Wednesday, February 21, 2018

A Little Squeeze



‘Little things’ in shipping practices can add up to big savings.

With transportation rates soaring, saving money on shipping is vital, yet harder to accomplish. It can seem the only way to cut costs is to move shipments to less premium modes. But one powerful way to squeeze costs from your supply chain is to avoid paying unnecessary fees to carriers. These four categories are a good place to start:

1. Address Corrections. Address correction charges apply when a package has a mistake – any mistake – with its recipient address. These fees can be applied for errors like spelling a city name incorrectly or using the wrong postal code. It may seem trivial on paper, but with charges around $13 to $14 per package, these can add up fast. To help battle these fees, your system needs to flag which addresses are incurring fees most often, and establish a pattern for where the fees are originating.

2. Invalid Accounts. If a package does not provide a valid sender account number, carriers can again tack on an extra $13 to $14 per shipment. These errors can be fixed at the origin of the package, simply by ensuring the correct sender account number is used. A transportation management system (TMS) can show what locations may be the largest offenders in order to implement a plan to consistently get this right. 

3. Dimensional Weight Fees. It seems obvious that shipping a pack of pens in a large box the size of a refrigerator would be overkill. Carriers increasingly charge according to the amount of space a package takes on their truck, penalizing shippers for sending items in oversized cartons. The perception between box size and the dimensional weight are often prone to error. Dimensional weights are important to track and analyze on a regular basis.

4. Package Consolidation. Marrying shipments to the same delivery address, even if from separate orders, helps squeeze waste and cost from your supply chain. Suppose a customer orders a baseball helmet and a baseball glove, and the fulfillment center packs the helmet and glove in different boxes. Soon after, the customer remembers to order baseballs and places another order. Do the baseballs ship separately in a third box? You would like to think it won’t happen, but don’t assume it – monitor it.

Your supply chain needs to be routinely subjected to technological analysis to prevent issues – these and others – from creeping in. Human perceptions and force of habit can make it hard to see what the numbers are actually telling us. Little improvements in your shipping practices can add up to big supply chain savings. 


Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103

Tuesday, January 30, 2018

Perfect Storm


Multiple factors align to push trucking rates upward.

Coming soon to a loading dock near you: significant upward pressure on truckload and less-than-truckload (LTL) rates.

Multiple factors are converging to point to a climate where trucking prices climb substantially throughout 2018 and beyond, said reports in publications from the Journal of Commerce to the Wall Street Journal. With the North American supply chain as a whole already in the teeth of a substantial shortage in truck capacity, strong economic growth is increasing demand, with more goods being produced and requiring shipment.

Retailers are replenishing stocks after one of the strongest holiday sales seasons in recent years, and in December, industrial production had the largest year-over-year gain since 2010, according to the Federal Reserve. Economic activity is increasing worldwide as well, and growth in global trade will fill more trucks in the US.

The new federal safety regulation requiring truckers to track their hours behind the wheel with electronic logging devices, or ELDs, is also increasing rate pressure, with prices shooting up on some routes that might now take two days instead of one because of stricter timekeeping.

January is typically a quiet month for freight. But in the first three weeks of January, national average spot truckload rates were higher than during the peak season in 2017, according to online freight marketplace DAT Solutions LLC. Analysts expect capacity to become scarcer in April, when produce shipments pickup, and full enforcement of the ELD rule kicks in.
Spot-market prices for dry vans are up more than 20 percent year-over-year, and analysts expect long-term contract rates that shippers negotiate with carriers to rise by between five to eight percent this year.


And after years of low fuel costs, diesel prices are near a three-year high. Throw in an ongoing driver shortage that is forcing carriers to pay more to keep drivers in their cabs, and the “perfect storm” analogy is hard to avoid. Many of these factors are here for the long haul, and truckers, long-haul or otherwise, will not be inclined to discount their rates in the months ahead. 

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103

Thursday, January 18, 2018

Sky-High




Airfreight rates soar thanks to e-commerce, tight capacity and Chinese New Year.

Add air cargo to the transportation sectors where rates are climbing to new heights.
Largely fueled by a sharp rise in e-commerce, which is viewed as a long-term trend increasing demand for express airfreight in the China-US lane, airfreight rates are reaching new, unprecedented levels. Strengthening economies and US companies restocking after the holidays, coupled with years of belt tightening by air carriers, are also contributing to the new reality.

The burgeoning demand comes after a protracted period of weak demand in air shipments, during which carriers cut rates to compete and cut operations to the bone, hurting their ability to handle the current surge in shipments. The lack of capacity has led to congestion at airports, delaying shipments and adding to costs.

The situation is especially acute in the run up to the annual Lunar New Year on Feb. 16, leading Western companies, especially retailers, to stock up before Chinese factories go dark. Across the board, cargo owners making shipments from China to the US are looking at rates up to double what they paid last quarter, and shippers requiring urgent airfreight over the next three weeks may well find their costs have tripled.

Further constraining the ability of the system to process increasing shipments, the International Air Transport Association (IATA) predicts that rapidly rising passenger and cargo demand could see hundreds of airports, including most of the European gateways, reaching capacity in the next 10 years.

Shippers looking for relief from spiraling air express costs are turning to services such as Totalogistix's AirFreight.bid, simply the best way to do airfreight, and finding the best available pricing.


Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103

Tuesday, January 9, 2018

Ice Road Trucking



Winter weather has chilling effect on already tight transportation market.

Days of bitterly cold weather across the northern United States, followed by a massive winter storm along the Atlantic coast, are raising concerns for shippers. The extreme cold that blanketed the Midwest before moving east is causing delivery delays, and in an already tight truckload and LTL (Less than truckload) environment, raising the specter of spikes in pricing.
Shippers who remember the polar vortex of 2014 know what to expect in the wake of a weather event of this magnitude: less available transportation capacity and higher spot market truck rates, with many trucks and other assets in transportation networks out of place as the recovery begins. With temperatures falling to the point where diesel engines cannot even start, operators must consider conditions not only at the point of origin and destination, but ensure roads are passable in between, with massive snow drifts and hurricane-force winds reported. 
Winter Storm Grayson is unusual in the size of its footprint, as well as its severity. Ports as far south as Savannah were forced to close, and snow obstructed roads down to Tallahassee, Florida. Even after the storm’s passing, and a return to more seasonable winter temperatures, delays, port closings, carrier embargoes on freezable freight and backed-up shipments piling up in warehouses can continue to affect supply chains in the weeks ahead, impacting logistics operations even in areas far removed from the storm’s fury.

Just as in the 2014 polar vortex, and after Hurricanes Harvey and Irma, the ripple affect will likely affect sales and production, possibly for months. Businesses with contingency plans and an efficient Transportation Management System (TMS) in place will feel less frostbite.

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103

Wednesday, December 6, 2017

Looking Up




Walmart joins Amazon in proposing flying blimp warehouses to speed deliveries.

It only sounds like science fiction.

When Walmart applied for a patent for a flying blimp warehouse to speed “last mile” deliveries, it was actually playing catch up with online archrival Amazon. 

As reported by Bloomberg, Walmart filed a patent entitled “Gas-filled carrier aircrafts and methods of dispersing unmanned aircraft systems in delivering products.” According to the patent, the floating blimp would be operated remotely by a human pilot while flying at between 500 to 1,000 feet off the ground. A fleet of drones would then be used to collect and deliver items stored on board to destinations in the vicinity of the blimp.

By having a floating warehouse, Walmart could remove the expensive last mile deliveries from its network. Instead, the blimps would be deployed fully stocked with products which are then delivered by drones before the blimp returns to a base station to be restocked and refueled. There would be no traffic to deal with – until the skies become crowded with blimps and swarms of drones – and the area served by one blimp could cover dozens of delivery trucks on the ground. 

In its patent application filed two years ago, Amazon proposed a blimp warehouse traveling at heights up to 45,000 feet.  Delivery drones would save on fuel, as they would glide to their destination with gravity on their side. The blimp, said Amazon, could also hover over events such as football games so as to deliver food, drinks and souvenirs. Mobile warehouses could cover a wider distribution area compared with old-fashioned fixed warehouses that can fill orders only within a fixed driving distance. The airship could fly to one town and release a flock of drones to deliver packages, after which the drones would return to the vessel and restock while it flew to the next destination, bypassing congested roadways.

Walmart’s patent application was filed in August, but has yet to be approved. Walmart has also filed a patent for in-store drones to ferry products from the backroom to the sales floor. Amazon’s blimp concept won approval from the U.S. Patent and Trademark Office in April, 2016.

So when it comes to last mile delivery options, things are definitely looking up.


Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103