World Trade - August 2008 - (Page 30)

LOGISTICS 39% 2007 LTL Shipments Falling Under Transitional Arrangements Over a quarter of companies had at least 90% of their 2007 LTL shipments under transactional arrangements, while almost 40% of companies had less than 30% of their 2007 LTL shipments under transactional arrangements. ©2008 Clear Seas Research, www.clearseasresearch.com Total Respondents = 294 22% 17% 14% 9% 10% 28% 15% 13% 1% – 9% 10% – 29% 30% – 49% 50% – 69% 70% – 89% 90% – 99% 100% of LTL Shipments Companies may ﬁnd that shipping at near the LTL maximum weight can result in savings of 20 to 25 percent off straight tariffs. Likewise, adjusting the minimum weight also had advantages. In David Schneider’s days with Pep Boys, he recalls, “we changed our minimum weight from 500 pounds to 200 pounds, which cut the minimal cost from $180 to $78.” That made sense for inbound freight, which typically came from small shippers, he explains. It’s also worth checking among carriers to determine their minimal LTL weights and pricing. The differences may be signiﬁcant. What is considered LTL varies according to carrier. As Barton points out, “Most common carriers allow the maximum linear feet of the shipment to be somewhere between 12 and 20 feet, and for 12,000 to 20,000 pounds to be considered as an LTL shipment.” Knowing where companies draw the line helps shippers better match their shipments to the carrier. Another criteria, Barton says, is the extent to which carriers are willing to work with shippers to establish correct and fair classiﬁcations for freight. That is best determined by experience and by the carrier’s reputation. “Freight bills coming in three weeks later that have been adjusted by a carrier’s weighing and research department are difﬁcult to correct,” he points out, and any discrepancies “often are difﬁcult to collect from your customer if you have made a prepaid shipment.” Therefore, ascertain such details beforehand. Although costs are certainly important, shippers are quick to point out that costs are only one factor in the shipping decision. Often, they’re not even the most important. Some additional, important aspects to consider include reliability, transit times, geographic coverage, delivery accessorials, driver know-how and cost of claims from damages. The bottom line: reliability matters. Service which special services you really need. For example, inside delivery, lift gates, COD shipments, or hazmat handling all increase the cost of shipments. After you decide what you need, determine what services your carrier can provide and its service standards. In comparing service standards, understand that carriers may not deﬁne their terms the same way. “Overnight” for example may mean delivery by 10 a.m. to one carrier and 5 p.m. to another—or worse. Know how each carrier deﬁnes the terms used to describe its services. The next step is to very carefully delineate what is or is not an accessorial charge with a given company. Carriers often are willing to negotiate the rates on these services, particularly if doing so may help them get more of your business. Note that negotiations for an on-the-ﬂy shipment rarely will result in terms as favorable as those possible when negotiating for a longer-term contract. Another point, Schneider emphasizes, is to ensure that expected services are actually provided. Schneider notes that although the carrier may offer speciﬁc services, local managers didn’t necessarily provide them, leaving the shipper holding the bag. So, researching a carrier should also include research on the local operation. “You have to monitor service levels over time,” Stiles insists. “Software won’t detect service levels.” Reliability At Pep Boys, Schneider recalls, small shippers who “were shipping to us using the carrier’s standard tariffs were often getting killed in accessorial charges.” He sees that in his consulting business, too. The solution is to ﬁrst determine 30 WORLD TRADE AUGUST 2008 Cost is irrelevant if the carrier is unreliable, emphasizes Dan Weingart, president and CEO of the Alisam Group. “I come from the customer side of the industry,” he prefaces. And, as a shipper, “We had an issue with a freight company that was extremely unreliable, but also very cheap. We never knew if the shipment would make it.” That escalated the overall cost because problem resolution often took nine or ten hours, and detracted from the shipper’s image. Shippers can minimize the risk of finding themselves in that situation by pre-qualifying potential carriers. “Get referrals and check their credit worthiness,” Weingart recommends. The TIAnet.org “Watchdog” system tracks carriers’ performance, and load matching http://www.clearseasresearch.com http://TIAnet.org

Table of Contents Feed for the Digital Edition of World Trade - August 2008

World Trade - August 2008 Contents Weathering the Storm Helping the World’s Poorest Nations Benefit from Global Trade Supply Chain Watch Tradewinds World Trade’s Top U.S. Trading Partners LTL Shipping ‘On the Fly’ Air Cargo Flies a New Heading Getting More from China Sourcing Why 3PLs Need a Seat at the C-TPAT Table Performance-based Supply Chains Drive Total Lifecycle Value SmartWay Navigates Sustainable Transportation Around the World in 80 Days—Hours—Minutes

World Trade - August 2008

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