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Showing posts from 2014

Hours of Service Rules Changed With Signing of Congressional Funding Bill

A part of the spending bill recently approved by Congress and signed into law by the President will give truck drivers relief from two hours of service rules that are widely accepted as being a hindrance to truck driver productivity. Relief from the mandatory 34 hour restart, and more specifically the relief from the 1AM to 5AM rest period, and the 168 hour rule are now temporarily suspended. The funding bill did not suspend the mandatory 30 minute break period, however. This change will allow the hours of service rules to revert back to what was in place prior to the change on July 1, 2013.

Another part of the funding bill is a requirement that the Federal Motor Carrier Safety Administration (FMCSA) studies the impact that the rule changes have on safety, drivers and carriers. The FMCSA is required to study two groups of drivers - one group prior to the rules changes implemented on July 1, 2013, and one group studied after the changes were implemented - and according to wording in th…

Rate Hikes Expected Across All Modes of Transportation in 2015

Right now there is a big driver shortage in the trucking industry and the ports are backed up for multiple reasons. This is causing chaos in the supply chain and shippers not aligned with quality partners are facing tremendous rate hikes and delays in transit.

There are some key government regulations on the horizon for the trucking industry including electronic logging devices, speed limiters and your typical “going green” initiatives for cleaner emissions and more fuel efficient trucks. Additionally, many carriers have placed or will be placing new equipment orders for new trucks that should yield better fuel mileage, and these investment costs from the carriers in new equipment and driver training and retention will be passed along to shippers in the open market.

Also, in an effort to improve productivity and better align pricing to reflect their costs, carriers have begun using density scanners to analyze the freight in their systems for a better understanding of the shipments m…

3PL, Shipper & LTL Carrier Collaboration An Absolute Must To Drive Efficiencies & Keep Costs Down

If you've been using the same courier or transportation company for some time, maybe you have grown comfortable with the status quo, and the communication is stagnant. There may be some efficiencies that can be leveraged to help stabilize, and even lower costs for you and your carrier(s). Having your shipping team come in a little earlier or later than normal may allow the carrier to come in for an earlier or later pickup or delivery. This could reduce damages if your freight is now picked up at the end of the day rather than in the morning, or on the flip side it could enable you to receive orders first thing in the morning instead of at the end of the day.

Small adjustments to help accommodate the carriers’ needs, like having the shipping team come in an hour or two earlier or later, can create efficiencies that produce immeasurable soft dollar savings for the shipper and the carrier. Savings can take the form of reduced damages and faster turnaround times on new orders. The wil…

2015 Will Be A Tough Environment For Shippers

It’s A Carrier’s Marketplace The Freight-rate Climate Is The Best It’s Been In About 20 Years Shippers Should Expect Rate Increases Up To 10% Carriers Purging The Poorest Paying Routes In Favor Of More Lucrative Business Higher Than 10% Rate Increases Driver Shortage & Government Regulations Are #1 Concerns For Carriers The Situation Is Likely To Deteriorate Further More Government Safety Regulations Working Through The Federal Regulatory PipelineLTL In The Middle Of The Best Market Conditions Since 2005 2013 Weighted Avg. OR Of Public LTL Carriers was 92.9 – The Best LTL OR Since 2007Carrier, 3PL & Shipper COLLABORATION IS A MUST To Drive Efficiencies3PLs Will Become An Extension Of The Ltl Carrier’s Sales Channels Carriers Will Not Tolerate Bad 3PL Relationships 3PLs Must Bring Good, Profitable Business To Carriers To Be Partners The Best 3PLs Will Get The Best Pricing Barriers To Entry Tough for New 3PLs – Difficulty Getting Pricing From The CarriersMultiple Rate Adjustme…

Will Electronic Log Books Make The Driver Shortage Worse?

The fact that as a nation the United States is facing a big truck driver shortage shouldn’t be a secret unless you've been living elsewhere for some time. Currently there is an estimated shortage of 30,000 drivers, and according to the American Trucking Association the anticipated driver shortage is going to hit 239,000 by the year 2022. But there is another problem coming into play soon that may actually make it worse: electronic log books.

It's estimated that 75% of the industry is currently without electronic logging devices. In early 2015 there is a government mandate going into effect that requires commercial vehicles to have an electronic logging device. Once this is in place it will make it harder for drivers to dodge the hours of service rules. The way it stands now, trucks without electronic logging devices have a significantly lower chance of getting caught breaking the hours of service rules, especially if operated by a driver who knowingly wishes to manipulate hi…

LTL Re-Delivery Charges Are No Longer Being Overlooked

When carriers make an attempt to deliver a shipment but are denied or can’t perform the delivery because of no fault of their own (i.e. inaccurate information and / or lack of equipment) they will take it back to the terminal, put it on a different truck or get the correct information, and then attempt delivery of the original shipment. LTL carriers will charge a re-delivery fee for this should something similar occur. The ltl re-delivery charge is a fee that the carriers charge to help them recoup the costs incurred to perform the additional requirements necessary to deliver the shipment.

When the recession hit back in ’08-’09, all of the ltl carriers began vying for market share with a rate war of sorts, and they would often overlook or waive this charge in order to win or maintain business. During that time some ltl carriers were even hauling freight that resulted in a net loss just to keep employees and equipment employed. Now they are struggling to keep supply in line with deman…

Trucking: July Tonnage Index Up, Driver Shortage Still A Problem

Truckers have been hit with many blows recently, including the hours of service changes, higher operating costs from aging fleets, and insurance requirements. The aforementioned items have done nothing but hamper the situation when it comes to the driver shortage in the trucking market. Rates are going to have to rise in order to help even out the demand, or else there will be continual backlogs of freight and service issues. Something has to give.

Yesterday, the American Trucking Association released that the For-Hire Truck Tonnage Index increased by 1.3% in July. The ATA's Chief Economist, Bob Costello noted “The solid tonnage number in July fits with the strong factory output reading and a jump in housing starts for the same month. I continue to expect moderate, but good, tonnage growth for the rest of the year.”

The railroads are seeing the benefit of the driver shortage, but that still doesn't do away with the need for the drivers once the rail is at the unloading destinati…

Intermodal Activity up 5.9% for North America: Another Sign That LTL Rates Are Set To Skyrocket Soon

According to the American Association of Railroads, the intermodal volume increased 5.9% year-to-date for all of North America to 10.3 million trailers and containers through the week of August 9th. The Georgia Ports Authority reported that the container volume at the Port of Savannah reached a record level in July. "Container trade increased to 293,889 20-foot equivalent units at the port, surpassing the record set in May by almost 3,500 units." The Georgia Ports Authority stated that this was a 19.2% increase year-over-year. 
The GPA Executive Director said in a statement: “Improved confidence among U.S. retailers, newly added port customers and shifting cargo from U.S. West to East Coast are all fueling the growing cargo volumes at Georgia’s deep water ports.” Per the Intermodal Association of North America in a report last week, the Southeast came in with a 12.9% growth rate, but with just a little over 200,000 shipments it had the lowest total of overall shipments. 
The i…

Supply & Demand: Trucking Industry Driver Shortage

The reasons for the driver shortage can be debated amongst several issues, but the bottom line is that freight companies have been turning down business because they already have enough problems dealing with the business they have. In an economy where supply (capacity) and demand (freight) aren't matching up something has to give. The trucking industry is at full capacity and there is excess demand for trucks and the movement of freight. The trucks are there in many instances, but there is not enough qualified drivers to operate the tractors.

"The American Trucking Associations has estimated that there was a shortage of 30,000 qualified drivers earlier this year, a number on track to rise to 200,000 over the next decade. Trucking companies are turning down business for want of workers." This is quoted from an article in the New York Times on August 9th: http://www.nytimes.com/2014/08/10/upshot/the-trucking-industry-needs-more-drivers-it-should-try-paying-more.html

With t…

LTL & TL Shippers Beware: Carriers Have Leverage and Rates Are Poised To Rise

The link to this article is a great summation of what's going on in the trucking industry. We predicted a capacity crunch, and driver shortage is now the driving factor causing carriers to be able to cherry pick good freight at higher yields. Shippers should be prepared for what's ahead. It is going to get worse before it gets better, for shippers that is. You can hear it from the source : http://www.joc.com/trucking-logistics/labor/shortage-drivers-may-spark-higher-peak-season-truck-rates_20140731.html

LTL: FAK Explained

FAK stands for Freight All Kinds. If a shipper has an FAK it means that they have an agreement with their carrier or service provider (3PL) that allows different items falling into multiple different freight classes to be billed and shipped at the same class. An FAK may be beneficial for shippers with several commodities shipping at multiple classes, but it doesn't always make sense. A shipper’s volume, product mix and product types (value) are all things that should be taken into account before an FAK is considered.

Let’s say a shipper has several commodities ranging from class 50 to a class 77.5. This shipper may want to consider asking for an FAK 50, which if implemented would allow all of their shipments ranging from class 50 up to a class 77.5 to be rated and billed at class 50. This would provide savings for some of their shipments. More specifically it would save them money on the shipments that had historically shipped above a class 50 and below or equal to class 77.5. And…

LTL Accessorial Charges: Bill of Lading Instructions

Many shippers write something similar to this on their bills of lading: “No additional services will be paid unless prior authorization is obtained,” thinking this protects them from any unforeseen charges for additional accessorial services performed by a carrier at the time of delivery. This looks good on paper and may make shippers feel good, but the fact remains that this more than likely doesn't mean anything. A note or disclaimer on a bill of lading written by the shipper as such is generally not binding.
The positive side of this coin is that the note does provide the carrier with information that they otherwise would not have. In some instances a carrier may be able to alert the paying party of the needed services before they are performed, but this is the exception to the case. It is unreasonable to think that a carrier could call everyone that requested prior notice for approval for services required that were not originally requested. (Lift gate, inside delivery, etc.) T…

Refused Damaged LTL Shipments

When an LTL freight shipment is refused because of damage the carrier will notify the shipper and request a RGA# (or RMA#) to have it sent back to the shipper. If the shipper refuses to take it back the carrier will notify the consignee about accepting the freight again. In a case where the shipper will not accept the freight, the consignee should ask for it to be redelivered to them and take possession. If it is a third party drop shipment, the party paying the freight charges may accept it as well. If no response from anyone the carrier will send a letter with time limits before they sell it at salvage. 

The important takeaway is that someone must take possession of a refused damaged shipment before the carrier sends it to be sold at auction for salvage and all hope of receiving a claim settlement is lost. In most instances carriers will send the freight back to the shipper or party taking possession of the damaged freight at no charge, or free astray. If a claim is filed for a damag…

The Gain Share Model 3PL: Friend or Foe?

There are differing opinions and reports from professionals in the supply chain industry about the use of the gain share model by brokers or 3PL’s. Some shippers are happy with the model and some aren't. There’s no denying that it works in some instances, but many logistics experts are reporting that there is a lack of visibility and control associated with it. The model is similar to a consultant finding a client ways to save money on their business processes. The consultant may ask for a percentage or fee of the achieved savings since it took their expertise to find the cost reduction. This sounds good in theory and usually works well in a consultant type situation, but in the freight world this may not be a true representation of what's happening.

With the gain sharing model a shipper agrees to pay a percentage or flat rate fee of the savings a broker has said to have obtained for them. For instance, if a gain share 3PL proposes that they can save a shipper $10,000 off the…

LTL General Rate Increases (GRI's)

LTL carriers typically make modifications to their base rates yearly through the form of a General Rate Increase (GRI). Historically speaking, these increases occur once a year, but there have been years where there were none passed along and there have been years where there have been more than one. These increases are given with multiple factors taken into account, including but not limited to the economy and the carrier’s network and current operating ratio.


An important thing to remember with GRI’s is that the announced increase reflects only the average rate increase across all lanes combined. It’s a weighted average. It isn’t necessarily indicative of the true impact the GRI will have on a shipper’s total freight costs since it’s not a flat percent increase across the board. And yes, this can work both ways for individual lanes. The impact may be less than what’s announced in some lanes, and it may be a lot higher in others. The takeaway here is that a shipper could be seriously…

Old Dominion Freight Line 2014 Q1 Profit Up

Old Dominion Freight Lines reported this morning that compared to Q1 2013, revenue for Q1 2014 climbed 15.2% to $620.3 million, net profit rose by 13.2% to $45.9 million, and its operating ratio improved to 87.1% from 87.8%. ODFL’s CEO, David Congdon, said: “Due to the significance of our first-quarter growth, we have increased our projection for capital expenditures in 2014 by an additional $25 million for tractors and trailers.”

March Truck Tonnage Up & Home Sales Down

With capacity issues becoming more and more evident, Transport Topics and the American Trucking Association (ATA) recently reported that the March truck tonnage index was up 3.1% over March 2013. The ATA's Chief Economist, Bob Costello, said “Tonnage continued to claw its way out of the hole that was dug in December and January. However, with a cumulative gain of 2.5% during the last two months, we still have a way to go to offset the total loss of 5.2% in December and January."

The brutal winter weather in the US this year coupled with the trucking industry's driver shortage, tightened government regulations, and even a shortage of diesel mechanics contributes to lower than expected US truck tonnage reported for December 2013 and January 2014. 

Meanwhile, according to the Department of Commerce, new home sales in the US dropped to its lowest level in 8 months. The worst decline in home sales was in the Midwest which saw a 21.5% drop.

LTL Market Conditions & The Capacity Crunch

The capacity crunch in the U.S. trucking industry is here and it is very real. Analysts are reporting that annual rate increases levied to shippers by the LTL carriers in the open market this year are sticking. The tight capacity constraints are a result of numerous factors including a severe driver shortage, new hours of service regulations imposed by government regulation, a harsh winter that caused delays in the movement of previously scheduled to move freight, and even shortages of diesel and heavy equipment mechanics on hand to maintain and keep carrier fleets on the road.

Add all of that to the fact that the U.S economy has shown some life – even if minimal - with regards to turning around, and you have what has set the stage for the proverbial perfect storm that is changing the tides in favor of carriers instead of shippers for the first time in several years. The capacity crunch in the truckload segment of the market is also spilling over into the LTL sector, and shippers who …

LTL FREIGHT: WHAT IS AN FAK?

FAK stands for Freight All Kinds, and it is an agreement made between a shipper and a carrier that allows different items falling into multiple freight classes to be billed & shipped at the same class. An FAK can be beneficial for shippers with several commodities shipping at multiple classes. This is because they help with simplifying the bill of lading and freight payment process and can also provide savings. It may not make sense or be feasible to pursue an FAK in some instances. Shipper’s volume, product mix and product types (value) are all things that a shipper and a carrier take into consideration before an FAK will be put into place.
Here’s an example of where it may be beneficial: let’s say a shipper has several commodities ranging from class 50 to a class 77.5. They may consider trying to negotiate an FAK 50, which would allow all of their shipments ranging from class 50 up to a class 77.5 to be rated and billed at class 50. This would provide savings for all of their sh…

FAK CLAIMS LIABILITY LIMITS TIP

Before you implement any type of FAK parameters into your freight tariff, be sure to ask what claims liability limits apply to the proposed FAK. More often than not, when under an FAK, your claims liability limits per domestic shipment are greatly reduced. One damaged shipment could nullify the FAK savings.

How To Handle Concealed Damages and Claims with LTL Shipments

The LTL industry standard is that concealed damage must be reported to the carrier within fifteen (15) days of delivery of the shipment in order for a claim of this type to be considered. Once concealed damage is noticed, the carrier needs to be made aware of the concealed damage as soon as possible. This can be done by calling the local delivery terminal within 15 days of delivery date. Emailing the carrier is helpful as well. The main idea here is to make sure you have and keep documentation of where someone at the carrier was notified within the 15 day window. Notification closer to the delivery date will increase your chances of receiving a settlement. Please make sure to make note of the person you spoke with, time and telephone number. Additional notes of the conversation with the terminal may also be made for future reference if required. 

Very Important: ALL packaging that went with the specific shipment must be retained for the carrier’s inspection. Failure to do this will res…