On the Front
This past June, truckload capacity measured a three year high in the available loads to available trucks ratio (a key indicator of how tight the current market is). Certain areas of the country are impacted far more than others – the south in general has been very tight. The tools we use have the ability to narrow in on market segments to help us understand the dynamics and challenges of certain regions, and we often try to pass this information along to help educate our clients with regards to what we’re seeing. Moving past the end of the second quarter and past the 4th of July always loosens capacity up a bit, but we do not expect this to last very long. Truckload capacity issues are always a key predictor for service interruptions and rate increases within the LTL market. While there are many reasons LTL rates are rising, in an article written by Greg West with C. H. Robinson, he identifies five: "There's more ecommerce, and it's changing the game. With the
The recent load to truck ratio hit a two-year high indicating further that TL capacity is tightening up. As we've mentioned before, the DAT Solutions metric is a good indicator of the state of the market. If you explore the trendlines in more detail you can find certain markets that are tougher than others - like outbound Texas. http://www.dat.com/resources/trendlines/van/demand-and-capacity We are also noticing a very strong change in direction from the LTL carriers. You may recall in our last post we mentioned increases are being requested at higher %'s, which is a clear indication pricing power has shifted. In addition - they are getting far smarter in what they are handling and making it clear that there is certain freight they will not handle at a cheap price. I met with a large, national LTL carrier at their headquarters just last week. They told me they are handling around 50,000 shipments a day and are not looking to increase that number.
As 2017 progresses, we continue to see more signs of aggressive price increases within the LTL market. Carriers have invested a significant amount of money implementing new technology to ensure all shipments moving through their terminals are priced accurately which can translate into reweighs and reclassifications for shippers. According to multiple national LTL carrier sources, capacity is tightening rapidly and many are looking to implement “take it or leave it” increases upwards of 20+%. This is a sure sign the economy is changing and price increases are not going away anytime soon. Recently a carrier rep told us their president mandated a 20% increase in revenue per bill and instructed reps to walk away from bad business. Another mentioned they are pushing for a 91% OR (operating ratio) no matter what it takes. Last year, according to YRC CEO James Welch, he said ”Our contractual pricing has continued to increase between 3 and 5 percent. We’re going to continue
As members of the Recon team travel this week to attend the Transportation Intermediaries Association’s (TIA) 39th Annual Conference, we’re reminded again of the importance of collaboration to drive better solutions for shippers. During this conference, qualified and carefully selected freight intermediaries across the country come together to learn and offer the best solutions and practices. In an industry saturated with 3PLs and brokers, it’s important for shippers to carefully select with whom they do business – and ideally partner with a member of the TIA. Why, you might ask? The TIA is a customer-focused organization with the full intent to better the freight industry, so companies will know they are working with a respectable intermediary. Out of 1,600 member companies, 70% are small, family-owned businesses that follow a strict code of ethics. Another benefit to partnering with a TIA member is to gain access to a network of vetted and reputable carriers.
We have always believed relationships between shippers, carriers and 3PLs should be honest, open and transparent - all qualities Recon has firmly stood by since our founding in 2005. For this reason, we aren't surprised to see the industry move away from transactional relationships and towards true partnerships (a philosophy we have always embraced). While it's been tradition for most 3PLs and brokers to build walls and barriers between shippers and carriers to capitalize on hidden margins, we've been working hard to break down these walls. To maximize savings and efficiencies, shippers should seek expertise within freight management companies with a business model offering collaboration and transparency to yield the best results. As noted in the article below, "The topic of alignment remains relevant, and shippers and 3PLs agreed on the importance of openness, transparency and effective communication to overall success." With the combined influence of increasingly
Managing LTL freight has continually become more and more challenging over the past several years. While “surface” pricing appears to be soft, underneath the surface carriers are looking everywhere they can to find additional opportunities for revenue. In many cases it’s understandable – shipments outside the normal, commercial, dock-to-dock moves are more costly to service and should have additional charges. Residential, limited access, and lift-gate deliveries (to name a few) all involve more time, hence more money. Knowing your customer’s specific requirements prior to setting up the load is imperative to receiving an accurate quote. Carriers have traditionally had lengthy rules tariffs which identify and explain these additional charges, but they were often not strictly enforce. However, they have become smarter on their margins and what is impacting their costs, causing a shift in the LTL environment. Not only are carriers now billing for additional
In order to run as efficiently as possible, it's important for manufacturers and suppliers to incorporate a transportation management system (TMS) into their daily supply chain operations. Not only does a TMS provide a significant return on investment (ROI), but it helps shippers cut freight costs and improve optimization across their company. Below we'll dig into the ways a TMS can help your company: Accountability A TMS is imperative for accountability measures within a company. It not only holds employees accountable internally, but also makes sure carriers are performing where they should. We’ll dig into reporting in a later point, but access to performance reports and compliance helps shippers identify trends and weak points for improvement. Having a robust TMS helps managers better understand their supply chain environment and where their employees and carriers should be performing. Actionable Intelligence Ever hear the phrase “you don’t know what you
Watch your ACC! Understanding and Managing LTL Accessorials As shipping costs rise, it’s more likely small businesses will search for ways to save money within their supply chain operations. In doing so, it’s important to be aware of any potential hidden costs, including accessorials. Over the years, we have observed carriers become stricter with applying accessorial fees to cover inefficiencies when handling shipments outside “the norm.” While manufacturers cannot prevent all accessorial charges, they can take steps to become more proactive. Before learning how to manage accessorial fees, it’s important to understand what they are and why carriers charge for them. Simply put, accessorial fees are added charges to your freight invoice when extra services are required to handle your shipment. Accessorial fees are often added to the invoice after delivery and can be seen as hidden or unexpected fees for manufacturers. Some common accessorial fees include (but
As we begin the New Year, the Recon family would like to wish you and yours a happy, healthy and prosperous 2017. Like many of you, Recon looks forward to another year of business and helping our customers succeed in the New Year. Heading into 2017, we wanted to take a step back and understand our customers’ needs and what they value. Recon is not your typical 3PL or broker; to say we value transparency and a partnership for the long-haul is an understatement. We believe in building and cultivating relationships for the betterment of your business while always remaining open and honest. So exactly how is Recon different? To begin, you can always rely on quick, outstanding customer service with each and every contact. We tailor a solution to your needs; whether it’s lower freight costs, reporting and analyzing, freight bill auditing and payment, consulting services, freight rate negotiations, state-of-the-art TMS accessibility, or a valued partner in the industry
Auto Dispatch Now Available! Recon is proud to announce the roll out of the auto dispatch function in the TMS! What is Auto Dispatch? Auto
NMFC Rules and Requirements The National Motor Freight Classification (NMFC) is the freight "Bible" for motor carriers and contains rules, packaging requirements, approved freight descriptions, and freight class definitions for all commodities. Freight class of any commodity is determined based on the following: Density Load Ability and Handling Characteristics Value Susceptibility to Damage All carriers strictly require an accurate NMFC description, NMFC Item Number, and
Carriers today are very firm regarding adhering to the following requirements before they will consider a claim for approval. Upon arrival of the delivery driver, you must carefully inspect your freight for any sign of potential or obvious damage or shortage. The success of having your claim approved lies in your hands. • Damage: Prior to signing and dating the delivery receipt, clearly note in the presence of the driver that the shipment is damaged - DO NOT NOTE "SUBJECT TO INSPECTION." Take clear pictures of the damaged item(s), as carriers will require them to be filed with the claim, and be sure to keep the packing material for inspection by the carrier. The more you document, the quicker and more successful your claims resolution will be. • Shortage:
Just wanted to pass along one of those "rules" that the LTL carriers are now starting to focus on. Seems they are getting very technical these days with all of their tariff rules! In this particular case, the carrier has the right to change the classification based on the overall dimensions of the pallet vs. just using the NMFC for the product. That may seem unfair, but I always like to look at this from both sides. The carrier makes money off of selling space from A to B primarily. Due to the nature of what might ship, weight is a key factor, but it's the overall PCF (pounds per cubic foot) that matters and the carriers are much more diligent now about charging for the space they are providing. In the example below, the carrier can't maximize their payload with all this wasted space. So - please be aware of these things and advise your shipping departments to do all they can to "right-size" their shipment.
Cargo theft can occur anywhere and it happens more frequently on weekends, especially long holiday weekends. You don’t have to be a sitting duck, though; there are steps you can take to help ensure you are not a victim of cargo theft. Outlined below, we explain where thieves typically strike and how you can avoid their traps. When cargo theft happens, it’s usually in one of two ways: the entire trailer and its contents are stolen, or the trailer is broken into and only the contents are taken. In some situations, however, a thief will drive off with the tractor and trailer! After hours at carrier terminals and truck stops are the heaviest hit locations. If you plan to park a trailer at your terminal, backing it against a wall is always a good idea. Make sure the area is well-lit, install cameras,
"The highly anticipated 2013 "State of Logistics" report describes last year's logistics environment as uneven. After a slow start to 2013, mid-year shipments were strong before a very deep dive at the end of the year with not much movement in freight rates across the modes." "Trucking capacity is becoming a "more severe" issue for shippers. The truck driver shortage is the "No. 1 concern for trucking executives," who are coping with higher costs for drivers as well as compliance with tougher government regulations regarding hours of service and other driver standards. All this capacity reduction in trucking likely means higher rates for shippers. Wilson said carriers should be able to "significantly" raise truck rates this year, "probably in the 5 to 8 percent range." For the full article click here.
Have you noticed an explosion of reweighs and re-classifications with your freight? More and more shippers are voicing concern and it's become epidemic. More than half of the reweighs we investigate turn out to be carrier errors, and shippers have had enough of this mess. A lot of shippers have an exact process and because of this, they refuse to accept any reweighs. They weigh each skid on a certified, calibrated scale, print the scale ticket and attach it to the corresponding pallet being shipped. They are doing their part to be as accurate as possible. When reweighs happen in these situations, the onus should be put back on the carrier. The shipper should not have to waste their time proving the weight of their shipment. Carriers have been wrong on far too many reweighs recently. Yes, there are shippers out there who have no idea
Reweighs, Classifications, Inspections - Why are they happening, why does it seem like it's escalating recently, and what can you do about them! LTL carrier inspections resulting in reweighing shipments, re-classifying shipments, and adding accessorial charges is now epidemic, but before we get into how to avoid them it's necessary to understand a little history and to have an appreciation for the carrier side of things. LTL carrier profitability has always been under serious pressure due to an abundance of capacity and competition in the marketplace. The recent recession crushed margins for these carriers, but the recovery wasn't as kind to them as other modes. Most are still scrambling for market share and find price increases difficult, but one thing the recession taught us all was to be lean and be smarter. Technology
How often should you have your freight analyzed? Has it ever been analyzed by someone that was looking for every possible opportunity to save you a significant amount of money? If you are like most manufacturing companies, there is a good chance you could save 20-30% on your freight spend. A comprehensive freight analysis should be performed on at least one to two months of carrier invoices (depending on volumes and seasonality) and can generally be completed within a couple days. So how does it work? The data from each freight bill is collected and examined to get a complete and detailed picture of overall cost. In order to uncover savings, everything is analyzed: shipping class, NMFC #s, product descriptions, dimensions, cost/lb, inspection fees, accessorial
MAP-21 - Shippers MUST check status of brokers and carriers! 38% of brokers are no longer legal to date! The Moving Ahead for Progress in the 21st Century legislation (MAP-21) contains provisions that have ramped up licensing requirements for brokers of freight. A broker can be any traditional broker who hires a motor carrier and acts as the intermediary for a shipper, but it also now includes carriers who sub-contract to others. Many carriers broker out freight and now they must have a broker's license including carrying the new $75,000 bond requirement. THIS IS VERY IMPORTANT! Shippers must know that any broker they use has the new bond or risk dealing with an entity not legally allowed to broker freight. The FMCSA site is the official site for
Managing freight costs is getting more difficult by the day. Everyone thinks managing freight costs are important, but they typically just see it as simply cutting carrier costs. There is so much more to it than that! Yes, there are shippers who are paying too much and in these cases rate cuts are possible, but the really powerful solutions involve looking at the entire process of freight management. Let's look upstream - who is managing the process and how? How does our packaging and palletizing of freight impact our rates and costs? What order quantities are most economical? How about the auditing and freight bill processing systems? What is our carrier strategy and lineup - is it cheap and poor service, expensive and top-quality, or is it the best combination of each dynamically selected for each shipment? Do we have a system to track