Loose package shipments Shipments under 150 lbs. Length + 2x height + 2x width less than 165 in. Hub and spoke distribution Standard $100 per package insurance Very few competitors UPS, FedEx, DHL
Transportation Modes – Less than Truckload (LTL)
Palletized or crated shipments (generally) Shipments between 150 lbs. and 5000 lbs. Typical shipments are from 1-6 pallets Terminal/Breakbulk network, shipment will travel on multiple trucks Insurance coverage is generally $5 -$25 per lb. Lots of local, regional and national competitors YRC, Conway, FedEx Freight, R&L, Central
Lots of equipment types – vans, flatbeds, intermodal, reefers Full truckload implies that you are using the entire trailer - up to 45,000 lbs or approx. 24 pallets Partial truckload encompasses shipments over 6 pallets up to a ½ truckload Shipment stays on same trailer for entire journey Insurance coverage is generally $100,000 per load Thousands of local, regional & national competitors Schneider, JB Hunt, Swift, Mercer, Werner
Expedite – make an action or process happen sooner or be accomplished more quickly Terms – “guaranteed”, “hot shot”, “time definite” Any size shipment from parcel to full truckload Can be via truck or air Guarantees only cover freight charges – not down time, crew costs, client penalties etc. Fragmented competition – lots of carriers offer expedite options FedEx Custom Critical, Panther, Conway Now Transportation Modes – Expedite
Shipments originating or destined to countries outside of North America Full container and less-than- containerload options Can be via ocean or air Lots of insurance and pricing (incoterms) options Most shippers use a broker or freight forwarder
Basic Freight Cost Elements Distance – zones, zip to zip, mileage Size and weight (dimensions & freight class) Transit time requirements Equipment requirements Additional services – liftgate, inside delivery, residential Capacity – carrier specific and market driven Fuel costs
LTL Costs – Freight Classes!!! Freight classes are used by LTL carriers to categorize different types of freight for costing and pricing. There are 17 classes: 50 -500. Classes are published by NMFC (National Motor Freight Classifications). Freight class is determined by multiple factors: Density Value Ease of Handling Fragility Special considerations – hazardous, used or new, “dirty” items
Common Accessorial Charges Liftgate – Free to $100 per occurrence Inside Delivery - $25 to $150 depending on complexity Notification – Free to $25 per occurrence Non-Commercial or Residential - $50 to $100 Service is defined by each carrier – not consistent Schools and colleges Farms Military bases and government facilities Churches
Strategies to Reduce Freight Costs Conduct a formal review at least annually. Identify metrics that measure freight costs. Incent customers to order in larger quantities. Consolidate purchasing of materials. Eliminate vendor “best way” shipments. Negotiate an FAK with LTL carriers. Negotiate fuel and other accessorials. Utilize a broker/3PL/consultant with expertise. Utilize economy carriers (lower service expectations).
Types of Freight Claims Shortages – portion of the shipment is missing or the entire shipment is gone. Visible Damage – shipment is obviously damaged and notated on the delivery paperwork. Concealed Damage – damage is not obvious and discovered after the delivery has occurred. Carrier will pay a max of 33% of the claim when concealed. Service Failure – applicable on certain “guaranteed” shipments. Only covers the cost of the freight, not any incidental costs.
Freight Claim Tips Inspect shipments immediately, there is a limited window to notify the carrier that a damage has occurred. Document as much as possible, take pictures. You will need copies of the bill of lading, delivery receipt, vendor invoices and details of your costs. Expressly list both pieces and pallets on the bill of lading. Use proper packaging, pallet sizes, corner protectors etc. Don’t waste time on claims under $200. Be Persistent! Do not accept the carrier’s first denial – you need a “bulldog” mentality to get resolution.
Customer and Vendor Routed Hands off approach to freight – puts the responsibility on your vendors and customers to choose and pay the carrier. Liability for charges and claims falls on vendors & clients. Don’t have to negotiate freight rates, pay trucking invoices. Zero control / leverage when problems do occur. Dock congestion for larger shippers, too many different carriers / drivers. There is really no such thing as “Free freight”.
Carrier Direct Model Shipper responsible for managing carrier contracts, selecting carriers and paying carrier freight bills. Allows for complete control over the process, carrier choices. Best possible freight rates for shippers with high volume (over $1M) Must have staff to perform traffic management and freight payment functions. Hidden cost increases in carrier rates and tariffs.
Outsourcing – Forwarders, Brokers & 3PLs Hiring a company to perform traffic and freight payment services on behalf of your company. Access to better freight rates for smaller shippers. Reduces time involved in dealing with freight administration and problems that occur with shipments. “Must have” option for international shipping Lose some control over carrier selection. Start-up and implementation can be a difficult process. May feel threatening to existing employees.