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Showing posts from April, 2014

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…