A Bumpy Road

A Bumpy Road:

‘State of Logistics’ Report sees unsettled times ahead for supply chains

The state of logistics is volatile, according to the 22nd Annual State of Logistics Report, put out by industry prognosticator Rosalyn Wilson, and presented to the Council of Supply Chain Management Professionals.

“Most measures would call the first quarter a strong one for the logistics industry,” says Wilson. “In the last few months of 2011, however, volumes have been eroding, along with other key economic indicators, and there are signs that the economy is stalling and predictions for a strong 2011 may fall short.” No matter how you slice and dice the data she’s collected, shippers are going to be in for bumpy ride in terms of rates, capacity, and service over the next six to eight months.

“An unstable rate and capacity environment hurt both sides, and it’s not going to get much better for a while,” said the report. With consumers still on the sidelines, the recovery from the Great Recession has proven to be more elusive and prolonged than any other in our history, and the slow growth presented another year of challenges for the logistics industry.

“By the end of 2011 we will see a different looking freight picture. Shippers may be dodging about in a search for capacity during sudden surges in demand, and carriers will continue to look for a sustainable revenue model,” cautions Wilson.

Navigating these rough seas, staying on this bumpy road, requires keeping constant tabs on a constantly changing logistics market.

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

Cubism

Cubic Capacity Rule means some shipments are more equal than others.

Trucking is not known as a creative business, but carriers get positively artistic when it comes to creating ways to boost revenue and make margins on a given shipment. Case in point: the Cubic Capacity Rule.

Like the DIM or dimensional weight rules used in the air freight and small package world, the Cubic Capacity Rule is a way to allow less-than-truckload (LTL) trucking companies, if your freight doesn’t weigh enough to generate the dollars they require, to charge for a calculated weight instead of the actual weight. Low density shipments, those weighing less than six lbs./cubic foot, or those that can’t have other items stacked on top of them, may very well be charged a premium for taking up excessive space in the trailer.

Ping pong balls are the classic example, but the Cubic Capacity Rule can be invoked on a wide variety of goods. The rule’s specifics are complex, and vary from carrier to LTL carrier. These charges can result in a nasty shock, or even worse, ongoing freight bills higher than expected, with explanations that are confusing. You might pay three times more on a shipment of a given weight.

As carriers struggle to boost revenue, assessorial charges take a bigger bite of your logistics dollar. For every shipment, there are options to make sure it travels as efficiently as possible. Make sure you are aware of and consider all of yours.


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