LTL Freight News

Approach filing cargo claims as if you are filing a claim with your automobile insurance company. Do not do it unless it is necessary. Impulsively submitting claims against carriers every time something goes or perhaps just looks to have gone wrong, taking that approach won’t lower freight rates nor your car insurance premiums. When both parties stay committed to the partnership, over time, a mutual trust established creates a superior work dynamic. Partners work together to find, to solve and to prevent problems. Whenever things are going good and whenever things are not going good, partners continue working together. When something goes wrong, both shipper and carrier work together making the best of a bad situation and moving forward. Rather than placing blame when something goes wrong, partners look ahead searching for solutions. Whether carrier pricing adjustments or car insurance premium increases, once you file a claim against the company, you will continue to pay for it years i...

Concealed damage is much harder to prove because there's reasonable doubt as to who's responsible for having caused the damage. Carriers can't simply take everyone's word that a shipment arrived with damage and can't return every concealed damage shipment back to the shipper free of charge. If they were to do that, they'd go out of business quickly. Let's face it: customers don't always tell the truth. The unfortunate issue with concealed damage is the fact that, unless someone accepts and/or admits responsibility for having caused the damage, it's virtually impossible to concretely determine exactly who was responsible for having caused the damage. There’s no doubt that concealed damages happen and they are sometimes the fault of the carrier. Concealed damage also happens sometimes through no fault of the carrier, and it is sometimes a result of careless handling by another party involved with the handling of the shipment, either before or aft...

There are some important changes that have been made in Supplement 1 to NMFC 100-AO regarding guidelines for filing and investigating damage claims. New NMFC guidelines effective April 18 require concealed damages be reported to carriers within 5 days after delivery. Currently concealed damages can be reported up to 15 days after delivery for consideration of a valid claim; however, per NMFC guidelines effective April 18, 2015 the time period for reporting concealed damages is being reduced to 5 days. The closer to the time of delivery that the damage is reported to the carrier the more likely the claimant is to receive some type of settlement offer, but just because the damage is reported in a timely fashion doesn't necessarily mean that the claim will be approved for a settlement. Other changes effective on 4/18/2015 include one day being removed from the time frame allotted for filing suit on a claim. The new time period for filing a suit is two years. Previously, it was two...

Broker model 3PLs buy freight from the carriers and put a markup or margin on it and resell it to the shipper at a higher rate. This is how they make their money, and their margins can be adjusted on virtually every shipment as they fit. With the 3PL broker model shippers are normally unable to go directly to carriers for copies of the actual freight bills, and in some cases they are unable to obtain rates directly from the carriers. Since the 3PL broker is actually the one “buying” the freight from the carrier, they invoice the freight to a shipper on their own freight bill instead of one from the carrier. Otherwise, if shippers had direct access to the carrier freight bills then the shippers would be able to see how much the freight actually cost versus what the 3PL was "re-selling" it for.   As a part of their proposed value to shippers, many broker model 3PLs will tout that they file claims for their customers. They portray filing claims as their willingness to go th...

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 a...

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 destinat...

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 ...

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. (...

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 c...

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...