LTL Freight News

There’s no doubt the ruse of free freight can be very attractive to buyers. Many companies insist on free freight being included in their purchasing agreements and negotiations and will also make large purchases from vendors to qualify for it. There is no such thing as free shipping. Freight is never free. Someone has to pay for it.  When sourcing products, having free freight included in the purchasing agreement may feel like a win, but you are paying for the freight cost somewhere else in the cost of the product. Free freight is often used as a psychological selling tool, with the actual freight cost simply factored into the price of the goods you ordered. Some vendors will use this to their advantage and solicit business with the lure of free freight on qualifying bulk orders knowing that companies will place larger than normal orders simply to qualify for it. The problem with placing orders big enough to qualify for free freight is that, in some cases, it requires a company to ...

Electronic Data Interchange (EDI) has been the industry standard for years. EDI is a form of communication between two systems where the specific status or value of something is conveyed to another system at a particular time, and ongoing communication between the two systems endures based on scheduled batch exchanges or data transmissions that take place at regularly scheduled time intervals. For example, a shipper may send a carrier a list (or batch) of shipments they would like the carrier to pick up every morning. In turn, the carrier will transmit an EDI file back to the shipper at the end of the day that acknowledges receipt of the request sent by the shipper asking for pickup of those shipments, so the shipper knows the carrier received their request. Shippers and carriers can communicate using this process daily, but the exchange of information is essentially only an exchange of status messages that acknowledges communication being sent and/or received. It doesn’t give any f...

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 ...

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...

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...

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. (...

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 th...

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 seri...

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.  

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 shi...

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 th...

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.

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. F...