An effective load tendering process directly impacts your shipping costs and reliability. How well are you navigating the freight matching process?

Load Tender Essentials

In the world of logistics, efficient and reliable transportation is a cornerstone for the smooth operation of supply chains. A load tender plays a critical role in this process. Essentially, it’s a formal proposal from a shipper for a carrier to transport goods. It outlines specific details such as the type of goods, quantity, pickup location, delivery destination, and required delivery timeframe. When you tender a load to a carrier, you are initiating a contract for the services needed to move your freight from its origin to its intended destination.

Your understanding of how to effectively tender loads can directly impact your supply chain’s efficiency, costs, and reliability.

Understanding Load Tendering

Basics of Load Tendering

Load tendering is the practice where you, as the shipper, initiate the shipping process by sending a request to potential carriers to transport your cargo. This request, known as a load tender, formalizes the details such as shipment volume, type of goods, pickup and delivery locations, and delivery timelines. The primary goal is to find a reliable carrier that can meet your requirements at a competitive rate.

• Essential Elements of a Load Tender:
  • Type of Goods: Specifying what cargo needs transporting.
  • Quantity: The amount or volume of the freight.
  • Pickup Location: Where the cargo will be collected.
  • Delivery Destination: The final drop-off point for the shipment.
  • Timeline: Expected pickup and delivery dates.

By clearly defining these elements, you ensure transparency and minimize the chances of miscommunication between you and the carriers.

Types of Load Tenders

Different types of load tenders cater to various shipping scenarios, each with distinct protocols and purposes.

1. Spot Tendering:
   • Occurs when you have an immediate, one-time shipping need.
   • You negotiate rates on the spot, often leading to higher costs due to urgency.
2. Contract Tendering:
   • Involves longer-term agreements where rates and terms are pre-negotiated.
   • More stable and cost-effective for regular shipments.

Coordinating the different types of load tenders will help you choose the most suitable approach for your logistics requirements, whether for a single urgent shipment or ongoing freight needs.

Load Tender Submission and Carrier Selection

Tender Submission Process

When you’re ready to move your shipment, the tender submission process begins. You’ll need to provide detailed requirements in your tender, which includes the type of cargo, pickup and delivery dates, locations, and estimated weight. Your transportation management system (TMS) plays a significant role here, enabling you to send this information electronically to multiple service providers with ease and accuracy.

• Prepare Documentation: Ensure all shipment details are accurate and thoroughly documented.
• Utilize TMS: Submit through your TMS for a streamlined process.

Choosing the Right Carrier

Choosing the right carrier requires a strategic approach where you assess potential carriers against your shipping needs. Carrier A may offer a competitive quote, but Carrier B could have a better track record with contract compliance. Your carrier base should consist of reliable service providers that align with your cost and service level expectations.

• Assess Quotes: Evaluate quotes not just on cost, but on service level and reliability.
• Review Carrier Performance: Look into historical performance data for on-time deliveries and compliance.

Remember, the right carrier can enhance your supply chain’s efficiency, so take the time to compare and choose thoughtfully.

Maximizing Efficiency in Load Tendering

Maximizing efficiency in load tendering hinges on optimizing every aspect of the shipping process, from choosing the right routes to ensuring compliance. Technologies that provide real-time tracking and automation, paired with adherence to best practices, can elevate your ability to manage transportation costs effectively, maintain transparency, and improve timelines.

Technology and Automation

Leveraging technology can drastically improve your load tendering process. Automation is integral for reducing human error and increasing productivity. For instance, using a routing guide that integrates with your transportation management system can help automate carrier selection based on commodity, volume, and destination. Real-time tracking platforms ensure a transparent timeline for less-than-truckload (LTL) shipments, which helps in compliance and maintaining a reliable network.

• Tools to Consider:
  • Transportation Management System (TMS)
  • Automated Carrier Selection
  • Real-time Tracking Systems
• Benefits:
  • Improves Efficiency
  • Reduces Costs
  • Enhances Transparency

Best Practices

To enhance efficiency and cost reduction within the load tendering process, it is critical to follow industry best practices:

• Optimize Lead Times: Provide sufficient lead time to avoid expedited shipping costs. Aim for at least a 12-day lead time, which could save approximately $50 on average per load versus a short, less than one-day lead time.
• Collaboration Is Key: Forge strong relationships with carriers for better pricing and shipment details accuracy. Your partnership can influence the timeliness and compliance of their part in the manufacturing and shipping process.
• Routing Guide Adherence: Keep your routing guide up-to-date to ensure carriers and partners are aligned with your shipping routes and pricing strategies.
• Data-Driven Decisions: Use historical data analysis to improve routing decisions and pricing strategies, which helps to manage the transportation costs effectively.

Implementing these technological solutions and best practices are pivotal to achieving a streamlined load tendering process, ensuring you move your goods with the best balance of cost, speed, and reliability.

Challenges and Solutions in Load Tendering

In load tendering, a strategic approach can help you navigate logistical challenges effectively.

Common Load Tendering Issues

Your main challenges in load tendering include dealing with visibility, ensuring flexibility for pick-up and delivery, maintaining accurate documentation, and managing the billing process efficiently. Carriers, including Carrier B and Carriers C, often face difficulty with truckload management due to a lack of real-time data sharing. Retailers and consignees expect timely and accurate delivery, which adds pressure to the logistics process. Furthermore, liability issues can arise, leading to complications in service level agreements.

• Visibility: Without proper transparency throughout the logistics process, you may encounter significant hurdles in tracking your shipments.
• Flexibility: Changes to pick-up or delivery locations require a flexible approach that can adjust to new circumstances quickly.
• Documentation: Ensuring that all necessary paperwork is correct and complete is crucial to avoid delays and liability concerns.
• Billing: Accurate billing is essential for cost savings and preventing disputes with service providers.

Strategies for Effective Load Tender Management

To overcome these issues, employ a suite of strategies that enhance your load tender management.

• Use of TMS: Implementing a Transportation Management System (TMS) can greatly improve visibility and flexibility by offering real-time data and automated documentation features.
• Building Relationships: Forge solid partnerships with a roster of reliable carriers and service providers to guarantee capacity and negotiate better rates.
• Award Strategies: Use award strategies to ensure freight is allotted to the right carriers based on performance and rate, promoting cost savings.
• Leverage Technology: Embrace advanced technology solutions that enable better tracking and management of truckloads.

By investing in technology and building stronger relationships with carriers, you can achieve greater efficiency and reliability in the load tendering process.

Frequently Asked Questions

In the logistics and transportation industry, understanding load tendering is crucial for efficient operations. Here we address common inquiries, providing concise, expert insights into the intricacies of load tender management.

How do I track a load tender?

You can track a load tender by utilizing specialized software systems that provide real-time updates on shipment status. Many carriers and third-party logistics providers also offer tracking capabilities through their websites or customer service centers.

Can you provide an example of a load tender?

An example of a load tender includes a document or electronic request issued by a shipper to a carrier, detailing the pickup location, delivery destination, freight details, and necessary handling instructions.

Which companies specialize in handling load tenders?

Companies that specialize in handling load tenders include third-party logistics providers (3PLs), freight brokerage firms, and carriers with dedicated logistics divisions. Freightcourse and Nexterus are examples of resources where you can get more information.

What does tendering a shipment entail in logistics?

Tendering a shipment entails offering a shipment to a carrier by providing all necessary instructions and details required to transport the cargo from origin to destination successfully.

How does the freight tendering process work?

The freight tendering process involves a shipper sending a load tender to a selected carrier, which then confirms whether they can accept the shipment or negotiate terms. Upon acceptance, the carrier is responsible for moving the freight as per the agreement.

What are the key elements of a trucking tender?

The key elements of a trucking tender include the shipment origin and destination, requested pickup and delivery dates, freight class, type, and weight, special handling requirements, and the proposed rate and terms of transport.

To stay competitive in last mile delivery, companies need to prioritize factors such as accuracy, speed, and reliability when selecting delivery partners. Is your business knocking on the right doors?

With the increasing importance of customer experience in last mile delivery, the impact of last mile delivery on the overall supply chain and the role of e-commerce in shaping the industry’s future. This article explores the evolution of last mile delivery, its importance, the challenges it presents, innovative solutions, sustainability efforts, technology’s role, customer satisfaction, and its impact on e-commerce businesses.

Understanding Last Mile Delivery

Last mile delivery for most of us is literally the business of bringing the last leg of logistics to your front door. It’s the final leg of the product transportation process, where goods are transported from a distribution centre or hub to the end-user’s location, typically their home address. When you’re expecting a package, the last mile delivery is what gets it to your doorstep.

Also known as the final mile, last mile delivery presents significant challenges for retailers and logistics companies involving complex networks of rail, sea, road, and air transport that move billions of parcels around the world every year.

In addition, urban areas can be difficult to navigate, and rural locations may be far away from distribution centres, adding time and cost to the delivery process.

To enhance the customer experience, it’s crucial to streamline the last-mile delivery process, as it has a significant impact on the overall satisfaction of the customer.

When executed efficiently, delivery times improve, shipping costs reduce, and better yet, it creates a positive impression of your brand. To achieve this, companies often use advanced technology and real-time data to optimize their delivery routes and strategies.

Operational Elements

To better understand last mile delivery, consider the following elements integral to the process:

• Delivery vehicles: These can range from traditional vans or trucks to more innovative solutions like drones, electric bikes, or autonomous vehicles.
• Real-time tracking: Customers increasingly expect to be able to track the progress of their deliveries, adding pressure on logistics providers to offer real-time updates and precise estimated times of arrival.
• Flexible delivery options: Catering to customers’ needs by offering flexible delivery options like pre-scheduled delivery times or pick-up locations, can help improve the last-mile experience and increase customer satisfaction.

The efficiency of your delivery operations can make or break the customer experience. As a retailer or logistics provider, it’s essential to invest in optimizing your delivery process and keeping abreast of industry trends and advancements. By doing so, you’ll not only keep your customers happy but also maintain a competitive edge in the dynamic world of e-commerce and logistics.

Last Mile Delivery Market Size

Delivery Companies

Major delivery entities like FedEx, UPS, and USPS being highly visible in the last mile delivery landscape, work closely with retailers to transport goods from distribution centres to the customers’ doorsteps. These companies are continuously striving to innovate and improve their services to meet the growing demands of the eCommerce market.

In the larger scope, the global last mile delivery market size stood at $27.1 billion in 2022 and is anticipated to advance at a compound annual growth rate of 20.6% from 2022 to 2030, reaching $121.2 billion by 2030. To stay competitive in this market, delivery companies are investing in new technologies and exploring collaborations with startups and tech giants to find solutions to current challenges, such as congestion, route optimization, and same-day delivery.

Retailers

Retailers play a significant role in the last mile delivery process. As eCommerce sales continue to grow to an estimated $6.5 billion by 2023, retailers must continue to adapt their supply chain strategies. Some major retailers, such as Amazon, have taken on an active role in last mile delivery and developed their own networks, while others partner with delivery companies to fulfill their customer orders.

The Role of Major Delivery Companies

When it comes to last mile delivery, major delivery companies play a crucial role in ensuring packages are delivered efficiently and on time. In this section, we will explore the approaches of Amazon, FedEx, and UPS to last mile delivery.

Amazon’s Approach to Last Mile Delivery

As a leader in the e-commerce industry, Amazon has developed a unique approach to last mile delivery. One of their most notable initiatives is Amazon Prime, which offers customers free two-day shipping on eligible items. To accomplish this, Amazon has built a vast network of distribution centres and partnered with local delivery companies to ensure packages are delivered quickly and efficiently.

In addition to Amazon Prime, the company has also experimented with innovative delivery methods, such as using drones and autonomous vehicles. These initiatives aim to reduce delivery times and costs, while also improving the overall customer experience.

FedEx and Last Mile Delivery

FedEx is one of the largest delivery companies in the world, and they have a significant presence in the last mile delivery market. To improve their last mile delivery capabilities, the company has invested heavily in technology, including the use of real-time tracking and advanced route optimization software.

In addition to technology, FedEx has also developed partnerships with local delivery companies to help ensure packages are delivered quickly and efficiently. This approach has allowed the company to expand its reach and offer a range of delivery options to customers.

UPS and Last Mile Delivery

Like FedEx, UPS is a major player in the last mile delivery market. The company has developed a range of innovative solutions to help improve delivery times and reduce costs. One of their most notable initiatives is UPS My Choice, which allows customers to customize their delivery options and receive real-time updates on their package’s status.

To ensure packages are delivered quickly and efficiently, UPS has also invested in advanced route optimization software and developed partnerships with local delivery companies. This approach has allowed the company to expand its reach and offer a range of delivery options to customers.

Technology in Last Mile Delivery

In the last mile delivery industry, technology plays a crucial role in enabling efficiency and enhancing customer experience. As you navigate the evolving landscape, it’s essential to understand how these technologies work and how they can benefit your operations.

AI and Robotics

Artificial intelligence (AI) and robotics are transforming the way last mile delivery services operate. By integrating AI algorithms, you can optimize routes, reducing fuel consumption and improving delivery times.

Moreover, automation and robotics enable streamlined warehouse processes, ensuring packages are sorted and dispatched seamlessly. With technologies such as the Internet of Things (IoT) and machine learning, last-mile delivery becomes more efficient and better able to handle unexpected conditions.

Drones for Delivery

Drones are an innovative addition to the delivery ecosystem. They offer a faster, eco-friendly alternative to traditional delivery methods. By employing drones, you can bypass traffic congestion and reach remote areas more easily. They also reduce the time spent on each delivery, increasing overall efficiency. Implementing drone technology in your last mile delivery processes can enhance customer satisfaction by providing faster access to goods.

Autonomous Vehicles

Autonomous vehicles are an emerging trend in the last mile delivery sector. These electric vehicles can revolutionize the industry by drastically reducing fuel costs and lowering carbon emissions. As these self-driving vehicles become more prominent, they will also contribute to optimized route planning, further increasing efficiency. Integrating autonomous vehicles into your delivery operations can boost your business’s sustainability and responsiveness while catering to modern consumer demands.

Incorporating AI, robotics, drones, and autonomous vehicles into your last mile delivery strategy can significantly enhance efficiency and customer satisfaction. By staying informed on these advancements, you can make strategic decisions to improve your operations and stay ahead in the competitive market.

Challenges in Last Mile Delivery

There are various challenges that can impact your final mile operations – one of the most significant being traffic and traffic congestion. In heavily populated areas, increasing traffic can cause difficulties in maintaining speed and efficiency as your agents navigate through the roads, resulting in higher delivery costs and operating expenses.

Another concern is the fluctuating fuel costs, which directly affect your business’s bottom line. Any increase in fuel price can drastically raise your operating costs, forcing you to adjust your pricing model accordingly. A crucial factor to consider is the infrastructure, especially in remote or rural locations. Limited access and poor road conditions may lead to inefficiencies and delays, making it difficult for businesses to provide fast and reliable delivery services.

Solutions

One way to address these challenges is by optimizing your operations through route planning and delivery management. By carefully planning your drivers’ schedules and routes based on real-time traffic data, you can minimize delays and improve overall efficiency. By developing and maintaining a robust logistics network, you can adapt to fast-changing consumer demands and reduce the impact of challenges associated with last mile delivery.

Customer Experience in Last Mile Delivery

A significant aspect of customer experience in last mile delivery is setting realistic customer expectations. Ensure that you provide accurate delivery estimates and frequency updates to keep customers informed. Maintaining transparency in your operations helps build trust and results in a positive customer experience.

Communications

Effective customer communication plays a pivotal role – keep your customers informed with timely updates regarding their shipments, including any changes in the delivery time or unforeseen delays. By proactively addressing potential issues, you demonstrate your commitment to meeting their needs.

Order Tracking

Order tracking is another essential aspect of a successful last mile delivery strategy. Providing customers with the ability to track their shipments in real-time can significantly improve their experience. This transparency allows customers to plan their day and be present to receive the shipment, ultimately leading to greater satisfaction.

Real-Time Data

Utilizing real-time data is crucial for optimizing the customer experience in last mile delivery. By analyzing live information regarding shipment status, delivery routes, and driver performance, you can make data-driven decisions to enhance your delivery processes and meet customer expectations consistently.

Impact of Last Mile Delivery on Supply Chain

In the context of warehouse and distribution centre operations, last mile delivery directly influences the efficiency and effectiveness of your warehousing strategy. As goods move through the transportation hub, a streamlined last mile delivery system can reduce storage times and minimize stock-outs. This ultimately leads to a more optimized inventory management, allowing for faster order fulfillment and improved overall customer experience.

Warehousing, Distribution and Transportation

The impact of last mile delivery extends beyond the boundaries of your warehousing and distribution facilities. Given that last mile delivery accounts for a significant part of the total delivery cost, focusing on improving transportation operations can yield significant cost savings.

For instance, investing in advanced routing and scheduling software, exploring alternative delivery methods such as drones or electric vehicles, and partnering with local courier services can help reduce transportation costs while improving the speed and reliability of deliveries.

While consumers want their products delivered quickly, they may also express concerns over the environmental impact of fast deliveries. The trade-offs between speed, cost, and sustainability need to be carefully assessed, so you can make informed decisions that will benefit your organization and at the same time match your target customers’ sensibilities.

In summary, the impact of last mile delivery on your supply chain should not be underestimated. By focusing on this critical stage in the supply chain process, you can unlock opportunities to streamline operations, reduce costs, and enhance customer satisfaction.

The Role of eCommerce in Last Mile Delivery

Thanks in part to eCommerce, the demand for faster and more efficient delivery services has grown exponentially. Last mile delivery plays a crucial role in fulfilling your orders and has become a key factor in shaping customer satisfaction.

Critical Bottlenecks

eCommerce customers have high expectations regarding the delivery process. They want quicker deliveries while retaining the option to track your orders in real-time. Last mile delivery providers must overcome delivery bottlenecks and work tirelessly to meet these demands by adopting strategies that address critical factors such as:

• Delivery points
• Time
• Speed
• Value-added services
• Prices

In addition, customers’ needs become more diverse. For instance, some may prefer picking up a package from a designated location, while others insist on doorstep delivery. Offering flexible delivery options increases the chances of customer satisfaction and creates more opportunities for eCommerce companies to thrive.

The Future of Last Mile Delivery

Same-Day Delivery

Same-day delivery is becoming increasingly popular, and it’s no surprise why. Customers want their purchases as soon as possible, and same-day delivery provides that convenience. Retailers are investing in same-day delivery to stay competitive, and it’s expected to become the norm in the future. With the use of drones and autonomous vehicles, same-day delivery will become even faster and more efficient.

Optimization

Optimization is key to the future of last mile delivery. By using data analytics and machine learning, retailers can optimize their delivery routes, reducing delivery times and costs. Delivery companies are also experimenting with new delivery models, such as crowdsourcing, to optimize their delivery networks. In the future, we can expect to see more optimization strategies being implemented to improve the efficiency of last mile delivery.

Fast Delivery

Fast delivery is another aspect of last mile delivery that is becoming increasingly important. Customers want their purchases delivered quickly, and retailers are responding by offering faster delivery options. In the future, we can expect to see more retailers offering same-day and next-day delivery options, as well as faster delivery times in general.

Convenience

Convenience is a major factor in the future of last mile delivery. Customers want their deliveries to be convenient and hassle-free. Retailers are responding by offering more delivery options, such as in-home delivery and locker delivery. In the future, we can expect to see more convenient delivery options being offered to customers.

Overall, the future of last mile delivery is exciting. With the introduction of new technologies and optimization strategies, we can expect to see faster, more efficient, and more convenient delivery options in the future. As a retailer, it’s important to stay up-to-date with the latest trends and technologies in last mile delivery to remain competitive.

Frequently Asked Questions

What are some common challenges faced in last mile delivery?

Last mile delivery poses several challenges for logistics companies, including traffic congestion, unpredictable weather conditions, and the difficulty of finding accurate and up-to-date address information. Other challenges include managing customer expectations, coordinating multiple delivery attempts, and ensuring the safety and security of the package during transit.

How can last mile delivery be optimized for efficiency?

One way to optimize last mile delivery is by using route optimization software to create the most efficient delivery routes for drivers. This can help reduce delivery times and costs, while also improving customer satisfaction. Other strategies include using real-time tracking and analytics to monitor delivery performance, and leveraging data to identify areas for improvement.

What role does technology play in improving last mile delivery?

Technology plays a critical role in improving last mile delivery, with route optimization software, real-time tracking, and automated delivery systems all helping to streamline the delivery process. Other technologies, such as drones and autonomous vehicles, are also being explored as potential solutions to last mile delivery challenges.

What are some successful strategies for last mile delivery?

Successful strategies for last mile delivery include leveraging data and analytics to optimize delivery routes and improve performance, using real-time tracking to provide customers with accurate delivery updates, and offering flexible delivery options such as same-day or next-day delivery. Other strategies include partnering with other logistics companies to share resources and reduce costs, and investing in technology to automate and streamline the delivery process.

What are the benefits of outsourcing last mile delivery?

Outsourcing last mile delivery can offer several benefits, including reduced costs, improved delivery times, and access to specialized expertise and resources. Outsourcing can also help companies scale their delivery operations more quickly and efficiently, without the need to invest in additional infrastructure or hire more staff.

How can last mile delivery impact customer satisfaction?

Last mile delivery is a critical component of the customer experience, with delivery times and reliability playing a key role in customer satisfaction. By optimizing last mile delivery, companies can improve delivery times, reduce costs, and enhance the overall customer experience.

As a shipper, the last thing you want is an unwanted surprise when you get your freight bill. Before the additional fees add up, it pays to know your accessorial charges beforehand

Accessorial charges, sometimes referred to as value-added services, are additional fees that may be added to a shipment’s transportation cost. These charges are applied to cover the cost of extra time, labor, or care required to honour special shipping requests. Accessorial fees vary based on the type of shipment and can quickly add up, making it important for shippers to understand what they are and how they can reduce them.

What Are Accessorial Charges?

Accessorial charges are extra fees that are added to the base price of a service, primarily in industries that involve transportation, logistics, and deliveries. They are typically applied when certain conditions or requirements are not met, or additional services are needed. Essentially, they cover the “accessories” of the primary service. Similarly, these charges are designed to compensate for the extra time, effort, or resources required to complete a job.

Since accessorial charges can significantly impact a shipment’s total cost, it’s essential for shippers to understand them to avoid unexpected expenses. By planning and minimizing these charges, shippers can reduce their transportation costs thus improving their bottom line. In the following sections, we will explore what accessorial charges are, why they are important, and how you as a shipper can reduce them.

Understanding Accessorial Charges

It is essential to note that accessorial charges are not included in the standard shipping rates and are typically added on top of the base cost of the shipment. These fees can vary depending on the carrier and the specific services required, making it critical to review and understand all charges before finalizing a shipment.

Common accessorial charges can include a wide range of fees, such as liftgate services, inside delivery, residential surcharges, and fuel surcharges. Carriers and freight brokers may apply these fees for various reasons, such as extra labor or equipment needed to complete a shipment.

Types of Accessorial Charges

When it comes to shipping, accessorial charges can add up quickly. These additional fees are charged for any services beyond standard pick-up and delivery. To help you better understand what to expect, here are some common types of accessorial charges that you may encounter:

Loading and Unloading Fees

Loading and unloading fees are charged when a shipment requires additional labor or equipment to load or unload. This may include the use of a forklift, loading dock, or extra labor. These fees can vary depending on the carrier and the specific requirements of the shipment.

Delivery Related Charges

Delivery related charges include any additional services required at the delivery location. This may include inside delivery, residential delivery, or liftgate service. Inside delivery is charged when the shipment needs to be delivered beyond the front door, while residential delivery is charged for deliveries made to residential areas. Liftgate service is charged when the delivery location does not have a loading dock or forklift available.

Fuel and Time Related Charges

Fuel and time related charges are fees that are charged based on the distance traveled and the time required to complete the delivery. Fuel surcharges are added to the base rate to cover the cost of fuel, while detention charges are charged when a shipment is delayed at either the pick-up or delivery location. Layover charges may also be charged when a driver is required to wait for an extended period of time.

Special Handling and Equipment Charges

Special handling and equipment charges are fees that are charged when a shipment requires special handling or equipment. This may include hazardous materials, oversized or overlength shipments, or extra services such as reclassification or reweighing. Hazardous materials require special handling and may require additional documentation, while oversized or overlength shipments may require special permits or equipment.

Documentation and Reclassification Charges

Documentation and reclassification charges are fees that are charged when a shipment requires additional documentation or reclassification. This may include the preparation of a bill of lading (BOL) or freight invoice, as well as reclassification and reweighing of the shipment. The National Motor Freight Classification (NMFC) number is used to determine the correct classification for a shipment, and any errors in classification can result in additional fees.

Additional Types of Accessorial Fees

Provided you know the scope of accessorial charges, they can be anticipated and included on the initial bill. Additional reasons for these charges may include:

• Layover Charges
• Re-consignment
• Stop Charges
• TONU (Truck Ordered and Not Used)
• Detention
• Limited Access Pickup or Delivery
• Blind Shipments
• Sort and Segregate

Overall, understanding and being familiar with the various types of accessorial charges can help you better prepare for the total cost of your shipment. By working with a reputable carrier or freight broker, you can ensure that you are aware of any potential fees and can make informed decisions about your shipping needs.

Strategies to Negotiate and Reduce Accessorial Charges

When it comes to reducing accessorial charges, negotiation is key. By working with carriers to establish clear expectations and guidelines, shippers can reduce the number of accessorial charges they incur. Here are some strategies to help shippers negotiate and reduce accessorial charges:

Planning and Communication

One of the most important strategies for reducing accessorial charges is effective planning and communication. Shippers should work closely with their carriers to establish clear expectations for pick-up and delivery times, as well as any special requirements for loading and unloading. By providing carriers with accurate information in advance, shippers can help ensure that shipments are delivered on time and without incident, reducing the need for additional charges.

Accurate Information

Another key strategy for reducing accessorial charges is providing carriers with accurate information about the shipment. This includes the weight and dimensions of the shipment, as well as any special handling requirements. By providing carriers with accurate information, shippers can help ensure that the shipment is loaded and transported safely and efficiently, reducing the risk of damage or delays that can result in additional charges.

Advance Notification

Shippers should also provide carriers with advance notification of any changes to the shipment, such as a change in delivery address or a delay in pick-up. By providing carriers with advance notification, shippers can help ensure that the shipment is delivered on time and without incident, reducing the need for additional charges.

Negotiation

Finally, negotiation is key to reducing accessorial charges. Shippers should work closely with their carriers to negotiate rates and establish clear guidelines for when accessorial charges will be assessed. By establishing clear guidelines and negotiating rates in advance, shippers can help ensure that they are not surprised by unexpected charges and can budget accordingly.

In conclusion, shippers can reduce accessorial charges by effective planning and communication, providing carriers with accurate information, providing advance notification of any changes to the shipment, and negotiating rates and guidelines with carriers. By following these strategies, shippers can help ensure that their shipments are delivered on time and within budget.

Role of Logistics in Managing Accessorial Charges

Logistics plays a crucial role in managing accessorial charges. Accessorial charges refer to additional services that a carrier provides beyond the standard shipping services.

Logistics companies are responsible for managing accessorial charges by negotiating with carriers to ensure that the charges are reasonable and fair. They also work with shippers to identify potential accessorial charges and develop strategies to minimize them. By doing so, logistics companies can help shippers save money and improve their bottom line.

In addition to negotiating with carriers, logistics companies also use technology to manage accessorial charges. They use transportation management systems (TMS) to track shipments and monitor carrier performance. This technology allows them to identify potential accessorial charges and take action to prevent them from occurring. For example, if a shipment is delayed due to weather conditions, the logistics company can work with the carrier to avoid detention charges by rescheduling the delivery time.

Third-party logistics (3PL) providers are particularly adept at managing accessorial charges. They have the expertise and resources to negotiate with carriers and manage the entire shipping process. 3PL providers can also provide shippers with access to a network of carriers, which can help them find the best carrier for their specific needs.

In the logistics industry, managing accessorial charges is essential to maintaining profitability. By working with carriers and using technology to manage these charges, logistics companies can help shippers save money and improve their bottom line. Effective management of accessorial charges requires a combination of negotiation skills, technology, and expertise, all of which logistics companies possess.

Frequently Asked Questions

What are some common accessorial charges in the trucking industry?

Accessorial charges are additional fees that carriers and brokers charge for services beyond standard pick-up and delivery. Some common accessorial charges in the trucking industry include detention fees, liftgate fees, inside delivery fees, and re-delivery fees.

What is the difference between an accessorial charge and a surcharge?

An accessorial charge is a fee for a specific service that is not included in the base rate, while a surcharge is an additional fee added to the base rate to cover fuel, security, or other costs. Accessorial charges are typically more specific and relate to services provided, while surcharges are more general and relate to overall costs.

How do accessorial charges affect shipping costs?

Accessorial charges can significantly impact shipping costs, especially for less-than-truckload (LTL) shipments. Truckload accessorial charges are often added to the base rate and can vary depending on the type of service required. Shippers should be aware of these charges and factor them into their shipping costs.

Can accessorial charges be negotiated or waived?

Accessorial charges can sometimes be negotiated or waived, especially if a shipper has a long-standing relationship with a carrier or broker. However, it is important to note that not all charges can be waived, and carriers and brokers may have different policies regarding negotiation.

What is the typical range of accessorial charges for LTL shipments?

The typical range of accessorial charges for LTL shipments can vary depending on the carrier or broker and the specific service required. However, some common charges include detention fees ranging from $25 to $100 per hour, liftgate fees ranging from $50 to $100, and inside delivery fees ranging from $50 to $100.

Are accessorial charges the same for all carriers and brokers?

Accessorial charges are not the same for all carriers and brokers. Different carriers and brokers may have different policies and fees for specific services. Shippers should be aware of these differences and factor them into their shipping costs when comparing carriers and brokers.

Without cross-border logistics, international shipping quickly becomes a major headache for smaller businesses. Luckily, your logistics partner has remedies to help facilitate the movement of products from country to country.

It would be fair to say the international trading landscape is becoming more complex. But considering global transportation and supply chain industries are constantly evolving, a more appropriate statement recognizes that the nature of cross-border shipping has never stopped changing to begin with.

Let’s have a look at how logistics fits within the global supply chain, and possible solutions to effectively managing international shipping.

What is Cross-Border Logistics?

Cross-border logistics is an integral section of the supply chain that focuses the efficient flow of products as they pass from country to country. Along with providing transportation services, its purpose is to facilitate compliance with legal and tax regulations as products are shipped across international borders.

Types of Cross Border Freight Shipping

Cross-Border TL/LTL

Whether you have full truckload or less-than-truckload cargo to import into and export out of Canada, we have the logistics expertise to expedite freight shipments and reduce the risk of costly border delays. We can even help expedite imports into Canada valued at $3,300 or less.

International Freight Forwarding

We can help manage the import of goods into and export of goods out of North America and facilitate delivery into the Canadian market. We pick up shipments offshore and load containers onto ocean liners for delivery into Canada.

What are the Challenges to Cross-Border Logistics?

The problem is: how to seamlessly manage courier, freight, freight forwarding, air cargo and associated international supply chain needs. The solution is: through cross-border logistics.

The very nature of logistics involves the handling and tracking of goods as they move through your supply chain. When your products need to move through another country, cross-border shipping multiplies the complexity of getting your products to their destinations. Additional paperwork, the potential for customs delays and multi-carrier handoffs are just a few of the issues that make moving products across borders much more complicated than is reasonable for smaller business.

Every business wants to main a competitive edge in the marketplace. A firm can help improve its operational position by maximizing logistics strategies that affect the movement of products as they navigate across borders.

Logistics partners with experience in cross-border freight management must have professional people, systems and processes in place to help facilitate the transition of goods from one country to another.

Without help from a third party logistics professional, critical tasks quickly wind up outside a small company’s capabilities. Some of these tasks include:

• Shipping
• Order tracking
• Tracing
• Liabilities
• Carrier handoffs
• Meeting expected delivery times
• Returns and Reverse Logistics
• Customs paperwork and clearance

Cross-Border Shipping vs Local Shipping

The need to move products across borders arises from one of two conditions: products on their way to final destination or, materials are being transported to facilitate the manufacturing process. For example, one shipping path would be a smart phone on its way from the manufacturer to the distributor or retailer, whereas the other would be the import or export of components and raw materials that constitute the smart phone itself.

Anyone who’s run an inventory-based business knows that, when bringing in significant quantities of supplies from another country, duties become a serious consideration when budgeting and projecting costs. It’s usually more cost effective to try and source local fulfilment for the products you need. Drawing from inventory that is stocked regionally gets around a host of cross-border complications in that duties, customs, trade tariffs, shipping and associated international paperwork has already been taken care of.

Not only can a business leverage the current trend of “locally sourced”, there’s the added benefits of supporting local economies and keeping working capital within the region itself. But as much as it may be preferred to find sources locally within your own borders, this isn’t always possible.

Still, the flow of goods across borders shows no signs of any serious degradation. If anything, international shipping and logistics is booming:

“”Overall, the value of global trade reached a record level of $28.5 trillion in 2021,” the report says. That’s an increase of 25% on 2020 and 13% higher compared to 2019, before the COVID-19 pandemic struck.”

source: UNCTAD’s Global Trade Update

Logistics Shipping and Technology

In today’s business world, particularly with the rise of e-commerce, the mere thought of trying to manage shipping without the aid of technology is a non-starter. Technology effectively helps provide end-to-end supply chain visibility and reduce operating costs. On the international front, electronic data solutions provide easier management of logistics functions such as:

• Route planning
• Warehouse management
• Coordinating shipping partners
• Freight preparation
• International commercial terms management
• Other required import and export documentation

For businesses on the receiving end of cross-border shipping, implementing a system that allows products to arrive Delivered Duty Paid (DDP) helps to reduce friction from unexpected charges at end points. But capabilities such as this depend on improvements derived from actionable data provided by digital operations.

Additionally, being able to respond effectively to customer demands also requires international logistics networks to have transparent systems in place. Better logistics providers incorporate international tracking systems to monitor basic shipping needs such as end-to-end order tracking and in-flight delivery changes.

Problems Facing International Trade

Due to the sheer number of globally recognized borders, the challenges facing international logistics are immense. Inherent roadblocks arise from how each country administers their own international customs and border management.

To try to make importing and exporting processes as seamless as possible, efforts are constantly being made to harmonize, simplify and standardize cross-border trade procedures. One solution is to lessen restrictions on border controls by shifting certain responsibilities to suppliers and end users through supply chain security. But these same efforts would also have to incorporate contingencies that curb the ability of less scrupulous entities looking for ways to manipulate the system by way of loopholes. Without proper governance, these unintended consequences carry the possibility of undermining public safety and economic security.

Ultimately, the goal of smooth cross-border logistics operations should minimize the regulatory burdens placed on businesses. For government controlled agencies, efficient border management implies the best use of inspection resources and encourages good compliance behaviour. The downstream benefits resulting in a healthier business environment and wider range of social and economic benefits.

Additionally, relying on cost-effective outsourcing from other countries depends on a consistent cross-border supply chain. But over time, this consistency occasionally gets disrupted as laws governing international trade change. Let’s say for example, you manufacture types of wooden furniture from a certain species of tree that, through regulatory change, becomes internationally protected. Suddenly your source is an endangered species.This is what happened with various flora and fauna species that fell under the CITES treaty in 1975 and was ratified by over 180 countries:

The objective of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is to control the trade in species of wild animals and plants that are, or may be, threatened with extinction as a result of international trade.

Furthermore, as we’ve seen in the news, geopolitical landscapes affect trade regularly, which winds up compromising existing trade capabilities. Take for example the recent conflict between Russia and Ukraine. With Ukraine being one of the world’s largest grain producers, its ability to export the commodity was seriously hobbled when Russia restricted access to Black Sea ports.

Unfortunately, regional and bilateral trade regimes continue to become normalized, particularly in emerging markets. This results in a host of tariff and non-tariff conditions, varying degrees of shipping standards, complicated rules of origin and regulatory compliance issues which make it difficult and costly for businesses to navigate. Since it began life in 1995, The World Trade Organization (WTO) continues to struggle with equalizing multilateral trade efforts due to differing political policies.

How Can Brimich Logistics Help?

Today’s cross-border shipping is facing higher demand and expectations for fast, seamless delivery. Your business deserves the capacity it needs to operate, flexible transportation models, and the expertise needed to navigate regulations and processes without delays.

If timing is critical and your budget is under fire, trust Brimich Logistics and Packaging to help you navigate the complexity of shipping between countries.

One hundred percent OTIF. The perfect order, that’s the goal. Along with many other KPIs, a perfect fulfilment rate is ideal, but the reality is no system is completely and consistently free of issues. To hit better target numbers, what factors do we need to focus on to improve OTIF and get as close to the bullseye as possible?

What is a Good OTIF Metric?

As previously stated, an ideal OTIF report would be 100% successful compliance and performance across your customer base. In the real world of unpredictability and circumstance, 80% to 90% fulfilment rates constitute more realistic results.

OTIF KPI

In the simplest of terms, the key performance indicator (KPI) for an OTIF rating is expressed as a percentage measuring logistics or delivery performance within a supply chain. Specifically, it refers to the ratio of customer orders successfully shipped on or before the requested delivery date and at the correct quantities versus the total number of orders.

The Benefits of Improving OTIF

Beyond the obvious benefits to your customers, having a robust system to measure and track your OTIF results can cut down shipment returns, expedited deliveries, and order refusals.

Not only does this add to your bottom line and increase customer confidence, having access to more predictable stock levels helps avoid missed revenue opportunities due to lack of inventory on hand.

Ways to Improve OTIF

A good strategy towards improving OTIF results must focus on agility, resiliency and the ability to plan for contingency. One method of leveraging agility can be implemented through the use of systems that utilize machine learning technology and emerging artificial intelligence models.

While adopting new technologies may not happen overnight, the ability to diagnose issues early does allow you to react quickly and enact changes.

Along with implementing enhanced technologies, other ways of improving supply chain OTIF performance include:

1. Leverage Real-Time Data

Leveraging real–time data is essential for improving OTIF performance. Partnering with a logistics provider whose technology offers real–time updates on order tracking is a must. This allows you to know exactly what’s happening in-transit and proactively prevent late deliveries if any issues arise.

2. Utilize Logistics Data

Logistics data is a critical tool for understanding overall shipping performance. Segregating out key metrics such as pickup and drop-off accuracies can help you identify weak spots in your supply chain. if drop-off times are consistently late, you can drill down on the underlying cause of problem to help determine a solution.

3. Work with Logistics Experts

Work with a logistics partner who understands the intricacies of your market sector. Better 3PL companies will be up-to-date on the latest technologies and have reliable carrier networks. A logistics partner with a strong record of dependable performance and timely delivery goes a long way to improving your OTIF rate.

4. Know Your Customer Intimately

Knowing the specific requirements of your customer helps mitigate wasted time and effort. Every business has its own culture and way of operating – such as very specific requirements for delivery windows. Assuming every customer operates by the same standard is setting yourself up for failure.

5. Keep Production and Transportation Coordinated

Companies with misaligned production and transportation schedules will have a hard time coordinating with on-time deliveries. Systems must be put in place that keep production expectations in line with transportation deadlines.

6. Understand Must-Arrive-By-Date Scheduling

Buyers set due dates for product deliveries. Meeting the must-arrive-by-date (MABD) consistently is a critical component of delivery. Your buyer will determine a definitive due date for your product to arrive by at their distribution center.

It’s important to understand that while some receiving locations exercise open scheduling, others restrict appointment hours with little to no flexibility.

7. Communicate Clearly with Warehouses

Communicating clearly with your warehouse partners and production managers will help ensure product pick-and-pack is properly coordinated and ready to ship on time. One sure way to generate bad-will is to leave carriers waiting too long in customer pick up or needing to set new appointment times.

8. Optimize Network Configurations

Cutting down on transportation times means optimizing warehouse providers to work with key receiving locations. Organizing your network to better suit preferred customers can keep transportation between facilities more efficient.

9. Add Extra Lead Time

If at all possible, padding your shipping with an extra day or two for contingency can make the difference between a successful and late delivery – especially in seasonally affected areas.

10. Partner with Preferred Carriers

Partnering with preferred carriers with experience in your sector will give your organization the best chance of hitting a customer’s OTIF requirements. These carriers will be familiar more with the nuances of the type of shipping and have a better chance of meeting deadlines.

11. Consider Consolidation Opportunities

By using consolidation or pool distribution, you can improve on-time performance to specific receiving locations and cut costs. Opportunities that unify shipping functions create more a more nimble service and increase capabilities.

12. Renegotiate When it Makes Sense

There are many facets of a business relationship that can be renegotiated, especially when both parties benefit. Over time, it’s not uncommon for demand to ebb and flow, therefor it makes sense to maintain an open conversation based on mutual flexibility.

For example, a couple of key points that could help improve OTIF performance would be things such as requesting new due dates or adjusting order quantities to better suit overall operations. In all cases, it’s best to provide proof with data supported reasoning and clearly defined expectations.

What KPI Factors Affect OTIF?

Factors that affect OTIF can be as simple as weather and seasonality. Other factors include slow shipping speeds,  in-transit damage, outdated order tracking systems, manufacturing lead times, communication systems and of course human error itself.

Overall, there are a multitude of individual facets, factors and KPIs involved in the successful movement of products through the logistics industry:

Any of these factors can have an impact on OTIF scores and therefor, affect the overall shipping experience and by extension, the level of customer satisfaction.

OTIF vs OTD

While similar to OTIF, OTD (On-Time-Delivery) is less specific in that it does not take quantity into consideration. A successful OTD simply means a shipment was received on time whether in part or in whole. Additionally, OTDs typically allow more time for early delivery.

Can OTIF Be Standardized?

Considering the magnitude, scope and breadth of the supply chain industry, creating a catch-all standardized has practical limitations. Although, moving in a direction that increases successful OTIF outcomes is a step in the right direction.

If we use the CPG sector as an example, a McKinsey survey of twenty four major retailers and manufacturers reported, “92 percent agreed that an industry standard for OTIF would create value.”

Logistically speaking, the challenges facing any kind of standardized OTIF rely on a transportation industry that is constantly in a state of development. Therefor transportation analysis is more of a snapshot in time versus an absolute measurable metric.

Furthermore, organizations must define all the variables that go into shipping their products successfully through the supply chain from end-to-end. Meaning taking into consideration factors such as tariffs, regulatory adherences and political environments.

Considering the operational and logistical variables sector to sector and around the globe, standardized OTIF would also require a unification of fragmented systems. Though this may seem like an insurmountable task, there are solutions such as multi-party orchestration platforms that provide intelligence on variables in operations and logistics systems.

What Does OTIF Mean in Logistics?

In terms of logistics, on-time in-full (OTIF) is a supply chain metric used to measure performance. The goal is to consistently deliver “the perfect order” – meaning, the supplier delivers the product within expected delivery windows and in full quantities.

In short, OTIF metrics are not universal. In fact, the term OTIF itself refers to Walmart’s compliance program. Over time many other big-box stores have adopted or manifested similar programs.

As we’ve seen recently, post-COVID supply chain disruptions have been a major issue. Take for example the consumer goods sector, though we are seeing some stabilization, keeping store shelves full on a continuous basis is still a considerable challenge.

Incredible changes are currently redefining the path of moving goods from one business to another. As we continue to move into the future of B2B third party logistics and order fulfilment, what signs should we be paying attention to?

The challenges of dealing with the pandemic both revealed and accelerated opportunities in the supply chain. Combined with technological advances enabling the ability to drill down on specific customer needs, B2B 3PL partnerships have in front of them new paths to success on all fronts.

Let’s have a closer look at the challenges facing B2B 3PL operations, and how emerging technologies are providing solutions.

B2B 3PL Defined

To be specific, B2B 3PL is the process by which businesses outsource their order fulfilment, warehousing, shipping, and other logistics needs to a third-party provider.

This allows businesses to focus on their core competencies while leaving the logistics to the experts. Thanks to the rise of e-commerce, B2B third party logistics is a booming industry, with many businesses outsourcing their logistics needs to third-party providers in order to save time and money.

Differences Between B2B and B2C

A quick look at the interior of a related 3PL warehouse will give you a very good idea of whether an operation is B2B or B2C.

For example, a B2B fulfilment warehouse will tend to handle large items or irregularly shaped products on their way downstream through the manufacturing chain. A B2C warehouse on the other hand will often store large quantities of the same item such as FMCG products bound for retail store shelves, or multiple types of items in smaller quantities being prepared for last mile delivery.

With the ongoing evolution of the supply chain, unified supply chains are streamlining processes even further to include more wholistic B2B2C operations within some market segments. This provides complete control over the entire logistics process from intake of raw materials and manufacturing to final delivery.

Challenges Facing B2B Shipping

The major challenges in fulfilment faced by both B2B, B2C and even B2B2C, lie in the immediacy of demand for timely delivery of goods and the ability of logistics partners to keep up with operational needs.

“Only when fulfillment demands are met can a manufacturer plan for exponential growth”

Source: John Hayes: Director of Sales for Balyo USA as quoted in Forbes

From a 3PL point of view, a growing B2B client will not only require more flexible warehouse space, but the means to handle orders quickly, efficiently and accurately.

In the best of times, some businesses must have the ability to adjust to the massive roller coaster swings of seasonal trends. There are also labour issues, both of which tend to be relatively constant compared to the need for staying on top of technologies designed to make orders and tracking more efficient.

Like it or not, the pandemic spurred a 77.6% increase in e-commerce due to the need for safety and fuelled by convenience. 3PL providers had no choice but to adapt by proving themselves to be agile and more flexible than ever before. As we’ve seen in the last couple of years, the pandemic also exposed liabilities in a fragile supply chain that manifested in a shortage of truckers and empty store shelves.

With B2B e-commerce taking up more and more market share, and ever-impatient customer demands, business leaders find themselves with their hands full trying to navigate developmental challenges.

In general, the rapid growth of e-commerce has significantly impacted B2B shipping expectations and the logistics industry as a whole. With the rise of online shopping, businesses feel more pressure to ensure that their products are delivered quickly and accurately. This has led to an increase in demand for 3PL providers who can offer fulfillment services such as warehousing, packaging services, inventory management, and last-mile delivery.

Opportunities and Solutions

Wherever there’s a bottleneck in the supply chain, whether it be in the physical transportation of goods or in data management, there’s an opportunity.

“Companies are facing unprecedented change due to innovation, technology disruptions, and evolving customer expectations. Supply chains are becoming unbundled and customized to reduce costs and meet evolving customer needs. Logistics structures will also shift to more specialized solutions tailored to different customer segments, modes of transportation, and distribution networks.”

Source: KPMG Advisory on the Future of Logistics

If you drill down into the specifics of oncoming capabilities, the opportunities are staggering – and fully capable of becoming new market segments all on their own. Take for example the drone technology and fully automated vehicles which, quite possibly, could become the mainstays of  intelligent logistics.

Nonetheless, here’s an overview of some of the more immediate solutions both currently in use and on the horizon:

Automation And Robotics

Automation and robotics are revolutionizing the logistics industry, and by extension providing serious benefits to B2B shipping. Robotic process automation (RPA) and artificial intelligence (AI) are being used to streamline processes, reduce costs, and improve efficiency. Automated guided vehicles (AGVs) are used in warehouses to transport goods, while drones are being tested for last-mile delivery.

Big Data Analytics

Data is the new oil in today’s digital age. Big data analytics is a game-changer for the logistics industry. Businesses can use data to optimize their supply chain, identify inefficiencies, and make informed decisions. Predictive analytics can help 3PL providers to forecast demand and optimize inventory levels.

Sustainability And Green Logistics

Sustainability and environmental concerns are increasingly becoming critical issues for businesses. Consumers are demanding eco-friendly products and environmentally responsible practices. Green logistics is an approach that focuses on reducing the environmental impact of logistics operations. It involves using renewable energy, reducing waste, and optimizing transportation routes.

Personalization And Customer Experience

Personalization and customer experience are crucial in today’s consumer-centric world. B2B businesses are also starting to recognize the importance of providing a personalized customer experience. 3PL providers can help businesses to achieve this by offering customized logistics solutions tailored to their specific needs.

In Closing

The future is coming, some would say the future is already here. Either way one thing is for certain, there will always be advancements and challenges in B2B logistics. Moving forward, the dependancy on technology to provide solutions may be the answer, but benefits do not always come without associated costs.

Does your 3PL provider live up to your expectations and deliver what your company needs? Are they paying attention to the trends and demands shaping the future of your business? As a growing family owned company with operations in Brantford and Etobicoke Ontario, Brimich Logistics and Packaging is willing and able to serve all your transportation and climate controlled warehouse needs. Contact us today!

Incoterms shipping terminology isn’t just fancy jargon. Knowing the rules on global freight can translate to minimized shipping risk and maximized profits.

Expanding your small business globally is a great way to increase profits, but navigating international trade in 2023 can be difficult. Incoterms are a set of internationally recognized rules that define the responsibilities of buyers and sellers in international trade transactions. In this article, we’ll explore how Incoterms can help small business owners control shipping and freight costs and risk factors to better succeed in the global market.

What are Incoterms?

First published in 1936, Incoterms (International Commercial Terms) are a set of standard trade terms widely used in international trade transactions. Formally and currently published by the International Chamber of Commerce (ICC), they are widely recognized and accepted by governments, legal authorities, and practitioners around the world.

As a guide intended to level the international playing field, Incoterms specify the responsibilities of the seller and buyer in the transaction. This includes obligations for the delivery of goods, transfer of risks, and costs related to transportation and insurance.

Key Incoterms Defined

Some of the more commonly used Incoterms include:

EXW (Ex Works): The seller’s only obligation is to make the goods available at their premises.

FOB (Free on Board): The seller is responsible for the delivery of goods to the port of shipment and the buyer is responsible for the cost and risk of loss or damage to the goods from that point onwards.

CIF (Cost, Insurance and Freight): The seller is responsible for the delivery of goods to the port of destination and the cost and risk of loss or damage to the goods during transportation.

CPT (Carriage Paid To): The seller is responsible for the delivery of goods to the named place of destination and the cost of transportation.

DAP (Delivered at Place): The seller is responsible for the delivery of goods to the named place of destination.

Incoterms play a crucial role in international trade by providing a common understanding of the obligations and responsibilities of the parties involved, reducing the risk of misunderstandings and disputes.

Incoterms 2022 vs 2023

Compared to 2020, 2021 or 2022, what’s new in Incoterms for 2023? Essentially, nothing.

The ICC updates and revises the Incoterms guide only once every 10 years, with the last update being in 2020.

Not that the ICC is static in its development for more timely resources, far from it. For instance in 2022 the ICC launched Genesis, a online tool intended to enable exporters to obtain certification of their origin statement on invoice declarations.

As for the update in 2020, several changes were made to the Incoterms, including changes to the rules and responsibilities of the buyer and seller. Also included were updates to reflect developments in transportation and logistics practices, and the introduction of a new Incoterm, DPU (Delivered at Place Unloaded), which provides additional clarity for delivery obligations in multimodal transportation scenarios.

How Do Incoterms Impact the Cost of Shipping?

Incoterms can have a significant impact on the cost of shipping in international trade transactions. The specific Incoterm agreed upon between the buyer and the seller determines the responsibilities and costs associated with the delivery of goods, including transportation, insurance, and customs duties.

Having an intimate knowledge of the terms that relate to your business, and the resources available to negotiate the best possible outcome can have a significant impact on your shipping costs.

For example, if the Incoterm agreed upon is FOB (Free on Board), the seller is responsible for the delivery of goods to the port of shipment, while the buyer is responsible for the cost of transportation, insurance, and customs duties from that point onwards. This means that the buyer will bear the cost of these expenses, which can significantly increase the cost of shipping.

On the other hand, if the Incoterm agreed upon is CIF (Cost, Insurance and Freight), the seller is responsible for the delivery of goods to the port of destination, and the cost and risk of loss or damage to the goods during transportation. In this case, the seller will bear the cost of transportation, insurance, and customs duties, which can reduce the cost of shipping for the buyer.

What are the Most Important Incoterms for Small Business

For North American-based small business,

Depending on your type of industry, the most important Incoterms for smaller North American-based businesses would likely be EXW (Ex Works), FOB (Free on Board), CIF (Cost, Insurance and Freight), and DAP (Delivered at Place). Simply because these Incoterms are the most widely used in international trade.

In terms of controlling shipping and freight costs, it is important to carefully consider the Incoterm agreed upon in each transaction. In general sum-sum negotiations, Incoterms that place more responsibility on the seller will tend to result in lower costs for the buyer, as the seller will bear the costs of transportation, insurance, and customs duties.

For example, if you’re importing goods from a supplier in another country, using an Incoterm like CIF or DAP, which place the responsibility for delivery and transportation costs on the seller, can help to reduce your costs. On the other hand, if you are exporting goods to a customer in another country, using an Incoterm like FOB, which places the responsibility for delivery and transportation costs on the buyer, can help to reduce your costs.

Overall, consulting with a trade expert or an experienced logistics partner to help you determine the best Incoterms for your specific needs to help you control shipping and freight costs

Incoterms Shortfalls and Limitations

As mentioned, Incoterms are a widely used and well-established set of rules for international trade, but like any commercial tool, they are not without limitations. Some of the potential shortfalls or limitations of Incoterms include:

1. Ambiguity: Incoterms are designed to be flexible, but this can also result in ambiguity in the interpretation of their terms. This can lead to disputes between buyers and sellers over the responsibilities and obligations outlined in the agreement.
2. Limited coverage: Incoterms are only intended to cover the delivery of goods and do not address other important aspects of the transaction, such as the payment of goods, warranties, and intellectual property rights.
3. Outdated provisions: Incoterms are updated every 10 years, but changes in transportation and logistics practices, as well as other commercial developments, can render some provisions outdated. This can result in a lack of clarity around obligations and responsibilities, particularly in new or complex commercial arrangements.
4. Non-binding nature: While Incoterms are widely used and accepted in international trade, they are not legally binding and are only enforceable if specifically incorporated into a contract between the buyer and seller.
5. Lack of uniformity: Incoterms are used globally, but the interpretation and application of their terms can vary between countries and regions, leading to potential misunderstandings and disputes.

Move Forward with Expertise

Considering the complexity of the global supply chain and the endless combinations of market participants, it’s important to keep potential gains and shortfalls of using Incoterms in mind. It’s critical to ensure that they’re used in the context of a well-drafted contract that clearly outlines the rights and obligations of both the buyer and the seller.

Partnering with an experienced trade expert or a logistics specialist such as Brimich can help you navigate the limitations of Incoterms and ensure that they’re used effectively in your international trade transactions.

What Does OS&D Mean?

In the context of LTL claims, OS&D is an abbreviation that stands for over, short and damage. To expand the meaning further, here’s a description of each term used:

• Over or Overage: The shipment quantity is over and above that listed on the shipping documents
• Short or Shortage: The shipment quantity is less than that indicated on the BOL (bill of lading)
• Damage or Damaged: The shipment was received damaged. Damage can be either externally visible or concealed within the packaging containers.

Solving Problems Associated with LTL OS&D Claims

Nobody wants to deal with the headaches of filing a claim of any kind – but it does happen. The fallout from an interruption in your supply chain will include delays, unexpected costs, lost productivity and perhaps worst of all, a loss in customer confidence.

Moreover, OS&D can become a point of contention between you the shipper and your 3PL partner as you try to hammer out the details. Both sides have to feel they’ve done the right thing towards resolving a claim.

To help you get past the problem of dealing with an OS&D claim as quickly and efficiently as possible, we thought we’d share some insight into how limit claims and improve your chances of recovering a payment.

Details of OS&D Claims

Since there are a number of aspects and circumstances that constitute a claim, here’s some further explanation on the particular elements:

Time Period for Filing a Claim

For visibly damaged goods, a shipper usually has nine months to submit a claim. Taking numerous pictures is critical in making sure there’s enough evidence to back-up the freight claim.

Similarly, don’t delay the claims process by waiting any great length of time. The success of being compensated goes down the longer you wait.

As shipping technology advances so does the ability to monitor freight claims. Using technologies such as Software-As-A-Service (SaaS) can greatly help to expedite the claims management process.

Shipper’s Responsibility for the Freight Bill

As a process, the freight bill still needs to be paid regardless of whether there is a claim in place or not. As a shipper you are still required to pay the invoice as part of the delivery service.

In other words, claiming reimbursement for a damaged shipment is a completely different process and transaction.

Bill of Lading

The importance of the Bill of Lading or BOL, can’t be underestimated. It’s the key document the carrier uses to verify all aspects of the shipment itself, especially when associated with an OS&D freight claim.

As a main point of reference in evidence, it’s the one document both parties inspect first to determine how the product was received at the warehouse or distribution centre.

Along the shipment’s journey, signing the BOL acknowledges the product arrived and verifies its condition. Before signing off on the BOL, he receiver validates the shipment quantity and inspects it to make sure there’s no visible damage to the freight.

Once the BOL is signed, the bill of lading is free and clear. This now “Free BOL” allows little to no opportunity for filing a damage or short-ship claim because title of the product is transferred at that moment.

Shortage Claim

As the name implies, a shortage claim occurs when freight arrives incomplete. The shipment is clearly missing a number of units and does not match the details described on the bill of lading.

If a consignee or receiver made a note of a shortage on the BOL, it’s relatively easy to file a shortage claim.

Concealed Damage Claim

Due to the extra layer of inspection required, concealed damage claims are more difficult to pursue and claim for reimbursement.

In comparison to obvious visible damage where you have an extended period to file a claim, most carriers will only allow concealed damage claims to be filed within five days.

Concealed Shortage Claim

Similar to a concealed damage claim, concealed shortage claims are not immediately recognized and therefore not noted on the BOL at the time of signing.

Concealed shortage claims are difficult to prove, so you’ll often find that carriers push back very hard on these claims.

As with other concealed claims, time is of the essence. You only have five business days to let your shipper know about the shortage. If you delay beyond five days, your carrier will deny your claim.

Refused Freight Claim

If a consignee is not happy with the condition of their received freight, they have the right to refuse part or all of the shipment. Examples of refused freight include: damaged freight, late shipment or wrong product.

In the case that your consignee refuses shipment, it’s returned to your carrier’s delivery terminal. Your LTL or 3PL partner will contact with the following options on what to do with the freight:

• Send it to another address
• Send the shipment back to the address of origin
• Dispose of the product of as per your company’s policy

Depending on the agreement with your provider, you may or may not have to pay the invoice.

Once again there is a critical window of time window. You must file the claim within five days otherwise the carrier can deny the claim.

Loss Claim

A loss claim makes great case for maintaining insurance as it means your entire shipment was lost by the LTL motor carrier. The majority of loss claims occur due to the shipment paperwork being separated from the physical freight itself.

In this situation, your carrier will typically have a week to try and to locate your freight. Service providers understand this does not reflect well on them. Therefor in the event the freight is not found, you will not incur shipping charges and the claim will be reimbursed quickly.

Freight Claim Reimbursement – Key Points to Keep In Mind

Successful OS&D claims begin and end at the receiving dock. Taking immediate action will help ensure the claim is quickly processed and approved.

The following lists cover the essential documents and actions required to facilitate a quick resolution:

OS&D Claim Requirements

• POD must notate any discrepancy to the BOL
• Copy of the freight bill
• Original BOL must be included
• Merchandise invoice documenting the value of goods
• Repair or replacement bill for the product
• Pictures of the damaged freight
• Damaged freight must be saved until the claim is approved

How to Improve the Product Receipt Process

• Inspect the freight immediately
• Do not sign the BOL without inspecting the freight
• Document any damages or shortages
• Notate any damage on the BOL
• Take pictures of the freight
• Store the shipment in a safe area to prevent further disturbance until the claim is approved

What is a Hub and Spoke Distribution?

The term hub and spoke can be used to describe any process that resembles the wheel of a bicycle: a central location (or hub) that provides a fixed point from which delivery paths (or spokes) radiate outward.

In logistics, the hub and spoke system is used to coordinate inventory from a single large distribution centre to multiple delivery locations such as warehouses or fulfilment centres.

How Does a Hub and Spoke Model Work?

As mentioned, the hub and spoke model provides a means of distribution that relies on a central location (the hub) and a number of spokes leading out from that hub.

The main hub is where the goods are stocked, and the spokes represent the various distribution centres that deliver the goods to customers.

Hub and Spoke vs Point-to-Point Distribution Models

Point-to-Point vs Hub and Spoke Distribution Models

Examples of Hub and Spoke Distribution Models

This system is often used in industries like air travel and logistics, as well as retail.

The Arline Industry

In the case of an airport, a passenger might travel from New York to London. Using a classic hub and spoke system, the passenger boards a plane in New York, which flies to the London airport and then lands at Heathrow Airport in London.

The London airport, in this example, is the hub. The spokes would be the routes the plane takes to get to London from New York.

The Logistics Industry

With the help of preferred logistics partners, merchants can control inventory centrally, source products from the least expensive suppliers, and deliver goods to customers from local warehouses.

By aggregating their inventory at a centralized point, shippers can take advantage of more affordable rates. These less than truckload (LTL) shipments can then be combined to fill a single truckload which can then be dispersed throughout the network.

Using this model, small and medium size businesses (SMB’s) can negotiate for better rates often associated with full truckload (FTL) shipments.

The Retail Industry

Due to the efficiency of hub and spoke distribution, large (and some smaller) retailers such as Amazon have adopted the system to help expedite the flow of shipping to consumers.

For instance, to help shorten time in transit (TNT), Amazon has fulfillment centres distributed across the country to facilitate the fast delivery times consumers have grown accustomed to.

This model also helps SMB’s realize the same high efficiency a larger retailer fulfillment network uses across all of their sales channels.

Will Hub and Spoke Distribution Work for Your Business?

Hub and Spoke distribution systems are particularly useful for any industry that relies on the movement of physical goods through a supply chain. These systems are commonly used amongst retailers, wholesalers, and manufacturers in order to make their logistics operations more efficient.

As centralized distribution models, they are particularly useful for retailers that ship goods to customers from multiple locations.

They’re also very beneficial for manufacturers and wholesalers who have long supply chains. For example, a manufacturer in China ships parts to a plant in Thailand, which assembles the parts and ships the finished goods to a distribution centre in the United States, which then distributes the goods to retailers.

Businesses may also consider a hub and spoke fulfillment model for their business if they are already distributing their inventory, but have excessive LTL freight rates eroding their profits.

Here are just a few of the benefits of a Hub and Spoke distribution system:

• Increased capacity to handle peak periods – A hub and spoke system can allow for a quicker, more efficient delivery of inventory during times of peak demand. This enables businesses to avoid costly out-of-stocks and keep their customers happy.
• Centralized inventory control – Having your inventory distributed among several locations increases the risk that customers may not be able to get what they want. A hub and spoke system allows you to keep a close eye on inventory at all locations and respond quickly when there’s a shortage.
• Lower Time In Transit (TNT) – Time in transit significantly affects logistics costs. A hub and spoke distribution model can help lower shipping costs at two key points within the supply chain: receiving inventory from manufacturers and forwarding inventory to fulfillment centres.
• Easily trackable deliveries – With a hub and spoke system, each delivery is tracked. This makes it easy to spot where potential issues may be occurring and address them before they become serious.
• Better use of resources – Hub and spoke distribution systems help you make the most of your resources. For example, if you’re experiencing high demand in one area and low demand in another, you can redirect resources so they’re going to the places where they’re needed most.
• Lower costs – Hub and spoke systems can help you lower costs by using less warehouse space, renting less expensive real estate, and using fewer resources.

Disadvantages

While hub and spoke systems are very beneficial for many businesses, they do come with some drawbacks:

• Higher inventory costs – The biggest disadvantage of a hub and spoke system is that inventory is often more expensive because of the need to rotate inventory among several locations.
• Fragmented customer service – Negatively affected customer service. Customers in one area may receive their goods more quickly than customers in other areas, for example.
• Inability to promote certain products – If you have certain products that are only available in one location, customers in the other locations won’t be able to get them.
• Slower response times – Because of the distance between spokes and the hub, it may take longer to respond to customer needs and ship products.

Key Takeaways

A Hub and Spoke distribution system provides centralized inventory control, making it easier to track deliveries and respond to customer needs for just about any physical product based business. As a distribution model, it can also make it easier to rotate inventory and use fewer resources.

However, like many other things, it does come with some disadvantages, including higher inventory costs, a fragmented customer service experience, and slower response times.

On the whole, after weighing the pros and cons, hub and spoke distribution systems are beneficial for a good variety of businesses that want maximized resources, efficient inventory flow and cost control.

Freight Shipping Transit Time

In freight shipping, transit time refers to how long it will take for a shipment to be delivered from the point of pickup to its final destination.

Depending on the the distance between the two points and the shipping method used, the amount of time can vary greatly. Therefor it’s a good idea to get an estimate from a preferred logistics company before booking a shipment.

Less-than-truckloa (LTL) shipping is an excellent option for shippers whose loads are less than a full truckload but too big for parcel post. But how long will it take for your shipment to arrive?

Shipping times you can expect by transit mode

• Full Truckload (TL or FTL) — With the exception of expedited shipments, full truckload is normally the fastest and most cost-effective way to ship by road. Without having to transfer the freight, the truck travels directly to the load’s destination.
• Less-than-truckload (LTL) — A common alternative and cost-effective method of moving smaller shipments. Because different shipments are aggregated into a single load, the freight must periodically stop for loading and unloading. This leads to increased freight transit times and can take slightly longer than FTL. To help determine what mode may work best for you, try this LTL transit time calculator to estimate shipping time for your freight.
• Intermodal Shipping, or rail shipments — As infrastructure improves, freight transit time by rail becomes more reliable. When averaged out, shipping times by rail is comparable to over-the-road shipping, plus it’s less prone to problems common to road-based delivery.

Delivery options for time-sensitive shipments

When standard transit time isn’t fast enough, or your freight needs to be delivered on a specific day or at a specific time, time-critical solutions can provide your best options. Keep in mind that faster freight delivery is usually associated with higher fees:

• Expedited Ground – the fastest ground shipping. With this option the freight never stops moving and is delivered as quickly as possible.
• Time Definite Service – ensures your freight is delivered by a certain day or time.
• Domestic Air – this solution offers the fastest shipping and includes multiple options to expedite your freight: next flight out, second day, deferred and charter. Most of these options are faster than ground, making air the ideal choice for critical shipments that need to reach their destination quickly.

LTL Shipping Times

Because of the nature of LTL shipping, times can vary widely depending on the carrier, the number of stops required and preferred routes. Here’s a more in-depth look at the major factors:

• Required Route: Logistically, shipments to less populated areas may take longer. With fewer trucks in remote areas, your shipment may have to wait for a full truckload before it continues on its route. As a rough example, freight being shipped from the coast to remote midwest points may take between 7 and 10 business days.
• Total Distance: When shipping freight over ground, the overall distance is the largest factor affecting shipping times. Drivers and trucks are limited in the number of miles they can travel each day. Speed limits, traffic laws and personal time behind the wheel all have bearing on the time a shipment will take. as well as regulations governing the time an individual driver can be behind the wheel each day. Typically, intrastate moves take 1-2 business days to arrive, regional shipments may take 2-4 business days, and cross-country shipments may take 4-6 business days.
• Operator Availability: As we’ve seen in the last few years, the number of operators has been less than what the industry could make use of. Due a shortage of qualified drivers and the recent conditions imposed by the pandemic, shipping times have risen sharply.
• Number of transfers: While full truckload (FTL) shipments generally take the shortest possible distance from point A to point B, LTL shipments may make several stops and transfers along the way. Your shipment is likely to first head to a regional terminal, where it will be taken off the first truck and sorted onto another truck headed towards its final destination. Depending on the carrier’s routes, this may happen more than once. Sometimes, shipments are even transferred between carriers, especially on cross-country trips. The more stops and transfers your load makes, the longer it will take to get to its destination.
• Weather and unexpected delays: Bad weather, poor road conditions, traffic and mechanical breakdowns can all cause unexpected delays in ground freight shipments. These delays can be difficult to make up, because drivers are still subject to the same traffic laws and regulations—chances are, they were already going as fast as possible for their route.

How to Reduce LTL Shipping Times

Because of the factors that influence freight shipping, LTL is usually best for shipments that don’t depend on hard delivery timelines. Still, there are ways to speed up your shipments and reduce your LTL shipping times:

• Choose the right carrier to begin with. As with any service-based business, different carriers can quote dramatically different delivery estimates. Quotes will depend on how much coverage they have for the given area, plus how many transfers will need to be made to get your shipment to its destination. You may find it’s possible to get a better quote from a regional carrier if you’re shipping intrastate or regionally. And they may provide better coverage for the same route. Of course, when freight shipping times are critical, it’s always best practice to shop around.
• Consider partnering with a 3PL company. Third-party logistics companies can be the perfect choice if you have ore complex LTL shipping needs. For example, a fully capable 3PL company will employ the latest software to help determine optimal delivery times and control costs. By using contacts throughout their preferred carriers network, they effectively coordinate shipments that can require transfers from one regional carrier to another.
• Ask about freight delivery guarantees. For an extra fee, some carriers will offer guaranteed or expedited delivery. If your freight delivery times are crucial, it might be worth it to find a carrier who offers this service.
• Help mitigate damage with proper packaging. Carefully organize and pack your shipment for transit before it gets on a truck, and make sure your shipments properly fit loadable and stackable pallets. Doing so will help ensure your products have a smooth journey to their destination.

Understanding LTL shipping times will help you make the right choice for your ground shipment. A little research can help you reduce LTL shipping times and get your load where it needs to go on time.

Sea Freight Transit Times

When it comes to shipping by sea, there’s a wide range in shipping times due to the sheer number of ways to ship, plus the endless combinations of destinations.

Overall, there are about 107,000 various UN Codes for Trade and Transport Locations (UN/LOCODE) spread across 249 listed countries and territories.

Therefor the time it takes to ship freight from port to port by sea will be greatly affected by the geographic distance between ports.

Let Brimich Help You Get the Best Freight Delivery Times

Brimich Logistics is a team of professionals always available to learn the specifics of your business, and help you choose the best shipping method for your freight. Contact Brimich today to get end-to-end visibility for every step of your freight’s journey along the way.