sets you up to thrive rather than simply survive. While it is demanding, the practices and processes you onboard will unlock long term gains for your business.
The question is, what do you need to consider when aligning your business with the demands of Walmart?
Top tips on being a star supplier for Walmart
Here’s what we’ve learned turns a good shipper into a great Walmart supplier from working with businesses just like yours:
It’s all about data: Walmart wants its supply chain to be as efficient as possible, so it’s willing to share the data it has to help you shape your operations. If you don’t sell direct, getting tangible customer intelligence can be a challenge, but Walmart will share information, such as on-shelf availability and point of sale insights, more often.
Work from the customer backward: On time doesn’t mean in-time to Walmart. If you don’t want to suffer chargebacks, you need to think about your timings from the customer backward. The customer buys your product after it’s been on the shelf X days, so how long prior to that do you need to be delivering it to the distribution or consolidation center? How long does it take to get from your warehouse to that point?
Chargebacks hurt, so make sure it’s justified: Walmart may be huge, but it isn’t infallible. There’s a lot of automation, which means sometimes chargebacks can be applied due to mistakes in their processes rather than your failed compliance. For instance, a carrier may have delivered your shipment OTIF, but the DC did not unload that day. The only way you can contest, however, is to have full and complete records showing how you delivered OTIF against the buyer requirements. Having a trusted logistics partner that can audit your scorecard and compare it to carrier manifests is critical, and it could be the difference between receiving a chargeback or being able to challenge it successfully.
Load planning: If you supply multiple products to Walmart, think about how they are loaded on the pallet or in the truck. It’s no good having the back half of the truck full of products for distribution centers further down the line, or shorter life products nearer the bottom of the pallet.
Think like a Roman: The Romans crisscrossed their empire with straight lines, because that’s the most efficient way from point A to B. You want to do the same, but build in factors such as weather forecasts, traffic patterns, fuel levels, and load points. You’re looking for the most optimized route because it will save you time, which in turn saves money.
Packaging tips: People need to know what’s in the box. That means distribution center employees, yes, but it also means customers. How will it look on the shelves? At Walmart’s Supplier Summit 2019, Foran said “packaging should be designed for impact and efficiency with large fonts that are easy to read, easy to find and bar codes which also are prominent on the packaging.”
Cut down on travel time: Fuel and transport costs are the great unknown, tied to everything from crude production levels to the political situation in the Middle East and South America. You want to control as much as possible, so limit how far you need to move your inventory by positioning it closer to warehouse locations. If Walmart is selling your product predominantly in California, why not get as close as possible to the new consolidation center? Limit the variables and you have a more efficient machine.
Appointment scheduling: Be aware that your mode of transport will dictate when your products can be delivered. Most LTL carriers will not allow you to pre-schedule appointments, preferring to wait until your freight has arrived at the consolidation terminal. It will then be co-loaded with other Walmart-bound deliveries, with appointments based on the trailer the carrier has allocated for that day. It’s therefore vital that you, or more likely your logistics partner, can work closely with both the carrier and scheduling system to make sure this is being done. By doing so, you will be better placed to identify exceptions, such as where the carrier cannot accommodate the delivery, to adjust OTIF without penalty. Most suppliers don’t realize this and miss the opportunity. It is important to note, however, that this must not be abused and is for exceptions only. Your lead logistics service provider is expected to have the right connections and expertise to manage it professionally.
Speaking of carriers, reliable ones are worth their weight in gold: We hear of horror stories where carriers and shippers fall out because neither can clearly understand what the other is actually trying to achieve. The number one mistake people make is to think that being efficient equals going for the cheapest option, when it’s actually about having every part of your chain operating reliably. There are carriers that will drop prices to get business on board, but if you’re then simply more low-paying cattle, is your OTIF compliance going to be top of the carrier’s agenda? You want a good price, certainly, but you need a partner that’s aligned with your objectives more.
The right foundations: You can’t operate a 21st-century business using 20th-century tools. To compete in today’s market needs having the right technology underpinning your operations, foundations which give you visibility and control and allow you to have sight of, and optimize, every aspect of your business.
Embrace digital: Walmart is investing billions in its technology – that means manual processes and paper documents are disappearing. Digital tools like electronic bills of lading are becoming the norm. Do you really want to be the only shipper the trucker has a paper docket for, with the rest on his mobile device the dock or DC are simply scanning?
Ensure everyone lives by OTIF: It’s all well and good your logistics team being held to OTIF, but when the penalties impact the rest of your business, isn’t it really a matter for everyone? It comes back to working back from the customer – the process doesn’t stop when the product leaves your dock but should carry on through to your production team. If you’ve got a lead time of two weeks to produce new stock, that’s not a just manufacturing factor, it’s a supply chain one too.
Walmart want you to win; let it help you: Walmart run a sophisticated education network designed to support suppliers. It’s in its interests that you are operating to the best of your abilities, so make full use of the classes, academy, and tools it offers to help you do just that.
OTIF is vital, but so is everything else: Walmart is taking huge strides in making its entire operation as sustainable as possible, which includes targets for suppliers. These are only going to get stricter, so it’s a good idea to know what they are and keep yourself aligned. There will come a point where being 100 percent OTIF compliant, with customers buying your products in droves, won’t save you if you have a huge carbon footprint and are unsustainable. That’s a lot to take in, so here’s a one-off tip:
How to write a great OTIF action plan: Walmart lives on data, which means evidence. Write a great OTIF action plan and you will have evidence on how you will improve standards. But how do you do that if you’ve not done one before? Googling isn’t an option here – you need qualified, experienced support. Hiring the right people is one route – but they won’t come cheap, and can you justify having them on staff as a permanent employee. Another option would be to outsource to a competent third party. One which has experience of supporting suppliers to build efficient supply chains, whether they’re supplying to Walmart, Amazon or any other big box retailer. Having a supportive partner that has done this, time and time again, for all sorts of different businesses and sectors, means you get access to the right experience and support, tailored to your unique requirements
Being a Walmart Supplier – a story from the frontline
For one Houston-based health and beauty supplier, working with Walmart was a dream come true, until the tremendous growth it propelled led to distribution challenges.
With vendor scorecards dwindling and chargebacks against purchase orders mounting the need for a better solution was apparent. From numerous carrier meetings to drive on-time compliance to costly upgrades in service levels, the trend continued to show little improvement.
Lead times were not an issue and inventory levels were manageable, yet carriers could not seem to comply with the OTIF date clearly displayed on the BOL. Purchase orders were being shipped with ample lead time and in most cases early with guaranteed service at a premium. However, even with upgraded service, the carriers would typically refuse to refund the charges since they were delivered “on time” per the standard transit.
To tackle this, the supplier analyzed the data and scorecards to determine the root cause and set a baseline for current state performance. Next, an assessment of ERP integration capabilities was performed. By linking this with a transport management system, this supplier was able to apply custom business rules to achieve the missing link of the overall issue.
What this meant was that no matter when the order was received in advance of the OTIF, the supplier could effectively route the “Best Value Carrier” and provide the most optimal ship date, relative to the selected carrier’s standard transit time. Each order, once approved within the ERP, would be rated and routed with a Walmart approved carrier delivering the lowest cost, standard service and shipped on the day that would best fit that carrier’s network, all to allow for the delivery within the specified OTIF window.
The supplier showed a 90 percent reduction in chargebacks within the first 60 days of implementing this program and realized the best scorecard performance in recent history.
Now it’s time to start work
As we said before, the hard work starts now. Remember, you aren’t alone – many CPG companies experience difficulties keeping up – back in August 2017, OTIF compliance stood at 70 percent, and it’s taken a while to get higher. Walmart wants you to do well, so listen, learn and take the opportunity that awaits. Look at your own network, your own suppliers and operations, and see how they can work together to support your business with Walmart or any other big-box retailer. Technology and nuances of logistics and supply chain operations are vital here. Working with partners who have the connections, first-hand experience, and understand both the business and technology can make the difference between success and failure.
BlueGrace is a freight and logistics services provider and one of the top 3PLs (Third-party Logistics Providers) with invaluable experience in managing complex logistics programs of leading CPG companies. The dedicated team has the first-hand experience in planning, building and delivering supply chain solutions for CPG businesses that not only help them meet the requirements of their retail partners but turn their logistics from a cost to value add.
You’ve done great work getting this far. Now it’s time to do even better. Give BlueGrace a call today at 800.MY.SHIPPING or fill out the form below and see how we can help you achieve exactly that.
While there are a lot of buzzwords in the logistics industry, it may be surprising to some but “business strategy” is not among them. Every company needs a strong plan of approach and a method of conducting business that will put them in a more advantageous position. Successful companies understand that good strategy isn’t about just doing better than the “other guy” but also about not hindering themselves in the process.
One of the biggest ways that shipping companies tend to shoot themselves in the foot is by looking at their carriers as a resource rather than an asset.
One of the biggest ways that shipping companies tend to shoot themselves in the foot is by looking at their carriers as a resource rather than an asset. Being a preferred or “shipper of choice” is one of the best ways to shore up your strategy to make you more profitable today, next week, next year, in five years and years after that.
With the dwindling supply of able-bodied drivers, the relationship between shipper and carrier is more important than ever before. Here are a few things to consider when it comes to attaining that status with your carriers and carrier conduct in general.
Move to an Integrated Supply Chain
One of the worst carryovers from the inception of the logistics industry is that aspect of the business is thought of as a separate entity, a cost center. By siloing these facets rather than integrating them, it’s easy to lose cohesion and efficiency.
For a shipper, every part of their business is (and should be) connected.
For a shipper, every part of their business is (and should be) connected. Your sales team is just as important as those in the warehouse or operating the dock. Even if those are all considered to be connected and are even working as a complete unit, transportation is no less a part of that. All too often, shippers look at their carriers as an afterthought and opt not to include them in the larger operations discussions as well as providing information to them at the last possible minute.
“When an order arrives, ideally the information shouldn’t only be broadcast to inventory folks and the distribution center. The information should immediately go to the transportation group so they can start to coordinate the capacity to move that freight. Too often transportation folks are only notified when the pallets are sitting on the docks,” said Brian Gibson, executive director of the Center for Supply Chain Innovation at Auburn University
While cutting down on the transportation budget might save a little cash up front, it could (and often does) have an impact on other facets of your business.
Of course, the cost is a factor in this regard. While cutting down on the transportation budget might save a little cash up front, it could (and often does) have an impact on other facets of your business. Disconnect and poor communication with a transporter tend to end up costing more in the long run with delays, detention fees, poor customer service, annoyed carriers, unsatisfied customers.
Do Unto Others
The golden rule certainly has its place in the business world and unfortunately, not all shippers and carriers have learned to get along as they should. Pricing is the perpetual thorn in the side, of course, and it’s easy for one side or the other to take advantage when the conditions are right. The “us-against-them” mentality may be useful when it comes to thinking about the competition, but it really has no place when you’re working with a carrier. Treating carriers poorly can have some serious consequences in the future.
Think about 2016 and 2017 when shippers could harangue carriers for a better rate and carriers had no option but to comply. In 2018, when demand was high enough for carriers to be more picky on what freight they carried, the worst of the antagonizers were either dropped or gouged when it came to the bill.
Trucking companies might put up with it when demand is low and they have no choice, but don’t think they won’t drop a company as soon as capacity picks back up.
Build a Good Working Relationship with Carriers
Remember, carriers, just as you as a shipper, are in the game to make money. For them, profit comes when they are more productive, so getting their drivers in, out, and on the road to the next delivery is key. However, when a driver is delayed, that puts a hurting on their productivity and ultimately their bottom line.
One of the best ways you can help to strengthen your working relationship is to ask your carriers to audit your supply chain and make suggestions and recommendations on how to make it more efficient.
One of the best ways you can help to strengthen your working relationship is to ask your carriers to audit your supply chain and make suggestions and recommendations on how to make it more efficient. While detention fees might help to recoup some of the losses from a delay, remember, carriers would much rather keep their drivers moving instead.
While we might not be able to predict the future precisely, shippers are able to put together a forecast of what they’ve got coming down the pipeline for deliveries. Communicating that information with carriers ahead of time not only helps to ensure there’s capacity available, but it also makes life considerably easier for both parties and strengthens the relationship at the same time.
Trucking companies like to know what’s coming down the line, more to the point, they like to have shipments lined up so they can keep their trucks moving. If they aren’t expecting anything from you, then they’ll look for freight elsewhere. While that’s a good move on their part, it doesn’t do a shipper any favors when they have freight that needs to get on the road.
One thing to remember is that the more communication you have with your carriers the better the relationship will be and the more reliable the service.
Small to midsize companies will typically make forecasts on a three week or monthly basis while larger companies will run a two-week forecast. Regardless of the number of days or week, though the one thing to remember is that the more communication you have with your carriers the better the relationship will be and the more reliable the service. The optimal goal is to have continuous service with the same carrier pool. This not only helps to build a more stable rapport with the carriers, but it’s mutually beneficial to both parties to have a consistent schedule that shipper and carrier alike can count on.
Make Decisions Based on Data
The technology available to the supply chain has grown up so much over the past few years that we’re able to make inductive leaps that we’ve never been able to do before. With the right technology, we can collect a seemingly endless number of data points, aggregate them and turn them into something comprehensible. From there we can take that information and use it to make informed decisions as well as highlighting opportunities for efficiencies.
Even on the most basic level, for example, this technology gives shippers the ability to track their freight in real time and proactively make decisions that could avoid delays, rather than reacting when it already happened.
Conversely, this data is also a great way to improve the communication between shippers and carriers.
Weekly communication with carriers helps to foster positive growth in relations as well as provides the ideal opportunity to discuss operational problems and pain points. Yes, the transportation budget matters, but that pales in comparison to the difference between getting exceptional service and poor service.
Why Shippers Should Consider Working with a 3PL
Third-party logistics providers (3PLs) can be instrumental in navigating this pro-trucker market. As a shipper, working with a 3PL can give you access to carriers that are not only rated and vetted but have a good working relationship with your 3PL partner. Consider it a “leg up” on building a good relationship. Additionally, a good 3PL knows what their carriers are looking for in terms of preferred or “shippers of choice.” Because of that and the changing market conditions, 3PLs are becoming more heavily relied upon to help get the job done.
“It’s more than just the growth of demand that is making 3PLs a tempting partner for shippers. With the influx of big data, analytics, blockchain technologies, and so many more innovations, attempting to keep pace can be difficult. As demand grows and capacity tightens, shippers and carriers alike need to be smarter about how they operate if they want to stay competitive in today’s marketplace.
As the industry continues to change, it’s likely that we’ll only see 3PLs continue to grow in popularity.”
Working with a partner that’s dedicated to shaping up your supply chain takes much of the guesswork out of having to do it yourself. We at BlueGrace specialize in doing just that, make your logistics work for you in the leanest and most efficient way possible.
At BlueGrace, we take your current freight data and get an inside look at what your team may be missing. Our carrier procurement strategists will help you meet tight deadlines, optimize your freight expense, and ultimately, find peace of mind. Fill out the form below to find out more about how partnering with BlueGrace can create more visibility and opportunities to simplify, overall helping you find a better way to do business.
2018 delivered some significant changes for BlueGrace Logistics. From new offices to charity events that helped others in so many communities, our amazing team made this year one to remember. We want to take some time to recap our biggest changes and our best memories of the year.
CSO, Randy Collack Announces Retirement
Randy Collack, Chief Strategy Officer, has retired this year. Mr. Collack had been with BlueGrace since its inception in 2009. He oversaw several departments as the Chief Strategy Officer, including all Freight brokerage in the Tampa headquarters. Throughout his tenure with the company, Randy was responsible for the growth of the sales and operations departments, and was a critical component of the success BlueGrace Logistics has achieved to date.
We wish him the best in his retirement!
BlueGrace Takes 1st Overall At 2018 SportsFest
WE. DID. IT. In April, our outrageous employees beat 200 other companies and 4,000 other people at SportsFest 2018 and earned the #1 Company title at Corporate SportsFest! Can we get a WOOOO!? Congratulations to all BlueGrace employees who attended and competed in SportsFest 2018. SportsFest is always a wildly successful event that embodies team building, solid competition and fun. Exhausted, but ecstatic, our team returned home victorious and more engaged with both coworkers and customers. We’re extremely proud of our team and their drive to succeed!
Opening Of Downtown Chicago Office
Mayor Rahm Emanuel joined BlueGrace Logistics to announce the company opening an office in downtown Chicago in May 2018. BlueGrace added 80 jobs at its new location in the iconic Chicago Board of Trade Building. The new office will continue to support the strong growth BlueGrace has accomplished since its launch almost 10 years ago.
“The market we’re seeing now will be around for quite some time. We need to add a lot of capacity and a lot of professionals,” Bobby Harris, president and CEO of BlueGrace Logistics, said. Chicago “is a rich source of talent and resources, whether it’s truckload capacity or sales reps.”
Cats vs Dogs Raises 64,000 Pounds Of Food for Humane Society
Each year, BlueGrace female (Team Cats) and male (Team Dogs) employees compete against each other to see who can collect the most amount of pet food in total pounds. The food is then donated to a no-kill shelter to feed homeless animals in the community and used for pet owner assistance programs that benefit homebound and elderly residents on a fixed income. This year, the employees of BlueGrace collected over 60,000 pounds of food between Tampa & Chicago – reaching a new record for the contest on a location-wide scale.
The BlueGrace Webinar Series Is Introduced
BlueGrace began our new webinar series in February of 2018. With that announcement came 10 highly attended Webinars that offered valuable information from industry experts regarding everything from capacity issues, to freight data usage and visualization. Every attendee is offered a Free Supply Chain Analysis, utilizing BlueGrace’s proprietary data analysis tool, Vision. For a list of upcoming Webinars Click Here. Thank you to all that have attended in 2018!
Harris joined an esteemed group of senior-level business executives representing all modes of transportation. They meet regularly to discuss the latest NUTC research and to consider solutions to the economic, technical and social problems facing national, local and global transportation systems.
15,000 School Supplies
Each year, more and more children are sent to school without the materials needed to be successful. BlueGrace Logistics partners with local organizations to assist in helping that need with their “Backpacks of Hope” drive. The drive divides each office into teams who then compete to collect the most supplies. The winning team wins simply bragging rights or a fun prize of no monetary value, but the competition as well as desire to help those in need truly push the drive to success each year.
BlueGrace’s headquarters in Tampa, FL has partnered with Metropolitan Ministries for many years, and as the company has grown and added regional offices throughout the country, these offices have found local organizations and schools to partner with as well. Together everyone was able to donate a total of 15,381 supplies and 1,157 filled backpacks.
Bobby Harris Named One Of Floridas Most Influential Business Leaders
The Florida 500 list is the product of a year-long research initiative by the editors of Florida Trend resulting in a personal, engaging look at the state’s most influential business leaders across major industries. The 500 executives were selected based on extensive contacts in regional business circles, hundreds of interviews and months of research, culminating in a highly selective biographical guide to the people who really run Florida.
Bobby is one of just 18 Transportation Executives chosen on the prestigious list of top business influencers throughout the entire state of Florida.
BlueGrace Logistics Becomes 6-Time Inc. 5000 Honoree
BlueGrace Logistics joined Inc. Magazine’s “Hall of Fame” as a 6-time Inc. 5000 Honoree. In 2012, BlueGrace was #20 on the annual list that ranks the fastest growing private companies in America – with 7,378% growth in just 3 years! Seven-Time Honoree, here we come!
BlueGrace Logistics Continues Chicago Growth Trajectory
The company’s prime Chicago Loop location matches perfectly with BlueGrace’s aggressive hiring approach aimed at attracting young sales professionals.
Here’s To An Even Better 2019!
We are so proud of how BlueGrace has continued to grow, prosper and help others in 2018! Thank you to all employees, partners and vendors for another successful year, and we look forward to a bigger and better 2019.
According to reports, the connected logistics market is set to grow at a CAGR of 30-35 percent by the year 2021. In the next 2 to 3 years, analysts predict the connected logistics industry to be worth USD 40 – 50 Billion. It is expected to change the entire landscape of the global supply chain.
Integrated, Digital, IoT, Smart Logistics, Automation, and Big Data are some of the words and phrases that we’ve come to associate with logistics. All these together give us what we call connected logistics. With even one of these aspects missing from the mix, it would be highly difficult to build a logistics network that links all the players in international trade.
Who Are Parts of The Connected Logistics Network?
But today, logistics has ceased to be just a process of storing and transporting goods.
More often than not, when we speak of logistics we tend to associate the word with storage of goods and their movement from location A to location B. But today, logistics has ceased to be just a process of storing and transporting goods. It’s no longer limited to transport and storage facilities. Apart from the road, rail, air, and sea transport and warehouse operators, the term connected logistics also includes customer service teams, manufacturing, production planners, inventory planners, and the sales team. All these teams have responsibility for processes that are necessary to deliver the final product to the end consumer. IT companies, software and hardware providers enable these teams to stay connected and support them to deliver a superior customer experience through cutting edge technology. This is how evolved logistics has become.
It is now not only a crucial part of the supply chain, but also an essential element of an organization’s product and customer service strategy.
In fact, it will not be remiss to say that logistics is often a key differentiator – a USP for certain consumer products. In addition to the businesses and technology providers, connected logistics also includes lawmakers, cybersecurity monitoring agencies, and government authorities – especially transport, IT, and infrastructure departments across the globe. This group is responsible for creating a framework that can take into account the variations in rules and regulations across the globe and ensure that trade across borders is carried out efficiently.
What are the features of a Connected Logistics Network?
Real-time data: With the use of new and advanced technology and advanced analytics, the connected logistics network provides its users real-time data and market insights. This is making it simpler for organizations to make informed business decisions.
Now shippers can track their shipments from the time it leaves their warehouse or factory till the time it reaches the final place of delivery right on the platform where they booked the transport.
Increased shipment visibility: Gone are the days when one had to follow up with customer service executives at transport companies to know the location of their shipments. Digitalization, RFID tags, and GPS trackers have immensely improved shipment visibility. Now shippers can track their shipments from the time it leaves their warehouse or factory till the time it reaches the final place of delivery right on the platform where they booked the transport. This is also facilitating better transport planning especially in the case of intermodal transportation.
Inventory management: Imagine a large warehouse with stacks of boxes of different SKUs. Earlier, warehouses would have to maintain physical records of the goods and manually manage FIFO and order picking. Even after the initial ERP systems were introduced, there were still some challenges in the order picking process. Now, with the new technology like the RFID tags and ERP systems warehousing operations have become much easier, less time consuming and more efficient.
JIT inventory: Both manufacturing and retail organizations are working on leveraging the Just in time inventory management concept to help reduce inventory holding and storing cost. This process can be better managed with the connected logistics network as an advanced system can be equipped to provide triggers for when is the optimum time to place an order for inventory – FG or raw material – so that it reaches the factory or store at just the right time.
Global compliance management: Global trade comes with different rules, regulations, and legal requirements. It is difficult to keep track of changes in the rules and adhere to all the requirements of each country one does business with. New systems that are equipped to store legal checkpoints and raise a red flag when these requirements are not being met are making it comparatively painless for companies to meet country-wise compliance requirements.
This not only reduces the organizations’ cost on systems and software, but it also ensures seamless flow of information from one process to another in a standard format which will, in turn, limit the loss of data.
Integrated systems: System integration is one of the major facets of connected logistics. Now, organizations do not need to maintain separate systems for their different departments. Transport management system, warehouse management system, sales and billing, production planning, and finance-management can all be integrated into one platform with different modules and controlled access. This not only reduces the organizations’ cost on systems and software, but it also ensures seamless flow of information from one process to another in a standard format which will, in turn, limit the loss of data.
Document management: System integration has also helped improve documentation management and storage. Now, documents pertaining to a shipment or sale can be stored in digital format on the system. There is limited need to store and maintain physical copies. Authorized personnel can easily access these documents whenever they need to. Potential benefits are: ● Easy access to delivery signatures, original BOLs, and W&I docs ● Fast PODs to verify deliveries and invoices ● Clear view of delivery receipts and customer notes ● Clean/organized shipping documentation
While the initial investment in such technology and equipment might seem huge, the returns are equally attractive.
While the initial investment in such technology and equipment might seem huge, the returns are equally attractive. Since these systems and technology have become the demand of the day, it has become imperative for organizations willing to get a share in global trade to upgrade their systems and stay connected to the global business via their logistics network. This is especially critical for 3PL and 4PL logistics service providers.
At BlueGrace, we offer a proprietary TMS that is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® 4.0 offers cutting-edge tools for strong reliability and quick performance. Many of our customers prefer to integrate their systems or ERPs such as SAP or NetSuite directly with our BlueShip platform. Our IT integrations team will work closely with your staff to complete the connection between systems, keeping you connected every step of the way. To request a BlueShip demo, call us at 800.MYSHIPPING or fill out the form below to speak to one of our experts.
When it comes to regulations in the trucking industry, it’s something of a mixed bag. On an economical standpoint, the Motor Carrier Act of 1980 has given the industry free reign. On the other hand, the trucking industry is perhaps one of the most heavily regulated sectors in terms of safety, environmental protection, driver standards, and others.
the Trump administration is also reconsidering some of the regulatory strangleholds the government has over trucking and is leaning in favor of the truckers.
The Trump administration has also been a mixed bag for the industry. For shippers and manufacturers who rely on goods sourced from foreign goods, the tariffs and escalating trade war have made for a bout of white-knuckled planning. However, the Trump administration is also reconsidering some of the regulatory strangleholds the government has over trucking and is leaning in favor of the truckers. “This administration is looking at the regulatory environment a bit differently,” says Mark Rourke, executive vice president and COO of Schneider, the nation’s second largest truckload (TL) carrier. “We’re not seeing a lot of activity with new regulations.”
With President Trump now beyond his midterm, it’s worth taking a closer look at the regulatory environment surrounding trucking. There’s a fine line between too much regulation and not enough. While reducing regulations might make trucking companies more efficient, they could also encourage some unsafe practices. The tradeoff to that is that with more regulations, efficiency drops and rates go up, with shippers picking up the tab, of course.
Hard Hitting Regs
Of the numerous regulations that are out there, there are some that stand out more than others. The biggest of them include the Electronic Logging Device (ELD) the Hours of Service (HoS) and the age restriction that locks out aspiring truckers under the age of 21.
Given that the mandate has also begun to tighten capacity even further, it also encourages shippers and carriers to work more closely together in order to increase operational efficiency.
The ELD mandate has been one of the hardest to deal with this year and has caused a great deal of productivity loss for shippers as enforcement went into full swing. While it was originally intended to keep truckers honest on the HoS ruling by removing paper logs it hasn’t been a smooth transition. “After months of issuing warnings, state enforcement personnel began issuing stiff fines for HOS violations last spring. The result, executives say, is between 3% and 8% lost productivity due to the elimination of cheating,” according to Logistics Management. Evening out the playing field with ELDs does have some advantages. It encourages carriers to plan routes more efficiently so as to make their deliveries on time, this is especially important when you consider that some companies are threatening penalties for tardy drivers. Given that the mandate has also begun to tighten capacity even further, it also encourages shippers and carriers to work more closely together in order to increase operational efficiency.
Fine Tuning the HoS
While it has taken some time, ELD compliance has reached almost 99 percent across the entire industry. The biggest gripe truckers have, however, isn’t with the ELD but with the Hours of Service ruling. This is especially true for agricultural, seasonal deliveries, logging, and other select commodities.
With that being said, Washington is looking to tweak some of the HoS terms in order to make it a bit more bearable. According to Logistics Management, there are four main areas, in particular, they are considering amending.
Expansion to the current 100 air-mile “short-haul” exemption from 12 hours on-duty to 14 hours on-duty in order to be consistent with the rules for long-haul truck drivers.
Extending the current 14-hour, on duty limitation by up to two hours when a truck driver encounters adverse driving conditions.
Revising the current mandatory 30-minute break for truck drivers after eight hours of continuous driving.
Reinstating the option for splitting up the required 10-hour off-duty rest break for drivers operating trucks that are equipped with a sleeper-berth compartment.
There is also an unintended side effect of the HoS and ELD mandates. Now that most of the entire trucking industry is on the same schedule, there aren’t enough safe places for truckers to park when they’ve run out of drive time. It’s actually gotten bad enough that many carriers are subsidizing their drivers to utilize paid parking at truck stops. These spots can range anywhere from $5 to $20 a night and while that’s not so bad for short trips, long-haul truckers could be shelling out a lot of extra cash to maintain compliance.
The Trucking Age for the Modern Age
The pool of truck drivers is drying up and it’s only getting shallower as more truckers hand in their keys and take to retirement. The Department of Transportation has announced that they will begin a pilot program which will allow drivers under the age of 21 to operate an 80,000 pound truck for interstate commerce.
Given that these youths would be behind the wheel of a 40-ton vehicle, there are more than a few safety advocates who believe this isn’t a good idea.
“The statistics are clear,” says Todd Spencer, president of the OOIDA. “There really isn’t any question that younger drivers are more likely to crash and be involved in serious incidents.” Given that these youths would be behind the wheel of a 40-ton vehicle, there are more than a few safety advocates who believe this isn’t a good idea.
The age restriction has been in place since 1935 and for the most part, no one has argued with the logic. However, the Trump administration is pushing hard to get this particular regulation removed and many don’t agree with it. However, there are some in the industry who think there can be some ways to ease new drivers into handling a rig, without just pushing them straight out of the nest. Handling the first and final mile of driving could give them the opportunity to experience freight handling without giving them total control of the rig from start to finish.
For better or worse, there will be some changes coming to the trucking industry. While these regulations have been put into place with safety in mind, have they reached the point where they’ve hindered operations? At what point does regulation get in the way of an enterprise?
When it comes to running your business, it can be difficult to identify points of improvement, leading you to believe that things are as good as they can get, but in a climate of rising logistics costs, making sure that your operations are running as smoothly and efficiently as possible, can mean the success or failure of your business.
Ground transportation is a cost faced by almost every shipper in every industry, and quite a significant one, yet many shippers aren’t paying enough attention to how their ground transportation spend is being allocated, or don’t realize that there are different ways to approach it. In this article, we will break down a major factor that affects transportation costs: the differences between less-than-truckload (LTL) and full-truckload (FTL) services. We will break down those terms, what they mean for your business, and give two examples of how BlueGrace helped clients that were operating with less-than-ideal business models save hundreds of thousands on their ground transportation costs.
Yes, the perceived cost savings associated with sharing a truck with five other shippers is tantalizing, and a legitimate notion, but it’s not everything.
LTL has gained a reputation of being a more efficient, cost-saving method of transporting freight. It can be thought of like carpooling for cargo; if two people are going the same place, why not double-up and go in one car, splitting the cost savings? Translating that idea into a business scenario, if you’re a small-to-medium sized business, you likely do not have enough product going to one destination to fill up a truck’s full trailer, so LTL can seem like a cost-saving no-brainer, but unfortunately, it’s not quite so cut-and-dry. Yes, the perceived cost savings associated with sharing a truck with five other shippers is tantalizing, and a legitimate notion, but it’s not everything. There are other factors to consider when deciding between LTL and FTL, and there is no, one-size-fits all approach.
Potential Downsides of Utilizing LTL
Timing: By nature of LTL, there are multiple stops along the route that means longer lead times and may cause delays in the supply chain. So, if you are aiming to minimize transportation time, which everyone is in the logistics world, then you are making a sacrifice.
If your company operates in the realm of e-commerce, it would be prudent to examine the costs associated with the loss of business that your business suffers due to potentially longer LTL delivery times, and evaluate what options would open up if you were able to reduce your transportation times by a period of days.
For some shippers, timing is absolutely critical. The obvious examples are perishable products, like fresh produce and pharmaceutical products, which cannot sit for long periods of time in untempered conditions. But now, other “non-perishable” products, like apparel, electronics, and non-perishable food products are becoming time-sensitive in the e-commerce driven world, with monoliths like Amazon now offering same- and one-day shipping options, which have set a standard in the minds of consumers to receive products quickly. If your company operates in the realm of e-commerce, it would be prudent to examine the costs associated with the loss of business that your business suffers due to potentially longer LTL delivery times, and evaluate what options would open up if you were able to reduce your transportation times by a period of days.
Damage: Another common problem associated with LTL transportation is the higher occurrence of damage to cargo. Due to the frequent stops and touch points along routes, in which cargo is being loaded and unloaded from the trucks, freight generally incurs more damage on LTL trips than on FTL trips. For hardier freight, some light damage to exterior packaging is unlikely to be of major consequence, but for shippers dealing in more delicate products, delivering damaged product could mean having to refund a customer for the full price paid for the product, the burden falling on you. If your product is not easily damaged, this may not be an important factor, but if your product is damaged frequently or even occasionally, calculate the average cost that you end up paying to make up for damages per quarter, and then comparing to how much it would cost you to instead opt for FTL, which would result in significantly less damage. Which cost is higher in the end? It will depend on your particular business.
It’s not an easy task for shippers. At BlueGrace, we work with shippers on a case-by-case basis to help determine strategies that fit business’ specific needs. Our digital platform, BlueShip®, takes all of a company’s attributes into account to identify which options result in minimized costs and maximized profits. In the case studies, for example,“Private Equity Group & Transportation Cost Reduction,” and “Manual Process Reduction & TMS Integration for Restaurant Industry,” we dive into each case, exploring how BlueGrace helped two different clients with similar needs rethink their supply chain strategies that were giving them less-than-optimum results.
The routing guide left out multiple states that certain carriers could not go to. Because of this issue, the supplier was receiving chargebacks from distribution centers on a regular basis.
In the first case, a private equity group (PEG) was using proprietary enterprise resource planning (ERP) system to allocate resources and make business decisions. After analyzing the company’s situation, it turned out that the ERP was not suited for the client. The routing guide left out multiple states that certain carriers could not go to. Because of this issue, the supplier was receiving chargebacks from distribution centers on a regular basis. Once BlueGrace helped them downsize their carrier network to a more tailored group of carriers, it saw a 12 percent reduction in transportation costs and $300,000 in annual savings.
In the second case, a restaurant supplier was having difficulties managing their current in-house ERP system. They had looked at 3PL solutions in the past, but couldn’t find a solution that suited their needs, causing them to continue to incur chargebacks frequently, dinging their bottom line significantly over time. After the implementation of BlueGrace’s systems, the supplier was able to straighten out their supply chain and avoid chargebacks, saving them 12 percent in hard costs totaling at $468,000 in one year.
Do You Understand Your Business’ Needs?
At BlueGrace, we understand that every business has specific needs.We would love to learn what matters most to you in this aspect of your business. Contact us at 800.MYSHIPPING or fill out the form below to speak to one of our freight experts today, and learn how you can optimize your supply chain, minimize costs, and maximize your company’s bottom line!
The freight industry is in the middle of a revolution. We are seeing changes take place at an unprecedented speed, and showing no signs of slowing any time soon. To track these changes and how the industry is responding to them, Forbes Insights conducted a survey of 433 senior executives in the Supply Chain, Transportation and Logistics industries. Of those polled, 65 percent of the respondents acknowledge that there is a monumental shift in operations of the corresponding industries as a whole. Of those responses, a similar number, 62 percent, responded that they are experiencing those changes within their own companies.
“We’re at a point where there’s more change taking place in this instant than what I’ve seen in 25 years on the front lines,” says the president and CEO of a major transportation and logistics provider.
These changes are coming from the massive influx of new data that is being collected and collated between the industries, extracted via telematics and the Internet of Things (IoT). Conversely, the data is being driven by massive upgrades in computing power and data storage, as well as being enhanced by Artificial Intelligence and Machine Learning, which removes the tedious and often time-consuming process of human data processing. Transportation is also seeing some considerable advancements in technology, specifically in drones, driver safety technology, driverless vehicles, and blockchain data storage.
Supply Chains that are enhanced by these technologies will be the front-runners in the global market, having a competitive advantage compared to other companies.
Supply Chains that are enhanced by these technologies will be the front-runners in the global market, having a competitive advantage compared to other companies. 58 percent of the consumer base (retailers, manufacturers, etc.) recognize the importance of supply chain, transportation, and logistics for the success of their business. “Anyone whose success depends on their ability to fulfill orders of physical goods for customers is now caught up in this whirlwind of change,” says Mary Long, managing director of the Supply Chain Management Institute at the University of San Diego School of Business.
The Driving Forces
As we mentioned above, these changes are coming faster than we’ve ever seen before. We can attribute this to four driving forces behind the changes. 1. Technological Advancements
Half of the respondents say that advancing technology has a strong impact on their company’s logistics, supply chain, and transportation operations. The heavy hitters for technology are IoT/telematics, AI, Machine Learning, Blockchain, Driver technologies, and Automated Delivery Machines. According to Langley, though the transport industry has always been data-focused, today “We see all of this added computing power—IoT/telematic data collection, data mining, AI and ML—that can be focused on making better decisions, not only from an overall strategic and resource planning basis but in real-time decisions: which routes, which carriers?” says C. John Langley, a clinical professor of supply chain management as well as the director of development for the Center for Supply Chain Research at Penn State’s Smeal College of Business.
Automated delivery technology such as drones and driverless trucks are still in development before we’ll see a full release, but that implementation is certainly on the horizon. In the meantime, we’re seeing advances in driver safety technology such as lane control and safety-braking. As these technologies continue to develop we’ll see a continued evolution of the freight industries.
2. The U.S. Economy is on the Rise
According to half of the survey respondents, there is a growth in the U.S. economy which is having a strong impact on their businesses. While this might fall under the purview of disruptive, the addition of trade tariffs from the Trump administration is changing demand and long-standing transportation patterns. 44 percent of the respondents say that lower U.S. taxes and other such reforms are helping to drive demand upwards.
“This resonates with the CEO of a major trucking carrier, who says, ‘We see it daily, the economy is rolling.’ But this is both a blessing and a curse. Indeed, ‘there’s heightened demand for our services.’ At the same time, however, ‘capacity is extremely tight, so the industry doesn’t always have the trucks it needs right where and when they’re needed.’ Piling on, the industry for some time now has been experiencing a driver shortage—an issue that’s only exacerbated by a strong U.S. economy. Overall, says the CEO, “there’s more freight and more trucks than there are drivers to drive them” says the report.
Nearly half of respondents, 48%, say they are experiencing the need to reevaluate warehouse locations due to shifting trade patterns resulting from changes in the U.S. economy: taxes, tariffs and, to some degree, the return of manufacturing.
Nearly half of respondents, 48%, say they are experiencing the need to reevaluate warehouse locations due to shifting trade patterns resulting from changes in the U.S. economy: taxes, tariffs and, to some degree, the return of manufacturing. All “impact the location of hubs and warehouses,” says Langley.
3. The Amazon Effect and Changing Consumer Expectations
Changing consumer expectations are having a considerable effect on the industry, heavily impacting logistics, transportation, and the supply chain. Consumers now have the expectation of finding whatever they want, whenever they want it and having the order arrive within the next two days. Even the two-day window is beginning to shrink as Amazon rolls out with next day and same day deliveries. “The effect of Amazon is heightened expectations,” says Langley. “Next week is no longer good enough. It’s got to be on its way now and arrive at the destination within a day or two!” It’s not just consumer expectations that have changed because of the Amazon effect. Truckloads also experience a considerable delay because they require more touches before their final delivery.
“Loads used to see two, three, maybe four touches before the goods were in the hands of the end consumer,” explains an earlier-mentioned CEO. But today, getting goods to consumers faster means “seven, eight or nine touches [moving] the freight to a network of warehouses and forward positions.” In short, says the executive, “that final mile is being redefined almost every day.” Interestingly, this is spurring a veritable arms race between e-retailers like Amazon, and brick and mortar retailers by rewarding innovation and pushing advance in customer service and fulfillment.
4. Tighter Regulations
The final driving force for change is the higher level of regulation and control from the U.S. government. Approximately 46 percent of the respondents say that regulations continue to push changes in transportation. The Electronic Logging Device (ELD) mandate is just one example of those regulations. By forcing drivers away from paper logs, there is a tighter restriction on the amount of hours a driver can be on the road. With the ELD, drivers cannot be on the road for more than 11 hours in a 14 hour period, even if it’s not a logical stopping point. It doesn’t always make sense to stop right at 11 hours,” explains an executive interviewed for the report (but preferring anonymity). “What if the driver is on a bridge or stuck in traffic or is only a few minutes away from a proper rest stop?”
That lack of flexibility is increasing the delivery cost.
The paper logs provided drivers a larger degree of flexibility, allowing them to decide when to stop and when to operate. The ELD’s are decidedly rigid, and the clock starts rolling once the truck moves, even if it’s just to move the rig across the parking lot. That lack of flexibility is increasing the delivery cost. “For example, as reported in the Chicago Tribune: For Pete’s Fresh Market, a 12-store grocery chain in the Chicago area, truckloads of produce from Mexico have roughly doubled in cost since the new [ELD] devices were mandated—from about $2,400 for 40,000 pounds of produce to more than $5,000,” Forbes Insights adds.
Surviving the New Era of Transportation
There’s no mistaking the fact that the freight industry is undergoing a massive evolution, scarcely resembling the industry that has remained virtually unchanged for the past several decades. As time and technology advance, these changes are only going to continue at an even faster pace than they’re happening now. This rapid pace of evolution will leave those unprepared off balance and at risk of collapse. Staying ahead of these changes will be essential to survival for the new era of transportation. This is where a 3PL like BlueGrace, will be crucial to your supply chain. To speak to one of our freight experts, call us at 800.MYSHIPPING or fill out the form below.
The term “optimization” is thrown around often in the logistics landscape. It’s true, optimization is an indispensable part of a well-run business model. Of course, every business owner wants their operations running as tightly and efficiently as possible, but the footwork required to determine how to optimize your business’s operations and see tangible results is often easier said than done.
Our Webinar discusses the typical LTL network and differentiates between less than truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment.
In our Webinar “Driving Down Supply Chain Costs with Mode Optimization,” Brian Blalock, Senior Manager of Sourcing Strategy at BlueGrace, discusses the typical LTL network and differentiates between less than truckload (LTL) and full truckload and the factors companies should consider when deciding which alternative is best for a particular shipment. Both have their advantages and weaknesses, but one may suit the business better depending on the kind of freight being transported, the location or origin and destination. While the decision is sometimes considered arbitrary, in order to optimize your operation, i.e. lower cost and maximize profit, it is crucial to consider the following factors.
LTL vs. Full Truckload
LTL shipments must be 12 linear feet or less, usually 5000 pounds or less, and are “typically consolidated with other freight from other shippers,” Blalock said, continuing that they are identified by class and that the structure, and that pricing can be very complex because it is determined by product class, distance and weight. Typically, it costs less than a full truckload, an obvious appeal to any shipper.
Fewer claims of damage occur with truckloads than with LTLs.
Fewer claims of damage occur with truckloads than with LTLs. “Why?” One might ask. It’s simple. Blalock uses the example of witnessing luggage being boarded into the belly of an aircraft; people rarely handle a stranger’s items as gently as they would their own. In conclusion, the “less handling of freight, the less damage to the freight,” Blalock says. Since LTLs require more stops and handling, more damage is incurred to LTL freight than full truckload on average.
When shipping a full truckload, your freight is the only thing on the trailer, so transit time is only contingent upon the required breaks for drivers and the time between pickup and delivery locations. The freight never has to leave the truck because it travels directly to its destination, so truckload shipments tend to arrive faster than LTL shipments, while at the same time, incurring less damage.
When to Not Ship LTL?
LTL loads should be the choice for shippers dealing in smaller quantities at a time as carriers charge by weight and volume, but may not be the optimal choice at every juncture.In order to determine which mode is right for your operation, create business and shipping rules around factors like weight, volume, time constraints, and cargo sensitivity of your shipments. You need to consider the rate at which damage may occur in your LTL shipments. How much does it really end up costing you at the end of the day? In knowing this information, you will be better able to decide in which case you need to opt for a full truckload, and which you are able to go with an LTL.
If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line.
Another key is understanding how business decisions affect OTIF (on time in full). “If you ship to Walmart you can’t show up late, you can’t show up early, and you can’t show up incomplete,” Blalock said. “Any of those that you do, typically, [are] about a 3% ding to the cost of the entire invoice.” If the margins are tight on your product, the last thing you want is another cost eating away at your bottom line. “Likewise, if you continue to not hit your dates, you’ll find that you can lose valuable shelf position, and you won’t be shipping to Walmart anymore.”Blalock says to consider using different carriers for different shippers to this end: “The choices that you build into your business rules include choosing the right type of carrier every time,” he said.
Supply Chain Engineering
“Understand that we are following the linear rules of the carriers,” Blalock says. “Build the rules of your freight around your tariffs.” Blanket rate pricing main type associated with the LTL market. Customer specific pricing is negotiated on your behalf when all of your capacity is going to a single provider, which is typically preferred for shippers with a larger freight spend. BlueGrace negotiates specifically customer-by-customer to determine which suites the customer better. “If you’re in Montana or the upper peninsula of Michigan, sometimes you may just want to pay the more expensive LTL cost,” he said, due to the fact that market is more remote, and competition between carriers is less apparent.
Identifying consolidation opportunities is the key to the cost-reducing aspect of optimizations.
Identifying consolidation opportunities is the key to the cost-reducing aspect of optimizations. BlueGrace’s software is designed to help clients consolidate unnecessary costs in their unique supply chains. One measure that BlueGrace uses is a center of gravity study, which considers various origin points and points of destination and calculates where each region should ship from to find the fastest route at the best cost.“You want to be able to take advantage of the ability to choose the right mode every time and drive down costs. If all things are equal, an FTL is going to travel much faster … and [incur] less damage to freight,” Blalock said. “If time is no issue, if the freight is indestructible,” then LTL could be the best option for you.
Click HERE to watch the full Webinar and learn more about tariffs and fuel surcharges associated with costs. If you would like to speak to one of our freight experts, contact us at 800.MYSHIPPING or fill out the form below.
Transportation Management Workflow may be defined as a supply chain workflow that connects and links the various parties involved along the chain from, for example, the seller’s warehouse to the buyer’s warehouse.A professional and effective logistics services provider needs to have an efficient transportation management workflow which follows a logical sequence and has the most effective operational procedures.
One of the primary requirements would be to operate an effective TMS or Transportation Management System.
One of the primary requirements would be to operate an effective TMS or Transportation Management System.The TMS used should be capable of handling various aspects of transport management including needs assessment, effective analysis, integration and management in addition to providing you visibility on inbound products, receiving, storing and distribution. An effective TMS will provide comprehensive data analysis on the current shipping costs and processes which offers you an opportunity to compare your costs and processes versus what is available in the market.
These analyses can help you optimize your supply chain process and also provide overall cost reduction. Your TMS must also be capable of handling pick and pack operations, product consolidation, replenishment and also final distribution and delivery to the receiver.
A well designed and effective TMS is of paramount importance in:
Reducing freight costs
Automating the routing and other internal processes
Tracking costs and delivery
Using your transportation management workflow, you can analyze important business metrics such as class and weight breaks, shipment density heat maps, cost/ton and cost/mile metrics, carrier utilization reports, DC optimization results, on-time performance.
An effective transportation management workflow will also be able to make recommendations on ways of reducing costs, identifying and controlling the costs per client which will also uncover inefficiencies, if any, in your business model.For example, you may be using antiquated routing methods with your current service providers that need some modernization in order to provide you with a more cost-efficient transportation management program.By conductingengineering reviews into your customer’s data, you will be able to identify inefficiencies within the existing strategy and adopt a more dynamic carrier routing which can result in significant cost savings and reduction in transit time.
The transportation management workflow must always be evolving as trade is dynamic and there must be constant workflow audits along the various silos within the supply chain.
Tracking and tracing is an essential and vital part of the transportation management workflow
Tracking and tracing is an essential and vital part of the transportation management workflow and the TMS used should be suitably equipped to handle this vital component in the flow.
While everyone likes to handle their own business especially if you are in the transportation business, sometimes it may just be more cost effective to outsource the transportation portion of the whole supply chain workflow.One needs to do extensive and thorough data analysis of all current costs within the transportation and logistics silos. Such analysis will allow you the opportunity to find ways to save money for your customers but also provide efficiency in operations.An efficient way to reduce costs would also be to negotiate accessorial charges because the various carriers may have different container sizes and types that they use for the transportation.
You can also use the TMS to plan warehouse spatial planning as your business may need to accommodate various sizes and weights of cargoes arriving in LTL or FTL modes.Using the TMS effectively will also assist in reducing the truck loading and turn around times which in turn will reduce the warehouse overheads in terms of staff overtime, etc. It may also be used to consolidate the booking processes which in turn will result in a consolidated billing process, reducing the overall time spent doing this activity manually by auditing, reviewing, paying and collecting each invoice.
History is the best teacher
History is the best teacher they say and in line with this, one also needs to pay special attention to historical freight data. You can analyze the performance levels of the various carriers used, achieve cost savings, and have an edge when it comes to future rate negotiations.
When effectively used TMS can assist customers to gain efficiencies in improving their service offerings while also allowing them to create scalability in their business processes. Customers, especially shippers, are always looking for ways to improve service delivery and efficiency while limiting the costs.By efficiently managing the transportation management workflow, shippers can address costly challenges like rate fluctuations, hidden charges, track and trace, visibility, etc.From both a functional and cost perspective, effective management of the transportation management workflow provides value to the customer.
BlueGrace’s Proprietary Technology
Our technology is designed to put the power of easy supply chain management and optimization back in your hands. BlueShip® offers cutting-edge tools for strong reliability and quick performance. Our customers are especially impressed with the user experience, which is completely customizable and has real-time updates, giving them a single source tool for tracking, addressing, and product listing. To see a demo and speak to one of our BlueShip experts, fill out the form below or call us at 800.MY.SHIPPING.
On Time In Full is a policy that Walmart created back in 2016 and implemented in August of 2017. In an attempt to drive their proficiency up and costs down, the mega retail chain started targeting their supply chain. Under this policy, suppliers that failed to deliver the total amount of promised goods, to designated stores at the prescribed time are penalized; fined up to three percent of the total shipment value.
The shipment has to arrive exactly when it’s expected. Not before, and certainly not after.
It’s not just trying to curb late deliveries, either. The OTIF policy also cracks down on trucks arriving too early, as it can create excess traffic and delays for loading and unloading. For suppliers and trucking companies, this means there’s no leaving early to create a buffer zone. The shipment has to arrive exactly when it’s expected. Not before, and certainly not after.
In addition to making things more challenging for suppliers to make sure their goods arrive on time, it will bring even more stress on carriers – we discussed this in more detail in our earlier post. With the Electronic Logging Device more closely monitoring hours of service, truckers will be in a tight spot when it comes to making sure that deliveries arrive exactly when they’re supposed to, all while making sure to stay compliant with their working hours.
A Tough Policy Gets Tougher
As of April 1st of this year, the company made the policy even harder. Prior to this month, the OTIF policy stated that full truckload shipments needed to meet a 75 percent OTIF rating and less-than-truckload shipments needed to meet 33 percent OTIF to avoid fines. Now, FTL’s are required to meet an 85 percent standard (down from the lofty 95 percent they had originally planned) while LTL requirements have increased to 36 percent.
Keeping products on the shelf is the name of the game for Walmart.
Keeping products on the shelf is the name of the game for Walmart. With increased competition from the likes of Target, Dollar General, and Amazon, the more items Walmart can keep in stock, the less likely they are to lose out to the competition.
A Necessary Change
While it’s easy to paint Walmart in a bad light through this policy, they aren’t the only company to enforce such a policy. Competition stores like Target, Kroger, and Walgreens also have similar OTIF policies. If retailers don’t hold the supplier accountable and they don’t make them try to comply, then suppliers can cause backlogs.
With the 90 percent failure rate for full and timely deliveries, Walmart has found a rather convenient way to turn a problem into profit.
According to a Bloomberg report, Walmart had a OTIF success rate hovering around a dismal 10 percent. With the 90 percent failure rate for full and timely deliveries, Walmart has found a rather convenient way to turn a problem into profit. This new policy doesn’t cost the company a dime. In addition to generating money from the fines, increased product availability will also mean increased in-store sales.
Given that Walmart is such a heavy hitter for suppliers, suppliers will have little choice but to either comply or lose out on some considerable business. With the extra revenue generation, Walmart can take that money and reinvest in its e-commerce business.
A Hard Place for Small Suppliers
While larger companies have no problem meeting delivery quotas, it’s the LTL deliveries that are going to take the brunt of the OTIF policy. Considering the strained nature of supply chain as it is, especially in the trucking sector. ELD and HoS mandates are pitting truckers against the clock as it stands. Couple that with the driver shortage and rising demand for LTL, and capacity becomes even more limited.
Couple that with the driver shortage and rising demand for LTL, and capacity becomes even more limited.
At least in that regard, the company has cut smaller suppliers a little slack, which is the reason that LTL shipments have less than half the requirements of their FTL counterparts. An LTL doesn’t schedule a delivery to a Walmart [distribution center] until the freight arrives at the terminal.
In order to avoid hefty fines being levied by Walmart and other retailers such as Kroger and Walgreens, suppliers are going to have to tighten and fine tune their logistics and supply chain considerably, especially given the current tight capacity environment.
Do You Need Help With OTIF Issues?
A 3PL, such as BlueGrace, can help your business overcome the challenges of OTIF and other supply chain issues. If you have questions about OTIF or just how to simplify your current transportation program, feel free to contact us via phone at 800.MY.SHIPPING or using the form below and we will be happy to assist.
Freight is one of the most essential industries in the United States, and according to the US Freight Transportation Forecast publication conducted by the American Trucking Association (ATA), it’s going to continue growing over the next decade. The ATA forecast estimates that US freight will grow to 20.73 billion tons by 2028, a 36.6 percent increase over tonnage moved in 2017.
Given the considerable amount of freight being moved, the freight industry has some considerable challenges to overcome to get the job done. New regulations (such as the ELD mandate) are putting a strain on trucking companies. Fuel prices and spot rates are prone to changing which can make finding reliable capacity, booking freight, and making a profit frustrating, even at the best of times. Increasing demand means a shortage in capacity, and many shipments are being left behind and delayed. There’s also a massive driver shortage in the United States, a problem that will get worse before it gets better.
In order to mitigate the obstacles, logistics is going to have to get a whole lot smarter.
In order to mitigate the obstacles, logistics is going to have to get a whole lot smarter. While human intelligence certainly goes a long way towards planning, artificial intelligence is beginning to take up a role in the industry.
The Growing AI Market
AI has a number of applications that will be crucial to the trucking industry and Original Equipment Manufacturer (OEM). Increasing operational efficiency can help to reduce costs for OEMs and fleet operators. Predictive modeling is also made possible by AI, allowing for preemptive maintenance by combining data collected via the Internet of Things, sensors, external sources, and maintenance logs.
In addition to increased road safety, AI can also offset the potential increase in trucking costs and higher driver wages. Artificial Intelligence will also help OEMs and fleet operators stay in compliance with new regulations regarding vehicle and driver safety. This is spurring the growth of ADAS technologies and other initiatives created by OEMs, especially when it comes to automated vehicles. It’s estimated that the AI market within the transportation industry will grow from $1.21 billion in 2017 to $10.30 billion by 2030.
However, despite the growth and development in the AI market, installation and infrastructure costs will likely be prohibitive to smaller companies. Even a few ADAS features like blind spot detection, telematics, and lane assist can drastically increase the cost of a commercial vehicle. Adding AI systems to vehicles will also require a heavy infrastructure cost as well, further complicating implementation and adoption.
Various AI Functions for Trucking
Artificial Intelligence in the trucking industry presents a wide array of opportunities and potential, especially when combined with automated trucking.
“AI constitutes various machine learning technologies such as deep learning, computer vision, natural language processing (NLP), and context awareness. Some of the recent applications of these technologies in the transportation industry are semi-autonomous and autonomous vehicles, truck platooning, and human-machine interface (HMI) applications,” Market Research says.
Deep learning is one of the most promising AI developments.
Deep learning is one of the most promising AI developments. As an advanced form of AI, it analyzes a myriad of different data sources including images, sound, and text, and then compiles that data through a synthetic neural network. The result is the ability to identify and generalize patterns and strengthens the decision-making capabilities for safe operation of autonomous vehicles.
Computer vision is another potential application for AI in trucking. Computer vision utilizes a high-resolution camera and increases the HMI (human machine interaction) capabilities of driver and vehicle. The camera interprets various data inputs such as lane departure, traffic signs, and signals, and is also able to detect driver drowsiness. Ideally, this version of AI will help to bridge the gap between semi-autonomous and fully autonomous vehicles.
The Future of AI in the Trucking Industry
AI will be instrumental in the future of trucking. Not only can it collect and monitor data, but as it observes patterns, it will be able to make predictions based on those patterns. These predictions will enhance onboard AI capabilities assisting in both driver and navigation functions as well as back-end functions like data monitoring and preemptive maintenance. Onboard AI will also increase connectivity and communication between other trucks on the road, improving platooning and other joint lane management systems.
The strength of AI in the trucking industry will be dependent on the amount of data it has to work with.
The strength of AI in the trucking industry will be dependent on the amount of data it has to work with. The more data, the smarter the AI. Building up a database from scratch, however, can be a costly and time-consuming endeavor, one that might be impossible for some companies to achieve in a reasonable time frame.
Integrating AI systems with a transportation management system can help to reduce both costs and implementation time, however.
Integrating AI systems with a transportation management system can help to reduce both costs and implementation time, however. Working in tandem, the AI can help to increase driver safety while a TMS can optimize the overall efficiency of the supply chain, allowing for a smoother and more profitable operation.
Using a 3PL to Prepare for the Future
While there is near limitless potential for artificial intelligence in the future of the trucking industry, it’s still a ways off from where it needs to be for rapid and easy implementation. The same is also true for automated trucking. However, there are readily available steps you can take to improve your operations without having to break the bank. We at BlueGrace specialize in true Transportation Management, without the need for a heavy investment in labor or technology. For more information on how we can help you harness the full potential of your logistics, fill out the form below:
The transportation and logistics industries are perhaps one of the most vital industries in the United States, if not the entire world. On average, trucks haul approximately 70 percent of all consumer goods across the country, and that number is only expected to grow as the global economy continues to grow and change. However, while it is the most vital of all industries, it has also remained the most stagnant, with very little about the industry changing over the past several decades.
The potential for these digital changes is immense, allowing companies to work smarter by lowering operation costs while boosting efficiency.
Yet, we’re beginning to see what can be described as an age of enlightenment for the transportation industry, a digital renaissance. Something in which logistics planners and trucking fleet owners alike are beginning to dive into. These changes are covering everything from ridesharing, “smart” logistics, and even automated vehicles. The potential for these digital changes is immense, allowing companies to work smarter by lowering operation costs while boosting efficiency. Even going so far as increase environmental sustainability as truckers, planners, and shippers all learn to connect on a broader level.
The Growing Web of Interconnection
In short, the digital age is built on the concept that just about anything is possible, including a sort of omniscience that is vital to running a highly efficient supply chain.
One of the biggest advantages of this digital age is how interconnected everything is. The Internet of Things (IoT) is providing more data and more accessibility to that data than ever before. New software systems are able to track where freight is during every stage of its transportation and the condition of it during its trip. 3PLs and other intermediaries are developing digital platforms that can connect a shipper to a carrier with a few clicks, rather than an exhaustive list of phone calls, emails, and faxes. Customs documents can be uploaded and transmitted to mobile devices, less demurrage and detention fees when a paper document gets lost in translation. In short, the digital age is built on the concept that just about anything is possible, including a sort of omniscience that is vital to running a highly efficient supply chain.
Building On the Infrastructure
Digitization within the transportation industry also has another, less obvious benefit. It gives developing countries easier access to the global market. As these countries haven’t built up their logistics capabilities to that of the U.S. or the E.U. attempting to break ground on this front is often both cost and time prohibitive. Having access to a digital platform allows them to “leapfrog” directly into digital and mobile solutions for logistics.
“According to the All India Motor Transport Congress, there are close to 12 million trucks in India. The road freight volume in India is forecast to be 2,211.24 billion freight tonne-kilometer, growing at 4.7 percent,” according to a recent article from YourStory.com
Market research from Novonous, ‘Logistics Market in India 2015-2020’ shows that India is a prime example of a country that can benefit from new, digitized logistics platforms. The report shows that the logistics sector for India approximately $300 billion, and expected to grow by 12.17 percent by 2020. Factor in that 90 percent of trucks in India are operated by single truck owners, and you can see the potential for connectivity and digital platforms.
The Growth of E-commerce and Digitization
E-commerce, of course, is at the heart of much of this digital growth as many consumers begin to veer towards a digital shopping cart, rather than brick and mortar stores. As E-commerce companies such as Amazon, Alibaba, and Flipkart begin to grow and attract more customers, the potential for higher logistics costs also increase. As it stands, India spends about 13 percent of its total GDP on logistics, versus China at 18 percent and the U.S at 8.5 percent. Even a drop of 4 percent in logistics spending could save India upwards of $50 billion.
The visibility and scalability of a digital network will undoubtedly be vital for the growth of the global economy.
The visibility and scalability of a digital network will undoubtedly be vital for the growth of the global economy. Not only does it help to level the playing field for new players making the market more accessible, but it also helps veterans and legacy companies to operate more efficiently.
Real-time visibility solutions can help tackle delays, productivity issues, accidents, diversion, theft, and damage.
“Mobile operators are uniquely poised to offer regional and global connectivity solutions for the logistics sector. These real-time visibility solutions can help tackle delays, productivity issues, accidents, diversion, theft, and damage,” says the Yourstory Team.
“Governments can also improve the quality of logistics via measures like budgetary outlays, foreign direct investment regulations, clarity in classification of logistics players, tax structures, and requirements for open data sharing. This covers truck fleets and the warehousing sector,” they added.
The logistics sector is heading towards a new digital era, that much is certain. Tech startups, along with forward-thinking incumbents, are bringing innovations and insights into the field and is shaking up the old ways of doing things. As this new era grows in years, it’s likely that we’ll be seeing the logistics and transportation industry in a wholly different light.
Offering Intelligent Logistics To All Customers
BlueGrace Logistics offers complete, customized transportation management solutions that provide clients with the bandwidth to create transparency, operate efficiently, and drive direct cost reductions. For more information on how we can help take your hard to understand and complicated data and turn it into easy to read and well calculated decisions data, feel free to contact us using the form below:
While it sounds like a no-brainer, a lot of cargo damage happens due to incorrect labeling of the packages that are being transported. Labeling is an integral part of cargo packaging and is an essential aspect to ensure that your goods reach the correct destination at the required time. Correct and proper labeling including package handling instructions is critical to ensure that your goods are delivered safely and efficiently.
Labeling is also important to facilitate real-time tracking of your package as it moves through your trucker’s network and your country’s road network.
For example, if you are shipping liquid cargo or any other cargo that needs to be kept upright, it is important to label it correctly so the cargo handlers know which way to carry it. Similarly, if the cargo is hazardous, then it is important to label it appropriately. You should use the required hazardous labels so safety precautions can be taken. Not just for handling and safety, labeling is also important to facilitate real-time tracking of your package as it moves through your trucker’s network and your country’s road network.
Your cargo label should have a few mandatory components which are crucial to ensure prompt delivery.
Clearly marked pick up or senders address. This is crucial because, in case of any returns or non-delivery, the cargo can be returned safely to the sender.
Sender’s reference number. In order to identify the package, as the same sender could be sending various parcels to the same receiver but with different items.
Clearly marked delivery address. This should have the full style address including the zip/postal code to ensure that it gets to the right area as there could be cities and streets with the same name in different parts of the country, but zip/postal codes are unique.
Receiver’s reference number. The receiver may be receiving parcels from same, or various senders and they can identify the contents/order quickly with the reference number.
If goods are hazardous, then the relevant hazardous labels must be affixed to the box.
If the goods are Fragile, it must be labeled with Fragile stickers or tape.
The label should have be clearly visible and have a big enough barcode for quick and reliable scanning.
The label should be at least A5 size or larger to accommodate all the above information.
You have to ensure that only the relevant markings are present on the outside of the package
If there are markings on the label or box that are irrelevant to the shipment, that must be removed as it may cause confusion with regard to the delivery. The labels used must be hardy and be able to withstand the elements as in sun, rain, snow or any other conditions they may be exposed to during the journey although it is unlikely that the goods can get wet during road transport. If you have more than one item in a consignment to the same receiver, it would be good to affix the labels in the same place on each item as it makes it easier for the goods to be scanned and sorted.
There are standard labels for package handling instructions which clearly indicate the nature of the contents of the packages so that everyone in the transportation chain knows what handling methods to be used like whether the package is sensitive to heat or moisture or which side is up and where the loading hooks may be used etc.
The symbols on the labels are based on an international standard ISO R/780 (International Organization for Standardization).
Whether you are managing your own processes or you are using the logistics services of BlueGrace, proper preparation is one way to help prevent delays or additional charges. If you have questions about how you can better prevent freight issues, or just how to simplify your current transportation program, contact us via phone at 800.MY.SHIPPING or using the form below, we are here to help!
Trucking is arguably one of the most vital jobs in the United States. When you consider that 70 percent of the freight that moves through the country is transported by trucks, the trucking industry is the backbone that holds the U.S. upright. As important as trucking is, however, it would be nothing without a strong running supply chain. Manufacturers need a constant stream of materials and resources to produce goods and retailers and other companies need a constant stream of deliveries in order for their business to operate.
“The U.S. supply chain economy is large and distinct. It represents the industries that sell to businesses and the government, as opposed to business-to-consumer (B2C) industries that sell for personal consumption,” the Harvard Business Review says. Much the same way that the trucking industry keeps many U.S. citizens employed, the U.S. supply chain industry accounts for 37 percent of all jobs in the country, employing approximately 44 million people. Interestingly enough, these jobs also pay significantly more than a number of professions and are largely responsible for bursts of innovation within the economy.
“The intensity of Science, Technology, Engineering and Math (STEM) jobs, a proxy for innovation potential, is almost five times higher in the supply chain economy than in the B2C economy. Patenting is also highly concentrated in supply chain industries,” HBR adds.
It’s the supply chain that links so many different industries and companies together.
So what is it that makes the supply chain industry pay so well and be responsible for such innovation? It might just be the fact that it’s the supply chain that links so many different industries and companies together.
The Importance of Supply Chain Services
As we mentioned above, the trucking, manufacturing and retail industries rely heavily on supply chain services to function and survive in today’s economy. With a heavy focus on lean manufacturing, many companies simply can’t afford to have extra products or parts lying around – there needs to be a constant influx, giving these companies what they need precisely when they need it. But it doesn’t explain why it stands out from other sources of employment. To that, Mercedes Delgado, a research director and scientist of MIT and Karen Mills, senior fellow of Harvard Business School, have taken a look at the categorization of employment and made an interesting discovery when it comes to the supply chain. “Only 10% of employment in the economy is in manufacturing, and 90% is in services. It is commonly thought that most of those service jobs are low-wage occupations at restaurants or retail stores, while the manufacturing jobs have higher wages. But not all services are the same.” – Delgado and Mills stated in the recent HBR article. “With our new categorization, we can separate supply chain service jobs – which are higher-paying – from the Main Street service jobs that tend to be lower paying. These supply chain service jobs include many different labor occupations, from operation managers to computer programmers, to truck drivers. They comprise about 80% of supply chain employment, with an average annual wage of $63,000, and are growing rapidly,” they added.
On average, these jobs pay about three times more and have 18x the STEM intensity over Main Street services, and the job market is growing fast.
Through their work, they’ve also uncovered a subcategory of the supply chain industry which is traded services. These services are traded and sold across many different fields such as engineering, design, software publishing, logistics services and many others. This subcategory, in particular, showed some of the highest wages and STEM concentration of the entire economy. On average, these jobs pay about three times more and have 18x the STEM intensity over Main Street services, and the job market is growing fast.
“Our supply chain economy framework leads to a more optimistic view of the economy. If we were to focus on supporting supply chain services, particularly those in traded industries, the result might be more innovation and more well-paying jobs in the United States.”
How Does this New Category Affect Policy?
While it might not seem like an important find, this new categorization is actually very important, especially when it relates to U.S. economic policies. For starters, there needs to be a heavier investment in skilled labor. While the supply chain industry has the majority of STEM workers already on the payroll, there is a shortage in America in general. This makes it hard for both sides to continue the level of growth and innovation. Many companies already have a hard time finding the necessary talent to keep them moving forward.
Supply chain industries are even more at risk since continuous innovation not only needs new talent but the ability to retain existing talent.
Supply chain industries are even more at risk since continuous innovation not only needs new talent but the ability to retain existing talent.The second point from Delgado and Mills is that we need to support regional industry clusters. “Suppliers produce inputs for businesses, and therefore, they particularly benefit from being co-located with their buyers in industry clusters. Catalyzing and strengthening organizations that support regional clusters is one way to promote buyer-supplier collaboration.”
Finally, it’s a matter of making sure that supply chain service providers have access to the necessary funds to continue their work. Many of the products and services that they create are things that can’t be patented which makes it difficult, if not impossible, to continue generating the necessary capital. Having government policies in place that would guarantee loans or credit support for suppliers would go a long way to ensuring stability and funding for these service providers to start and grow.
The supply chain is a very large industry within the United States and one with the potential for some dynamic growth. Supply chain service providers play a crucial role in not only ensuring that other industries are able to function but also provide the necessary access to these resources that will help this new category of the industry to grow and the American economy as a whole.
Are you part of the supply chain talent pool?
Are you eager to work with a company that helps simplify businesses across the USA? Do you feel a sense of accomplishment when you can cut costs for a customer? If so CLICK HERE to see all the positions available throughout the country at BlueGrace. We are constantly awarded a best place to work and love to see our employees succeed!
With rapid advancements in interconnectivity, such as the Internet of Things and the added advantage of instant data streaming, the freight industry has been devouring data technology as a whole and is getting a much-needed overhaul. Yet, the picture is incomplete. There are still some serious gaps, tracking being a great example of this. While shippers may have a general idea of where the freight is during its transit, often it is difficult or impossible to pinpoint the exact location and the estimated time of delivery.
Let’s face it, trucking is the life force of this country.
Communication within the industry also leaves a lot to be desired. Throughout the industry, many companies are using different systems for recording freight which allows some data to be lost in translation. That might be the reason why there is some considerable hype being built around blockchain technology. In fact, this hype is gaining some serious momentum when you consider there is a new faction, the Blockchain in Transportation Alliance (BiTA) that is working to find blockchain solutions for some of the most common trucking problems. Let’s face it, trucking is the life force of this country. Trucks are moving approximately 70 percent of the nation’s freight. As a whole, it represents over 80 percent of the nation’s freight bill. That being said, they could use all the help they can get to make the process more efficient.
Privatized Blockchain for the Industry
There is a considerable amount of potential within blockchain technology. As a data service, it can track and categorize every transaction through a products life-cycle.
For a logistics decision maker, the ability to pinpoint the location of various assets, both tangible and intangible, is invaluable.
For a logistics decision maker, the ability to pinpoint the location of various assets, both tangible and intangible, is invaluable. Within every step of the shipping process, blockchain can track the data and provide analyzable and actionable information which allows for more accurate and efficient decision making. As it’s a shared platform, the necessity for a privatized blockchain for the U.S. becomes apparent. Of course, that privatization isn’t necessarily exclusive, but rather separate from other blockchains used just for the industry. This would give shippers, carriers, freight brokers, 3PLs and anyone else in the BiTA consortium who needs to be in the know, access to a transaction ledger. BiTA’s goal, as a standards organization, is to develop a common framework to encourage the development of blockchain applications for asset tracking, transaction process and overall logistics management. All of which is geared at turning the trucking industry into something more intelligent and efficient.
…and The Seemingly Never-Ending Capacity Issue
Think about some of the most common issues within the industry. Manufacturers and shippers have a hard time finding available capacity. Putting aside the driver shortage for a moment, it makes no sense that it’s so difficult to find capacity when there’s an average of 29 billion empty or partially loaded miles per year. It also helps to understand that the trucking industry itself is incredibly fragmented in the United States. There are over 1.5 million trucking companies fielding close to 3.5 million drivers. While that might seem like a lot, 90 percent of those companies have access to six trucks or less. That makes it even more difficult for shippers to match up with carriers, both of whom need each other.
Matching a shipper’s demand to a carrier’s supply is just one of the many ailments within the industry that can be alleviated by blockchain technology.
Matching a shipper’s demand to a carrier’s supply is just one of the many ailments within the industry that can be alleviated by blockchain technology. There are many in the industry, both startups and legacy companies alike that believe that blockchain technology can make routing more efficient, cutting down on fuel costs and increasing productivity.
In reality, blockchain has a near limitless amount of potential, if it can get off the ground that is.
Considering how varied the industry is with so many different players in the game, it can help to unify the trucking industry to help it become more efficient as a whole. Logistics planners can see the “whole picture” rather than just pieces of it at a time. With real-time data, they can make better decisions to make the industry leaner and smoother overall. In reality, blockchain has a near limitless amount of potential, if it can get off the ground that is.
The Blockchain Obstacles
As with any new technology, there will be some hurdles and obstacles that need to be cleared in order for it to become successful. The first issue is that everyone needs to trust in the technology and believe it to be the sole source of truth for the industry. While most people will believe in the system they are working with, it’s a little more complicated with blockchain. As a crypto-technology, it is incredibly secure and the data is locked. That being said, nothing can be changed, altered, or corrupted. It becomes carved in a digital stone, for lack of a better term. Because the technology is distributed, there isn’t a sole governing authority for the data either. In short, it’s a double-edged sword. Data can’t be lost or tampered with, but it also can’t be altered. This means that there needs to be absolute faith that the data within is a genuine accounting of transactions.
If there is any hope of uniting the industry and reducing the inefficiencies of fragmentation, everyone will have to play the game.
Secondly, blockchain will need total participation from smaller companies, both shippers and carriers. If there is any hope of uniting the industry and reducing the inefficiencies of fragmentation, everyone will have to play the game. Much the same as trust. The problem here is that smaller companies often have a hard time drumming up the necessary capital to invest in new technology. The electronic logging device (ELD) mandate is a perfect example of this. Larger companies had no problem, and many were prepared well before the deadline. Smaller companies, on the other hand, watched the deadline come and go with only 37 percent of 1,600 fleets in compliance with the ruling prior to the deadline. Trying to get that many smaller companies on board with the same, or at least compatible software will definitely be an uphill battle. However, once that’s done, you’ll have an entire industry, shippers, carriers and brokers alike completely connected and collaborating on a frictionless network.
Simply put, there is some tremendous potential for blockchain and it could very well revolutionize the industry.
Lastly, the industry as a whole needs to accept data standardization. Everyone does things a little differently, which might work in the fragmented mess that it is now, but in order for blockchain to not become a convoluted jungle of indecipherable data strings, it all needs to be standardized. This is something that BiTA is trying to spearhead by working on standardization from the outset. If the history of the trucking industry has taught us anything, it’s that incorporating blockchain technology universally across the sector is another obstacle that won’t be so easy to get around. A difference in programs could mean a time-intensive process for integration to simply make the program work with the blockchain, nevermind the data entry in itself. Simply put, there is some tremendous potential for blockchain and it could very well revolutionize the industry. However, it’s going to be a long and bumpy road before we get to the smooth workings and benefit from what blockchain could provide.
Working With a 3PL Like BlueGrace
BlueGrace makes it easier than ever to reduce the amount of physical paperwork with our FREE proprietary software, BlueShip®. BlueShip is user-friendly, completely customizable and has real-time updates, giving you a single source tool for tracking, addressing, and product listing. Fill out the form below to request a free demo today:
Most shippers don’t spend much time worrying about who is driving the trucks carrying their goods, but choosing a 3PL with the right carrier network makes all the difference when your business is expanding. B2B and B2C networks are increasingly determined by where the customer is, rather than a companies’ geographical location. With more business moving to online, you need to be prepared to meet your customers where they are.
When your customers need change, you want to be able to say “yes.” But logistics is a complicated business and when you are examining your choices, there are some factors to consider.
The first step is to understand your internal requirements – consider what your specific needs are before looking for a 3PL. Questions to ask include, what modes of transportation and what services you will need? What volumes do you plan to ship and where? Do you have specific security or visibility requirements? Are your shipments time-sensitive? The list goes on…Despite their expertise, 3PLs are only as useful as their knowledge of your business and customer requirements.
The right 3PL will also have a network density that connects you with the right carrier, at the right location and with the right capacity and expertise.
Start with Carrier Partnerships
Whether you are shipping intra-warehouse or last-mile, it’s important that your 3PL has the capabilities to make it happen. Two considerations are technology and partnerships.
Shippers should look for a partner that allows them to quote, track and control invoicing for their LTL and FTL shipments, across a nationwide carrier network. Because your shipping partner is responsible for integrating different shipments, they are responsible for implementing technology that provides visibility to your shipment across their network of trucks and more.
The right 3PL will also have a network density that connects you with the right carrier, at the right location and with the right capacity and expertise. With capacity being tight these days, partnering with the right 3PL will increases the chances that your time-critical shipments will be delivered on time and at a competitive price. That means, if you have warehousing and delivery needs in Houston, your 3PL should have vehicles available to accommodate those needs, and quickly.
Door to Door deliveries
Not all trucking companies handle door-to-door deliveries and some don’t have to. What matters is that your 3PL is partnered with carriers that offer fleet capabilities that meet your needs. For your urban customers, the trucking company might need to deploy a fleet of smaller trucks or even vans. If your requirements are FTL B2B shipments, you need a trucking company with that sort of capacity. For many shippers, their requirements fall in-between, or into the ‘all-of-the-above category.’ In those cases, your 3PL needs to have a range of carriers available to facilitate your business.
Shippers should ask themselves if their 3PL understands their business and customer base. For example, a company shipping high-value electronics, will want to check with their 3PL about security protocols. Are trucks secured? Is there a system in place to alert management when drivers divert course? Proactive 3PLs will have systems in place so that your customers can rely on you in turn.
Shipping disruption is an unfortunate reality in the business, ranging from weather disruptions to dock strikes. The right 3PL will have a plan in place to make sure that you are taken care of.
Do the services match the requirements?
Some 3PLs specialize in specific modes of transportation, commodities, dealing with regulations and origin/destinations. Others are generalists. Make sure that you ask potential 3PLs if they have experience handling the cargo that your business will be shipping. The right partner for your business will be able to walk you through the different steps required, allowing all parties to agree on the correct protocols and procedures. Reviewing a 3PLs Case Study library can help you better understand their expertise.
How many modes?
There are four common modes – ocean road, air, and rail. Many 3PLs will offer “intermodal” services, but if they don’t have the size and experience to properly manage that freight in-transit, they are essentially handing off responsibility to another party.
To avoid this uncertainty, make sure your 3PL works with established rail and intermodal carriers. That way, you get the most options. Offering a variety of modes that let shippers choose slower transit times when possible, which lowers costs. On the flip side, if you need something shipped fast, having a 3PL with a dedicated expedite team will help to ensures that your shipment gets where it’s going, in the time it needs to be there.
How’s their customer service?
This might seem too obvious to print, but it’s important to distinguish between friendly phone conversations and 3PLs that can get you the information you need when you need it. If there’s a disruption or other events along the shipment chain, you need a 3PL that can reach out proactively to help you make the necessary adjustments on your end. There will always be disruptions, but that doesn’t mean they need to put you on your back heels.
Customer service is also about finding a 3PL that’s willing to take the time to help you set up the right solution. If your business is experiencing sudden growth, you might not have all the answers.
Is your 3PL BlueGrace?
At BlueGrace, our freight specialists work with you every step of the way to understand your requirements and set up a solution that’s tailored to your needs.BlueGrace provides scalability for growing companies to achieve their goals without labor or technology investments. With a fully built-out national network and global partners, BlueGrace makes it easier than ever to reach your markets in an efficient and cost-effective manner. Our expertise and processes provide clients with the bandwidth to operate efficiently and drive direct cost reduction, backed by procurement and dedicated management. For more information on how we can help you analyze your current freight issues and simplify your supply chain, contact us using the form below:
Whether you are a shipper, receiver or trucker, freight damage affects all equally. Freight damage not only increases your cost and affects your revenue, but recurring or heavy damages can cause friction between supplier and end users.
As a Freight Operator, you can take several measures to avoid freight damage and shipping claims.
1. Understand your cargo
Understanding the nature of the cargo is of utmost importance so that you can use the correct type of transport for your cargo and the correct type of packaging. For example, if you are shipping drummed cargo you don’t need the same level of protection as you would if you shipped fragile or bottled cargo such as sauces, jams, etc. If you are shipping cargo that is more volumetric in nature than weight (example Cotton Bales) you need a truck with a bigger space capacity than weight capacity.
2. Choosing the right packaging
This is a critical aspect of trying to avoid freight damage. Once you have understood the nature of your cargo, which may be fragile, heavy, sensitive to water, sensitive to heat, etc., you need to carefully assess the type of packaging required for your product.For example, if you are packing fragile cargo such as bottles, it is important to ensure that these cargoes are packed using durable packaging like corrugated cardboard which is then palletized on wooden pallets for easy and safe handling.
Use quality pallets that will last longer than cheaper pallets. Cheaper pallets may give in a short term, and better quality pallets will allow for double stacking as required. Don’t take shortcuts or skimp on the proper packaging material as this short-term saving could result in a much bigger expense at a later stage in case of any claims.
3. Label your goods correctly
While it sounds like a no-brainer, a lot of freight damage can be avoided by labeling the cargo correctly. For example, if you are shipping liquid cargo or any other cargo that needs to be kept upright, it is important to label it correctly so the cargo handlers know which way to carry it.Similarly, if the cargo is hazardous, then it is important to label it appropriately. You should use the required hazardous labels so safety precautions can be taken.
4. Protecting your packaging
Cargo such as clothing, shoes and other high-value retail goods are special targets for thieves and protecting your cargo is of utmost importance. Protecting your packaging is also essential against weather and dirt, especially if you use cardboard cartons.
You can protect your cargo by sealing it with good quality tape (usually with your company branding on it), strapping it and shrink wrapping it.
5. Stow the goods correctly
Stowing of goods on the pallet or the truck is absolutely essential to avoid freight damage. Due care must be taken to stack goods in a uniform and stable manner so that weight is equally distributed across the pallet(s) and the truck.Your products must stay within the dimensions of the pallet such that it cannot get damaged during handling.
If your cargo has a mixture of heavy and light goods (say boxes of canned food and boxes of marshmallows), ensure that the boxes of canned food are stowed at the bottom and the boxes of marshmallows are stowed on top of the canned food.
6. Stow the truck correctly
A lot of freight damage happens when cargo shifts inside the truck during transit. Cargo moves inside the truck due to improper stowage inside the trailer.Whether it is palletized cargo or non-palletized cargo, the cargo should be stowed inside the truck as tightly as possible to avoid movement.
If in spite of your best efforts there is some space between the cargo, you should use suitable dunnage material like airbags (inflatable dunnage) to absorb sudden impacts and to prevent the load from shifting.In the case of fragile cargo, you can use cargo nets to secure it, so it doesn’t move during transit.
7. Ship in bulk
Try to consolidate your goods and move as FTL (Full Truck Load) to avoid using LTL (Less than Truck Load) as much as possible. LTL moves multiple handling before the cargo gets to its final destination. However careful one is, multiple cargo handling has a possibility of damaging your cargo.
8.Choose reliability over price
Choose the right supplier.Using a reliable freight partner is of utmost importance in the whole supply chain process.You should choose your reliable carrier based on a few factors such as their FMCSA score, the trucks that they use, the age of their fleet, their insurance and liability cover, their cargo handling safety record and their staff training methodology.While these may not guarantee the safety of your goods, it can give you a pretty good idea of your supplier.
Ensure the cargo is properly packaged before you accept to ship it
Ensure that the cargo is properly labeled and marked
Ensure that all documentation for the cargo is correct
Ensure cargo is stowed properly and can handle the various weather and transit conditions while en route to its destination
Ensure that you know how to properly pack and stack your goods, or use a qualified company to do this job for you
Check and recheck your cargo, its packaging, its labeling, stacking/packing and documentation before it leaves your warehouse
Ensure you have the correct receipt from your supplier when you are handing over your cargo
Ensure you choose the right supplier for the movement of your goods
Whether you are managing your own processes or you are using the logistics services of BlueGrace, proper preparation is one way to help prevent damage.
By working closely with all suppliers involved in the movement of your goods, you can ensure that your cargo will reach its destination in time, within your budget, and in the condition that it left the origin.
Do You Need Help With Understanding Your freight?
Whether you are managing your own processes or you are using the logistics services of BlueGrace, proper preparation is one way to help prevent damage. If you have questions about how you can better prevent freight damage, or just how to simplify your current transportation program, contact us via phone at 800.MY.SHIPPING or using the form below, we are here to help!
The US less-than-truckload (LTL) market is undergoing a tremendous change. Improving economic conditions as well as manufacturing growth has helped increase demand for LTL shipments. As a result, Stifel analyst David Ross noted that the $35 billion LTL market combined for publicly traded carriers reported tonnage per day increased 4% year-over-year during the second quarter of this year.
Indeed, the overall US economy appears to have awakened after a sluggish start to the year. First quarter GDP rose only 1.4%, a disappointment for sure but second quarter growth certainly made up for it growing at a 3.1% clip thanks in part to strong consumer spending.
E-commerce is taking more of the consumer’s spend. According to the US Commerce Department, second quarter e-commerce as a percent of total retail sales increased to 8.9%, up from 7.4% in second quarter 2016. The rise in e-commerce has sparked new service solutions from LTL carriers particularly as “supply chains become shorter, turn times are quicker and there’s a drive for small, but more frequent shipments”, according to Mr. Ross.
Some truck carriers have introduced last mile delivery services for items such as exercise equipment, mattresses, and furniture.
E-commerce packages have been the primary domain of small parcel carriers FedEx, UPS, USPS and regional small parcel carriers. However, as more consumers become habitual to ordering larger, bulkier items, FedEx and UPS, in particular, have struggled because their small parcel facilities and networks are not designed for such items. As a result, some truck carriers such as JB Hunt, Estes and Werner have introduced last mile delivery services for items such as exercise equipment, mattresses, and furniture. XPO Logistics, the third largest LTL carrier per the Journal of Commerce’s 2017 ranking, has taken it a step further by also offering white glove services such as set up, install, recycle etc. and just recently announced plans to expand their last-mile hubs to 85 within a few years. In addition, it is introducing technology that will allow consumers manage retail home deliveries with advanced, online tools.
Many shippers are looking for more integrated services, faster delivery and fulfillment and increasingly detailed shipment tracking and information. Also, third-party technology start-ups and TMS providers, such as BlueGrace are offering real-time pricing, booking and tracking solution services targeting both the shipper as well as the LTL carrier who may have available capacity on a particular lane.
Pricing and Labor
Stifel’s quarterly overview of LTL trends indicates that fuel surcharges are returning back close to 2015 highs (but remain far below 2011-2014 levels). Carriers are aiming for 3%-5% rate increases, and while getting some push back, they’re not losing freight over any rate hikes. The pricing environment currently remains healthy but could prove a concern over capacity.
LTL carriers are finding it more difficult to hire the needed labor to meet the increasing demands.
Labor continues to be another concern. LTL carriers are finding it more difficult to hire the needed labor to meet the increasing demands. Those that are hired are demanding higher wages. As an example, YRC was able to get some concessions from the Teamsters to allow them to raise pay above the contract level in certain markets.
The federal-mandated regulatory requirement, ELD (Electronic Logging Device) is set to go into effect in December. ELD is an electronic hardware that is put on a commercial motor vehicle engine that records driving hours.
It is believed that ELD could benefit LTL carriers at the expense of TL carriers.
It is believed that ELD could benefit LTL carriers at the expense of TL carriers. As such, many industry analysts anticipate pricing to increase as well as tonnage while TL capacity is reduced. As the Vice Chairman and CEO of Old Dominion Freight Line stated earlier this year, “A 1% fallout in truckload could equate to a 10% increase in the LTL arena, with larger LTL shipments.”
The Journal of Commerce’s annual LTL ranking showed that total revenue dipped 0.4% from $35.1 billion to $34.9 billion after falling 1% the previous year. However, with US industrial output, consumer confidence and an increase in fuel prices, the top LTL carriers will likely return to expansion and revenue growth for this year.
A part of BPO, business process outsourcing is the transportation of product. A manufacturer can make the best, fastest engines in the world, but then a reliable transportation partner will be needed to help get this shipment from point A to point B. There are many issues with FBAP or Freight Bill Pay and Audit when it comes to the classification of products. Here is a short explanation on getting the proper NMFC code and freight class for engines and transmissions.
There are over 10 different NMFC codes for various engine types that can cause confusion during the initial stages of the shipping process.
Internal combustion engines are a highly complicated and valuable piece of machinery to ship; with over 10 different NMFC codes for various engine types that can cause confusion during the initial stages of the shipping process. These engines fall under a specific NMFC code though (NMFC 120800) and require you ship them in certain conditions. You need to ask yourself quite a few questions and discuss them with your shipping representative before you ship your engines. This could determine the shipping cost and freight class of your shipment.
Questions you should ask include:
Is the engine new or used?
A used engine must not work and can only be used for salvaging or reconditioning. If the engine is repaired or refurbished, it qualifies as new. Used engines fall under a different NMFC code and freight class.
Is the engine drained of all liquids?
The engine is not allowed to be shipped until it is drained of all liquids, except those necessary to prevent rust, corrosion or other damage.
How is it being packaged?
The way the engine is packaged is another factor in determining the freight class. The simple difference between mounting on a wheeled shipping carrier and shipping on racks or cradles can create a large difference in freight rates.
What is the released value of the shipment?
The released valuation is another large factor in determining the freight class of engines and must be given at the time of quoting, as well as notated on the bill of lading.
These guidelines only apply when shipping internal combustion engines, NOI, so it is important to make sure you have all the correct information before you book your shipment.