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.

What factors do you need to consider to better control your freight costs? Are there hidden charges you should be aware of? Is the domestic freight market predictable enough to make qualified decisions? Let’s see if there’s a practical road to understanding trucking rates.

If your products are shipped by truck, you’re paying for it. Whether you have your own fleet or have to rely on a third party, having a reasonable knowledge of the factors influencing your trucking costs just makes sense.

As we uncover the information you need, it’s important to realize there are two distinct facets in discussion: trucking rates and truck freight rates. Trucking rates apply to you directly (your costs as a business owner), whereas truck freight rates are the costs incurred by carriers – owner operators and trucking companies.

How to Calculate Trucking Rates

For most physical business, freight and trucking costs are a significant and often revolving part of your operating overhead. Therefore it makes sense to understand the basics so you can break down these costs into smaller increments that help you determine the best trucking rate per mile.

Trucking freight rates are calculated using a per-mile (or kilometre) basis. Therefore, the most important metric when calculating truck rates is the number of miles between your point of pickup and final destination.

Having an average rate per mile for trucking and reasonably accurate information of current freight rates is essential for predicting your shipping costs, providing quotes and negotiating shipping rates with your customers.

What is a Truck Freight Rate?

A truck freight rate is the price a specific broker or shipper will pay a carrier to haul a load. Because the average trucking company only only one to two trucks, the aggregated number of small businesses becomes staggering. This also means there can be a huge variation in pricing from company to company.

Is this a problem or an advantage? When you realize just how competitive the domestic freight market is, you certainly have an opportunity for a win. The trick is in being informed and doing your homework through due diligence.

Factors That Determine Truck Freight Rates

There are number of standardized factors used to calculate truck freight rates. Some of them are predictable or fixed, others are variable. As a group, they’re all taken into consideration when determining truck freight rates.

1. Distance

Whether local or long haul, the distance between start and finish points is an important part of determining trucking rates per mile.

2. Weight

The next most significant factor is the weight of the shipment. For instance, moving crates full of dumbbells is going to cost more than boxes full of ping pong balls.

3. Density

Shipment density is another factor that determines the volume of space a shipment will take up in the truck. This in turn impacts your trucking per mile rates. For all intents and purposes, calculating the shipment density is fairly straight forward: divide the shipment weight by its cubic feet. In other words, shipment weight divided by cubic feet = shipment density.

4. Base Rate

All trucking carriers have established base rates for shipments. Although most rates are usually cited per $100 dollars, they will vary based on the carrier and transporting lane. Your base rate also includes both fixed and variable costs and variable costs. Fixed costs are items such as insurance and equipment leases. Variable costs are those that fluctuate such as fuels expenses and driver pay.

5. Classification

Freight classification plays a significant role in freight rates. For instance, hauling hazardous materials is far different and requires extra precautions compared to shipping stuffed animals.

The National Motor Freight Traffic Association (NMFTA) has defined 18 classes of shipments that affect freight rates per mile. Freight classification is determined by factors such as:

• Product density
• Value of goods
• Handling needs
• Stow-ability
• Liability

Types of Trucking and Haul Rates

The type of truck used for transport will affect the overall cost of trucking. For instance, you’ll need a far more powerful vehicle to haul an oversize bulldozer compared to a vintage automobile. In a similar fashion, you’d want to ship frozen foods in a reefer rather than a flatbed.

Heavy Haul Trucks

Heavy haul trucking companies will use common per mile cost factors such as:

• Fuel expenses
• Repair and maintenance expenses
• insurance for trucks
• Highway tolls and fares

If you’re moving heavy products, a good rule of thumb is to keep an eye on both local and national trucking rates.

Flatbed Trucks

As for flatbed truck rates per mile, the national rates average $3.14 (USD) per mile. However, depending on your location a shipping points, specific areas may have higher or lower rates.

Fair prices for flatbed truck services consider things like:

• Trailer type
• Load-to-truck ratio: the number of loads vs your available trucks
• Cargo weight
• Destination
• Other services such as oversize loads, warehousing, loading and unloading

Refrigerated Trucks

Refrigerated trucks or reefers are equipped with a refrigeration unit for goods that need low temperature control. Since they consume more fuel, reefer freight rates are higher than that of other trucks of the same relative sizes. This difference ultimately factors into your freight prices per mile.

Dry Vans

Perhaps the most common type of truck you’ll see on the highways, dry vans have a non-temperature-controlled sealed trailer and represent a fair benchmark for determining the average cost per mile of truckload freight.

What’s the Going Rate for Trucking Per Mile?

In order to understand the scope of the trucking industry and determine a competitive rate per mile, you need to know how much trucking companies actually charge per mile. Their cost per mile is influenced by such factors as:

• Fuel
• Repairs and maintenance
• Insurance
• Roadway Tolls

For many operations, financing is also rolled into the cost per mile. Typical financing charges for trucks and trailers can range from 0%-30% of revenue.

As of July 2021, trucking rates per mile remain steady. Here are the current rates for the most popular freight truck types:

Trucking rates (in USD) for the most popular freight truck types within the last few years have hovered around:

• $2.30 to 2.86 per mile for dry vans
• $3.19 per mile for reefers, with lower rates of $2.47 found in the Northeast
• $3.14 per mile for the average flatbed
• $2.95 to $3.76 per mile for heavy haul according to heavyhaulandoversized.com

As we’ve experienced recently, inflation and interest rates have been impacting the economy. Resulting in rising fuel prices over the past year thus creating a huge variable when calculating transportation rates.

Company vs Owner-Operator Trucking Rates

In contrast to company drivers working exclusively for a trucking firm, owner-operators own or lease their own trucks. As a form of networking, owner-operators usually work together with a trucking company in order to find trucking jobs and leverage back-office support.

This autonomy comes at a cost though, as owner-operators have to deal with additional stress and the burdens of financing, maintenance, health insurance and related operational expenses largely on their own.

In terms of trucking rates, owner-operators generally earn an average of 75% percent of the loads they take. The balance of the percentage goes to the trucking company.

For a deep dive into the intricacies associated with the operational costs of trucking, please refer to this comprehensive industry pdf: https://truckingresearch.org/wp-content/uploads/2022/08/ATRI-Operational-Cost-of-Trucking-2022.pdf

Trucking Rate Terminology You Need to Know

Building a knowledge base on trucking rates also means understanding the terminology. Other than  pricing, there are a few trucking industry terms you should be familiar with:

Consignor: The entity that sends the freight to its counterpart the consignee.

Consignee: The entity that receives the freight from the consignor.

Carrier: A business that offers shipping services.

Bill of Lading (BOL): Also called a freight bill, the bill-of-lading is a record of all details of the shipment and the agreement between a carrier and the shipper.

Loss and Damage: Loss and damage rates only cover shipments in transit or in storage facility operated by the carrier.

Full Truckload (FTL): Also termed TL, an LTL shipment requires the use of a whole truck.

Less Than Truckload (LTL): Shipments that don’t utilize the full capacity of a truck.

Drayage: Drayage is a form of short-haul trucking that connects the different modes of shipping such as ocean freight or air freight.

Pallets (or Skids): Plastic or wooden stacking platforms that usually measure around 40″ by 48″.

SKU: A Stock Keeping Unit, a method of recording individual items of a different kind, size, or freight.

CWT: A standard shipping weight unit equivalent to 100 pounds.

Finding the Best Trucking Rates is Not as Hard as You Might Think

From trucker shortages, supply chain issues to the prospect of extra charges, the trucking landscape is full of – at times unpredictable pitfalls. But with a solid understanding of the trucking field and its players, you increase your ability to react with agility.

Contact Brimich and Packaging today and talk to an experienced professional who can quote trucking rates tailored to meet your company’s specific needs.

Spurred by changing customer behaviour, shipping consolidation services allow companies to ship more frequently in smaller batches and at cost effective rates. If this sounds appealing, it should, and here’s why it could be the right choice for you.

Fulfilment demands speed, and when your products don’t add up to a full trailer or container, you need a shipping solution that fills the need without eating into your bottom line. This is where consolidated shipping services make the most sense and keep your deliveries moving forward.

What are Shipping Consolidation Services?

Shipping consolidation services are processes that combine multiple orders together into single consigned shipments. This allows smaller companies to take advantage of bulk transportation rates, save time and conserve resources.

Based on the LTL (Less Than Truckload) and LCL (Less Than Container Load) shipping models, shipping consolidation services use fewer vehicles to transport freight. This is ideal for businesses that make small, frequent shipments as there is less products handling which reduces the risk of damage and claims.

An Example of Shipping Consolidation

Order consolidation can be a combination of a single company’s products or multiple shipper’s products. For example, let’s assume a shipper located in Etobicoke Ontario has multiple shipments of sports apparel going to a variety of retailers in Edmonton Alberta. Before sending it to their regional distribution centre, they usually wait until a full truckload accumulates. Once the load is full, it goes directly to Edmonton for delivery.

Now let’s say a shipper doesn’t have enough packages to fill the entire truckload but needs to ship what they have to meet delivery requirements. If we consolidate the shipment with another local shipper’s products going in the same direction that will fill the container, we have a win-win situation through combined efficiency.

As long as the various shipments fall within compatible freight classes, and fill an entire trailer from floor to ceiling, carriers help shippers create a more cost-effective streamlined supply chain. Rather than “shipping air” with multiple half-filled trailers, bundling orders presents multiple benefits to both shippers and consumers.

Types of Shipping Consolidation

Retailers in particular are always seeking innovative, cost-efficient ways to ship their products. In response, due primarily to escalating adoption of e-commerce, the methods surrounding consolidation of freight and unification of orders are gaining more attention due to evolving buying patterns of both consumers and suppliers who each expect speedy delivery times.

Freight Consolidation

Larger cargo shipments of dry or temperature controlled goods require careful logistics planning to combine less than truckload (LTL) and less than container load (LCL) freight into full shipments. An experienced 3PL provider will utilize contacts throughout their networks to ensure on time in full (OTIF) delivery via waterway, rail, air or truck.

Automotive Consolidation

As one of the major North American economic drivers, automotive consolidation requires next-level supply chain expertise to fulfil deliveries in the transportation sector. With a heavy reliance on just-in-time manufacturing, combining multiple orders from automotive suppliers into single shipments is key to cost-effective operations for automotive manufacturing plants, distribution centres and retail locations.

Retail Consolidation

In retail, consolidation warehousing plays a primary role in being able to hold product under ideal conditions. Through strategically located warehouses and distribution centres, retail-direct and pre-paid supplier programs help combine orders from multiple suppliers into a single shipment deliveries for retailers.

Forwarding and Distribution

If you need to ensure the quality of your goods due to restrictive shelf-life limitations, transportation time becomes that much more critical. In such cases, storage and staging of products is kept as close as possible to final destinations, picked and packed to order so goods arrive on time.

Cross-Border Consolidation Shipping & Logistics

One of the ways shipping consolidation helps customers reduce their freight expense is through consolidated cross-border programs. For instance, a partial or a full load in the US is delivered to courier and LTL networks in Canada.

Instead of paying for multiple international truckloads or LTL freight & courier shipments, customers enjoy reduced costs via Canadian domestic LTL, line-haul and courier transportation. This reduces multiple customs entries to one consolidated Canadian customs entry which can significantly save on annual customs brokerage fees.

6 Benefits of Using Shipping Consolidation

The benefits of consolidated shipping can be significant. Industry experts are providing in-depth and creative strategies customized to both shippers and their customers’ specific needs.

When done correctly, consolidated freight services provide a winning balance for retailers, courier companies, and end customers. Depending on schedule, volume and hold time, players involved in the order fulfillment process benefit in the following ways:

1. Reduced Shipping Costs

Consolidated shipping allows you to reduce the amount of packaging materials and use fewer boxes. This reduces both the dimensional weight and the actual weight of your shipments, plus it reduces wasted trailer space. Order consolidation also helps to reduce handling fees per package, further reducing shipping costs.

2. Increased Supply Chain Consistency

Through monitoring shipping patterns such as common pool points and recurring orders, you can increase delivery optimization. Knowing which orders are coming in each day, as well as which ones are ready for pick up allows you to implement predictive actions. Along with the aid of transparent order tracking and tracing throughout the supply chain, you’re better able to meet each customer’s deadline and run a smoother production schedule.

3. Less Risk of Damage

When a truckload or container is full, there’s less likelihood of packages shifting dangerously and incurring damage due to excess unused space. When shipments are consolidated, each item will also require less handling which again lowers the risk of damage.

4. Improved Consumer Experience

When orders are consolidated, retailers and suppliers get to take advantage of optimized supply chain efficiencies. The net effect results in customers receiving their orders more quickly, safely and of course at reduced cost.

5. Enhanced Quality Control

Consolidated shipping services enable your operations to detect order or product problems before they leave the warehouse by putting quality control measures in place before your goods are sent out.

6. Added Sustainability and Emissions Controls

Consolidated freight shipping means you can use less packaging materials: boxes, foam peanuts, tape and such, thus helping to reduce waste and its environmental impact. Additionally, better cube utilization on trucks results in more units shipped in fewer cartons. Vehicles require less fuel to ship more products thereby reducing carbon emissions in the environment.

With initiatives such as the SmartWay program, logistics providers are helping reduce the number of diesel emissions being released into the atmosphere.

Is Order Consolidation the Right Strategy for Your Business?

Consolidated shipping can help you improve associated costs on carrier rates, dimensional pricing rules, handling fees, or other shipping expenses such as customs fees and duties.

As an experienced logistics partner for multiple national brand names, Brimich Logistics and Packaging can help streamline your whole shipping process through multiple tools and touch points. From providing automatically generated shipping labels and customs paperwork, to automated shipping rules, along with branded tracking and packing slips to help with your order consolidation needs.

With the right combination of tools, consolidated shipping services help build customer confidence by offering a more positive shopping experience with lower shipping costs.

Shipments don’t always go as they should, and your logistics costs can rise. When you have to cancel a pickup or delivery, you need to know the consequences and how to deal with them.

Let’s face it, sometimes stuff happens. Extra fees such as TONU charges can undermine your profitability. In this article, we’ll look at why the charge occurs and what you can do to avoid it.

What is TONU in Logistics?

TONU, an acronym that stands for “Truck Order Not Used”, is a standard logistics term used to describe a last-minute cancellation fee. In the transportation industry, not every delivery or pickup goes according to plan. Circumstances can change and a customer may decide to cancel a prearranged, agreed to appointment.

Although we don’t like having to pay extra fees of any kind, the TONU fee helps balance the scales of time and effort.

Why Do Companies Charge a TONU Fee?

The TONU fee exists to help carriers recoup some of their losses. As the old saying goes, “If the wheels aren’t turning, the truck isn’t earning.”. From a transportation company’s point of view, trailers and trucks should always be moving. In other words, the time they sit idle is lost potential income.

The trucking industry is massive, and with so many vehicles on the road handling shipments every day, you can bet there are going to be instances where TONU comes into play. According to one of North Americas leading trucking associations:

10.93 billion tons of freight (primary shipments only) was transported by trucks in 2021, representing 72.2% of total domestic tonnage shipped.

Source: Trucking.org

For carriers, having to charge a TONU fee on top of having their time wasted is in itself very frustrating. It takes time and effort to plan a route and prepare a truck for a pending order. In worse case scenarios, a driver can already be on the road or waiting at the pick-up location when they receive a cancellation notification.

What Causes a Truck Order Not Used Charge?

The trucking industry is massive. With so many vehicles on the road handling shipments every day, you can bet there are going to be instances where TONU comes into play. According to one of North Americas leading trucking associations:

10.93 billion tons of freight (primary shipments only) was transported by trucks in 2021, representing 72.2% of total domestic tonnage shipped.

Source: Trucking.org

Since we depend on the trucking and logistics industries to move so much on a constant basis, there are a wide variety of reasons that can trigger a TONU fee. Some of these include:

• Supply chain delays
• Last-minute shipment cancellations
• A load is not ready for pickup
• Construction site delays
• Inappropriate transportation ordered
• Incorrect pickup time entries
• Unexpected manufacturing delays
• General human error

Most of us like to think our plans will roll out like clockwork, but as you can see, the future is not always predictable.

Examples of Truck Ordered Not Used

Let’s say a request is put in for a trucker to deliver a twenty foot shipping container, but at the last minute the order is changed to a forty foot shipping container. If the change is made outside of the agreed timeline limits, which can be anywhere from 4 to 24 hours, this may result in a Truck Ordered Not Used charge.

Another instance could involve a carrier scheduled to pick up a load at an agreed day and time, but the manufacturer discovers an error in product spec at the last minute and has to rework the shipment. Because the manufacturer has no choice but to cancel the expected pickup until the order is corrected, a TONU fee is charged.

How Much is a Typical TONU Charge?

The amount of a TONU charge can be related to the size of the vehicle ordered or the transportation company’s policies – or a combination of both. Typical TONU charges start at about $150.00 (USD) for a dry van, box truck or prime mover. With refrigerated (reefer) shipments or special equipment containers, the charge can escalate to about $300.00.

On average, the industry standard Truck Order Not Used fee is rated at $250 (USD). An experienced logistics partner understands the need to anticipate shipping issues and will negotiate the TONU charge ahead of time with the trucker and dispatcher as a contingency. When the instance arises, the TONU charge will be invoiced as soon as the official cancellation is received.

Is TONU Just for Cancellation Only?

In a word, yes. A TONU fee is specifically related to an order that’s completely cancelled. Other accessorial shipping penalties such as layovers and detentions have their own separate fee structures. Some transportation companies will charge by the hour whereas others charge a flat or daily fee depending on the nature of the delay.

For instance, a Layover Fee can be charged when the driver gets delayed by the shipper or receiver by 1 or 2 days. A Detention Fee can be incurred if a driver is delayed at the point of pick-up or delivery for longer than the allowed by the Bill of Lading grace period.

How are TONU Charges Collected or Paid?

In the event of a TONU charge, there has to be proof of a breach of agreement. The trucker can verify a charge by showing a record of the time the booking was made, trip confirmation, arrival at the requested location if applicable and lastly, cancellation the arrangement by the customer.

The trucking company will then generate a TONU fee invoice to the customer or the freight forwarder based on the trucking arrangement. If there is a third party involved, such as a freight forwarder, logistics company or freight broker, the truck may opt to charge the third party directly depending on the agreement.

Generally speaking, the party that scheduled the service or arranged a service agreement with the trucking company will be liable to pay under the terms and conditions laid out.

For freight forwarders, it’s common practice to pass TONU charges along to the customer in the event of a cancellation or last minute change to the pickup/delivery agreement.

How to Avoid TONU Charges

As mentioned, sometimes things are just out of your control. However, there are a few things you can keep in mind to help avoid TONU charges:

1. Know Your Contract: You should have a solid understanding of the details of your shipping contract. You can also expect to incur TONU charges at some point so it’s a good idea to be familiar with the specific conditions that trigger the charge, how much it’s going to cost you and how it gets paid.

2. Communicate: Maintaining open lines of communication is key to avoiding a TONU charges and ensuring successful pickup and delivery executions. Should a problem arise or your plans change, communicate with the trucking company immediately to see if the situation can be resolved without penalty.

3. Set Expectations: Although it’s difficult to anticipate all scenarios, it’s great practice to discuss how timelines, conditions, rates and payments are to be treated by your transportation provider in the real world should the need arise. Once again, an experienced logistics partner will be up front about policies and be glad to answer any questions you may have.

4. Plan Ahead: Good planning starts with good organization. Make sure everyone on your team is familiar with the details of your shipping and transportation schedule ahead of time. It’s also a good idea to have a contingency plan in place so your team knows how to deal with shipping cancellations effectively.

As a smart shipper, fattening up your bottom line also means knowing how to manage freight costs and increase shipping efficiencies with the help of practical strategies.

Costs Associated with Managing Freight

Every business is different, yet the most costly element associated with managing freight costs often tends to be the cost of the transportation itself. Realizing a better bottom line is not just negotiating better terms, but requires strengthening relationships and understanding the intricacies of the transportation and logistics systems themselves.

High-impact factors within the transportation industry include managing fuel, driver salaries, and equipment costs. Plus there are costs associated with packaging, warehousing, handling fees, as well as customs and import/export fees.

Overall, the total cost of managing freight will depend on a number of factors unique to your business – mainly the type of goods being shipped, the distance they are traveling, and the level of service required.

In this article, we will explore how a 3PL company can assist businesses in controlling freight costs. Some methods may be as obvious as shipping during off-peak hours, others require a better understanding of the components and common factors that drive up freight costs.

The following strategies provide insight into how to manage freight costs to help improve your transportation’s bottom line.

Strategies That Cut Shipping Costs

1. Perform an In-Depth Cost Analysis

When working with carriers, it’s important to clearly define what you need from them in order to make a comparison between their quotes.

For example, instead of simply asking for a standard rate and tariff format, specify the type of rate you need (e.g. kilogram rate, tonnage rate, pallet rate) and ask for quotes for different quantities (e.g. 1-5 pallets, 6-10 pallets).

By requiring all carriers to provide quotes in the same format, it will be easier to compare and understand which carrier is offering the best service and prices.

2. Define Your Freight Rate Structure

When it comes to freight rates and pricing structures, it’s important to make sure you’re paying the right rate for your specific needs.

For example, if you’re paying an hourly rate for deliveries, literally being on the clock might not necessarily encourage the transport company to make your deliveries efficiently.

It’s important to consider the rate structure, whether it’s per ton, per pallet, per carton, and ensure that it aligns with your freight profile. If it doesn’t, it might be worth reevaluating and potentially renegotiating the structure.

3. Recalibrate the Speed of Your Shipping Methods

When it comes to shipping and the premiums attached to speed, it’s important to make sure you’re not overusing faster methods like air or express freight when regular road freight would do. Take a look at your invoices and see which shipping speeds you’re paying for and make sure they’re appropriate. Often, people will book a higher priority than necessary.

Also, consider the different speeds of shipping methods and ask yourself if air freight is necessary for the entire shipping distance. For example, it might be more cost-effective to use air for a portion of the route and ocean transport for the rest, or vice versa.

4. Develop Relationships with Carriers

When shippers establish long-term relationships with carriers, they gain insight into transportation management that can have a real impact on the bottom line.

Long-term contracts allow carriers to optimize their resources and create more efficient networks with minimal deadhead miles. Carriers that are maximizing their assets are more profitable and can offer better rates. Plus, locking in a rate for a longer term, such as a number of years, means no annual rate changes and an overall better service.

5. Ship on Off-peak Days

Shipping on off-peak days can lead to some significant savings. For example, Fridays tend to be quieter days for shipping consumer goods as most retailers aim to have their products on shelves by the weekend. Similarly, Mondays tend to be less busy for carriers, so they may be more open to negotiating rates.

Of course, this may vary depending on the type of goods you’re shipping – for example, non-perishable goods may have more flexibility when it comes to shipping days than perishable goods. However, coordinating your freight shipments to take advantage of off-peak days is a great option for shippers of non-consumer products.

6. Offer Later Pick-up Times

Offering later pick-up times can be a great way to shave overhead costs in shipping. For example, by allowing carriers to pick up your freight after most other shippers have closed for the day, like between 6-12 p.m., you’re giving them the opportunity to make your load into a backhaul.

This means that they can fill their truck with your freight after completing another delivery, instead of having to make a separate trip. It’s a win-win situation, as it helps the carrier maximize their assets and save you expense. Just keep in mind that it depends on the cargo and the carrier’s schedule.

7. Bundle Your Shipments

Bundling shipments is a great way to drive down shipping costs; combining multiple orders into one shipment can save a significant amount of money. Instead of shipping a few pallets at a time, try to bundle them together into a larger shipment.

One way to encourage customers to bundle their orders is to offer them a discount on shipping costs. Another option is to implement Vendor Managed Inventory, where the retailer only pays for items once they are on the shelf, which may encourage them to take larger orders.

8. Maximize Your Carrier Capacity

Consider the ways in which you are packaging and presenting your freight to carriers. By making adjustments to loading and handling processes, you can help the carrier maximize the capacity of their vehicles and potentially reduce your costs.

For example, if you’re shipping fragile products that require individual pallets, you will be paying for unnecessary space in the carrier’s vehicle. Additionally, think about the overall design of your pallets, ensure they’re evenly packed to allow for efficient stacking.

9. Minimize LTL Shipments

Because LTL shipments operate on a piecemeal basis, less-than-truckload shipments drive up your freight costs.

Ways you can reduce LTL shipments include:

• Using logistics software make your full-truckload shipping frequency more efficient
• Work with carriers that offer load consolidation
• Offer incentives to freelance LTL carriers who offer better freight rates

10. Join forces with Other Shippers

Collaborate with other businesses near your regular distribution centers to bundle your shipments with theirs. This approach is even more advantageous if the companies are local and have a shared customer base.

11. Reduce Dunnage

Consider working with carriers to minimize unnecessary packaging and reduce shipping expenses without compromising product safety. Utilize carrier’s dimensional weight pricing plans that incentivize using the appropriate size packaging, reducing weight and packaging materials.

12. Increase Delivery Lead Times

By planning your supply chain needs and providing carriers with ample advance notice for future loads, you can help them optimize their resources and assets. Advance shipping notice allows carriers to align their trucks, drivers, and warehouse space to ensure efficient transportation.

One of the biggest costs for carriers is the idle time of trailers waiting to be loaded. By improving planning, communication and providing longer notice, carriers can reduce these costs and offer you more competitive rates. This also applies to all aspects of the supply chain, including pick-up, staging, and live-loading.

13. Contract for Steady Lane Freight Volume

Establishing a consistent and reliable shipping schedule with a carrier can lead to cost savings. Carriers can market unused capacity on their return trips and build a more efficient network when they know they will receive a steady flow of freight in the same lanes from you.

Additionally, in today’s market with limited capacity, carriers tend to prioritize the freight of shippers who are loyal and have dependable shipping volume.

14. Load Your Freight Quickly and On Time

Carriers typically develop their pricing based on a 2-hour load window. If the carrier knows they’re cutting their load time in half when picking up cargo at your facility, that’s an incentive to drop the price, and good reason to continue at a discount.

A shipper with a reputation for being efficient not only saves time and resources attributed to extra charges, but has carriers waiting and willing to negotiate better rates.

15. Find Carriers for Backhauls from Ship-to Points

Carriers that can fill space by backhauling from your ship-to points will get you a lower rate. Dead-heading costs them time and money. You can help them alleviate empty mileage and at the same time reduce your own freight costs.

Therefor it’s worthwhile investigating carrier terminals near your ship-to locations and endpoints.

16. Outsource your transportation department

Freight management for smaller companies especially is top-heavy. For many, the overhead in staffing and systems necessary to operate a transportation department is simply beyond their means.

By outsourcing the many facets of freight management to an experienced and efficient 3pl provider, the financial stresses of staffing and capital expenses are offloaded allowing the company to grow and innovate.

Reasons for Controlling Freight and Shipping Costs

Controlling freight costs is crucial, especially for small businesses, for several reasons:

1. Financial Impact: Freight costs can be a significant expense for small businesses, and if not managed properly, they can quickly eat into the company’s bottom line. By controlling freight costs, small businesses can free up funds for other important expenses, such as marketing and product development.
2. Competitive Advantage: Small businesses often operate in highly competitive markets, and controlling freight costs can give them an edge over their competitors. By keeping freight costs low, small businesses can offer their products at more competitive prices, which can help them attract and retain customers.
3. Cash Flow Management: Small businesses often have limited resources and rely heavily on cash flow. By controlling freight costs, businesses can better predict and manage their cash flow, which can help them avoid financial difficulties.
4. Improved Inventory Management: By reducing freight costs, businesses can reduce the amount of inventory they need to carry, which can free up space, reduce carrying costs and improve cash flow.
5. Better Customer Service: Businesses can improve their customer service by controlling their freight costs, as they can offer more flexible shipping options and faster delivery times. This can lead to increased customer satisfaction and loyalty.

Final Thoughts on Managing the Costs of Freight and Shipping

“I never predict freight rates; nobody can do that.”

Soren Skou CEO A.P. Moller-Maersk

For the short term that’s a fair statement. But a more significant observation involves the question, “Are future costs going to go up or down?” The answer is obvious.

Just as rates are expected to rise with inflationary pressures and demand, the same evolutionary predictions should be exercised when managing freight costs. Therefor, periodically evaluating and reevaluating your company’s position on transportation costs is an ongoing process; a critical facet of the jewel that is your company.

Need help managing your freight or shipping needs? Brimich Logistics is here to offer customized solutions guaranteed to move your company forward – contact us today!

As consumers, we all expect Fast Moving Consumer Goods to be there when we need them. With the demand for effective product flows increasing, how are logistics providers playing a critical role in keeping store shelves full?

The Rise of FMCG Logistics

Imagine turning on a tap only to find there’s no water. This flow, or lack of it, is equivalent to the movement of the thousands of relatively low cost products we use in our everyday lives being interrupted.

We depend on the continuous availability of fast moving consumer goods, FMCG, to keep our own refrigerators, and cupboards full to the point we can get through the average day – every day.

Short supplies and interruptions in the food and beverage, retail, pharmaceutical industries and other sectors that rely on fast turnover eventually hit us where we live.

Without sufficient buffer systems in place to guard against future interruptions, are we going to continue to experience these hiccups regularly?

Some would call these problems growing pains, others would see these problems as opportunities to create better FMCG logistics related workflows.

The FMCG Industry

By its very nature, the FMCG market is incredibly competitive. With margins that are already tight, suppliers are finding it harder to maintain their market positions due to ever increasing demands on delivery times and dubious availability of raw materials.

When viewed through a practical lens, this perfect storm of supply and “I want it yesterday” demand is as mentioned, an opportunity. To solve the problems, FMCG businesses are finding ways to leverage the high-level infrastructure of third-party logistics services: outsourcing appropriate elements of their sourcing, shipping, warehousing, distribution and fulfillment services.

Which Products are FMCG?

Fast-moving consumer goods include but are not limited to common items such as:

• Beverages
• Packaged food
• Toiletries
• Cleaning and laundry products
• Personal care products
• Over-the-counter medicines
• Stationery
• Plastic goods
• In short, the majority of items you’d find in a national super-store.

Who Supplies the FMCG industry?

Major FMCG suppliers manufacture virtually any popular brand-name consumer goods product you can think of.

Here are just a few of the top suppliers in the FMCG industry:

• Nestle
• P&G
• Pepsico
• Unilever
• Coca-Cola
• L’Oréal
• Danone
• Heineken
• And many, many more

Top FMCG Suppliers

In 2019, the FMCG market’s biggest players reported revenues that had grown 3.9% from 3.4% the previous year.

If that doesn’t seem like much, let’s give you an idea of market size: the world’s top 40 FMCG companies alone generated a combined $1.13 trillion in sales for the 2019 fiscal year.

Further, according to Allied Market Research, the global FMCG market is expected to exceed $15 trillion by 2025.

Size of the FMCG Logistics Market

As of 2019, the global FMCG logistics market segment was valued at over $1 billion, and is expected to reach nearly $1.5  billion by 2027. From 2020 to 2027 the compounded annual growth rate has been projected to be 4.6%.

Luckily for ground based logistics companies, the roadways segment was the highest revenue contributor in 2019. When comparing modes of transportation, this accounted for over $43 billion, and is estimated to reach nearly $518 billion by 2027. That figures equate to a CAGR of 3.30% for the forecasted period.

Modes of Transportation and Projected Growth

FMCG and the Supply Chain

As we experienced recently at the tail end of the pandemic, any interruption in the hyper-sensitive FMCG supply chain sends shockwaves through the transportation industry. These delays ultimately manifested as empty store shelves and product shortages at unprecedented levels.

From a lack of truck drivers, to production shortages due to sickness, these ripples have been disastrous to the what should be a smooth flow of fast moving consumer goods from supplier through to consumer.

Alternative transport modes to support the global supply and demand changes are required to secure speed to market and to reduce the risk of delays. Regionalisation of supply and demand, with FMCG companies shifting their sourcing areas to markets where products are manufactured and sold.

Source: https://www.maersk.com/industry-sectors/fmcg

Focusing on regional areas implies the use of experienced local logistics companies that know their own backyards intimately. These 3PL partners also leverage their networks to enable the wheels of local commerce turn more efficiently.

FMCG Demands Intelligent Logistics Processes

FMCG brands depend on their suppliers being key assets in their overall business strategy. Defining the value of a vendor at the granular level is incredibly difficult, but there are certain indicators that in practice, will always point the way to building better returns on investment.

Efficient logistical processes depend on these main factors:

• Operational effectiveness – a combination of consistency of supply and speed-to-market.
• A best price strategy – setting prices that allow both supplier and customer a reasonable sustainable margin.
• Sustainability – consumers are increasingly savvy to environmental issues, and adopting low impact processes is also favoured by many government agencies.
• Quality – maintaining consistent quality, especially during fluctuations in demand.
• Technical expertise and innovation – without innovation and the skills to make it happen we wouldn’t have modern the conveniences we take for granted every day – brands must innovate or die.

How Do 3PL Systems Help the FMCG Industry?

Some opinions would have you think giving up any part of the FMCG supply chain is a step backwards towards devolution.

While it would be ideal to wholly own and control every aspect from manufacture to consumer, not all FMCG companies have the resources to set up such operations. Alternatively, these smaller companies stand a better chance of survival by outsourcing logistics processes.

Moreover, consider some of these items with high turnover rates have limited shelf-lives and can lose their beneficial properties over time. In such situations, the agility offered by logistics centres offers more accessibility to those same products for timely and effective order processing.

From a boots-on-the-ground point of view, the implementation of WMS technologies maximizes control over logistics processes. This greatly reduces the risk due to errors and ensures delivery times are met.

A product’s traceability along its entire supply chain path is essential in the FMCG industry. The ability to monitor inventory in real time through WMS (warehouse managements systems) common to most logistics providers is quickly evolving into a much more comprehensive SCM – supply chain management system.

For more on how your company can benefit from logistical expertise and warehouse management services don’t hesitate to contact Brimich today.

Whether you’re looking to brush up on your freight shipping and logistics vocabulary, or just looking for information as you get your feet wet,  this guide is for you. Here’s a few of the most common freight shipping acronyms, what they stand for, and the situations where you might find them.

Acronyms Used in Shipping Options

Before you send an RFQ (Request for Quote), you should first understand what type of carrier you’ll need. Here are some of the more common freight carrier options:

• TL – full truckload
  Often the most cost-effective method of shipping your products – provided you have enough to fill the entire truck. When you ship TL your freight goes straight to its destination via long haul. Unlike LTL shipments, TL shipments do not transfer to other trucks or stop at any terminals mid-haul.
• PTL – partial truckload
  If you do not have enough product to ship TL, PTL is the next step down. Similar to TL shipping, your products will typically stay on one truck from its pick up point to final destination – but is not accessible during the trip.
• LTL – less than truckload (or less than load)
  For many businesses small and large LTL transportation allows you to ship minimal quantities. But for this method to be effective for all parties, the load must consist of a minimum of 1-6 pallets or weigh under 4,000 pounds. When shipping LTL, your items are combined with shipments from other shippers, plus they may be transferred one or more times before they reach their final destination.
• STL – shared truckload
  The STL method of shipping is a hybrid whereby multiple shipments can be combined onto one truck moving in the same direction. This intent is to bypass the hub and spoke system thereby reducing the number of stops. This helps avoid damage caused through the extra handling of a shipper’s freight.

Typical Freight Acronyms

Once you have a freight quote form in front of you, you may find a number of unfamiliar associated acronyms. In order to communicate clearly and efficiently with your logistics partner, you’ll need to be familiar with these common terms plus a few more:

• FAK – Freight of all Kinds
  The term FAK is used to refer to a pooling of different products into one load for the purpose simplification of rating and pricing.
• BOL – Bill of Lading
  As one of the most important documents associated with moving your goods, a BOL is a detailed, legally binding contract between a shipper and a freight carrier. Every BOL includes details that define the names and addresses of the shipper and carrier, shipment description, packaging details, expected pickup date, freight class, and hazardous material designations.
• NMFC – National Motor Freight Classification
  NMFC is a series of classification codes assigned to commodities by the National Motor Freight Traffic Association (NMFTA). NMFTA created the National Motor Freight Classification tariff to help classify all commodities into 18 different freight classes determined by four factors; shipment density, stow-ability, handling, and liability.
• EDI – Electronic Data Interchange
  At the basic level, EDI is the business-to-business interconnection of computers for the rapid exchange of documents. In the freight shipping industry, this would be items like bills of lading, invoices and tracking information.
• FOB – Free on Board
  FOB is a term used to indicate when ownership and liability of goods is transferred from seller to buyer. When used with a physical location such as a shipping port, FOB specifies which party assumes responsibility for the payment of freight charges, and at what exact point title for the shipment passes from seller to the buyer.

• GVW – Gross Vehicle Weight
  Because weight is such an important factor in freight transportation, GVW is the term used to quantify the total weight of the transport vehicle and its cargo. Likewise, GVWR, or Gross Vehicle Weight Rating is often used to express the maximum operating weight of a vehicle as specified by the manufacturer.
• LG – Lift Gate
  A lift gate is a powered tailgate used to lift pallets from ground level to the same level of a truck trailer deck. Many LTL truck fleets have lift gates as do smaller shipper locations with no loading docks.
• DV – Declared Value
  Declared value refers to the monetary value of a shipment as reported by you, the shipper. Being an extremely important declaration, it serves as a disclosure used to determine shipping charges and as a tool to control carrier liability for damage and loss.

Other Terms Used in Freight Management

As the saying goes, “But wait, there’s more!”. The acronyms don’t stop there. Because documentation and performance are an important part of the evolving transportation and logistics industry, you could benefit from a little familiarity with them. Here are a few important terms worth knowing:

• POD – Proof of Delivery / Port of Discharge / Port of Destination
  Having a number of different meanings within the transportation industry, how this term is used depends on its context.
  The port of discharge or destination implies where the container is correspondingly loaded or unloaded from a vessel and picked up by the consignee.
  Proof of Delivery is the paperwork authorized by the consignee indicating the receipt of a load. In this context, a BOL can often double as a POD upon delivery and must be signed for the carrier to get paid.
• CNOR / CNEE – Consignor / Consignee
  More like contractions rather than acronyms, these are fairly straight forward: a CNOR or consigner is the entity sending a shipment, whereas a CNEE or consignee is the entity receiving a shipment.
• OS&D Report – Overage, Shortage, and Damage
  Mistakes and problems do happen therefor they must be accounted for. For instance, a CNEE can file an OS&D report if there are issues with a shipment they received. As implied, an overage occurs when the recipient gets more product than ordered, while a shortage is the opposite. Shipment items that are delivered unusable or unsellable are considered damaged.
• TONU – Truck Ordered but Not Used
  A common result of miscommunication (hence the need for this article) or happenstance, a truck arrives to pick up a shipment, but the load isn’t ready – that’s TONU. If it’s due to your error, you may find yourself having to pay a fine and compensate the carrier for misuse of their time and resources.

As you can see, it’s extremely important to be familiar with these terms and how they apply to your business. It would be wise to take a few minutes and learn them so you get accustomed to seeing and hearing them in context throughout your shipping processes.

Increasing demands on your logistics needs will eventually lead to a partnership with a 3PL service. As a specialist in supply chain management, a well rounded and responsive third party logistics provider can allow you to move your products through the supply chain as your business expands.

Choosing A 3PL Company That Fits

Choosing a good 3PL provider will help to increase your business’ efficiencies, control costs and allow you to concentrate on keeping your customers happy.

Here are the key points to follow, and the characteristics to look for that set the better 3PL providers apart:

Understand Your Own 3PL Needs

Without a clear vision of exactly how you see your business growing, and how your products will need to move through the supply chain, choosing the process of choosing right logistics provider becomes less of a calculated decision and more of a gamble.

Forecasting sales and projecting future shipping volumes should be less guess work and more science as dictated by your known business trends.

In other words, having a better idea of where you expect to be will enable you to choose a logistics company that can grow with you.

Research 3PL Provider Options

With a better understanding of your own business needs, you can filter through the various services and specialized expertise offered by third party logistics providers.

As a shipper, you can use an RFP (request for proposal) to find the best 3PL provider to meet your needs. Better companies will have a track record of reliability, proven processes and stable ongoing relationships with carriers.

Pick A Provider That’s Compatible

Just as individual people have their own personalities, so do businesses – every business’ culture is a product of those who created it. Picking a 3Pl company that aligns with your values will help foster trust and allow better communication.

Between shippers and logistics partners, having a good working relationship from a similar cultural standpoint will certainly prove beneficial when tested.

Know Your Provider Can Accommodate All Your Needs

Rather than spreading your logistical needs across multiple services, better efficiency lies in streamlined touch-points.

A single 3PL provider that has a broad range of capabilities will have greater flexibility in customizing solutions to fit your particular needs, and be able to handle the changes that happen as your business scales up.

Make Sure You Have Compatible Technologies

Over time, the very nature of technology is fluid and changes quickly. Most notably, the logistics industry has seen massive benefits in shipment tracking over the last few short decades. With advancements in WMS (warehouse management systems) and EDI (electronic dat interchange) systems, the movement of products through the supply chain is both sophisticated and streamlined.

Working with a logistics company that can integrate with your systems is a major bonus towards growth and efficiency. Moreover, a good 3PL provider will not only be using current technology you can leverage as you grow, but provide business intelligence on your shipments that helps you make smarter decisions.

They Have the Ability to Scale

A good 3PL service provider will also have the room and means for you to grow along with your shipping needs. Sharing space is a common practice that reduces overhead costs for both parties, but when your own operations scale up make sure your logistics partner has the room and capability to accommodate you accordingly.

They’re Committed to Improvement

Choose a 3PL provider that takes the long view towards improving their own operations and has adopted an attitude of continuous development. Quality management and a commitment to provide excellent client service are assets that will allow you to thrive against the competition.

They’re Agile

Because not every widget that makes up the whole arrives exactly on time every time, there has to be room for contingency. The days of sitting on idle warehouse stock are long gone, replaced by optimizing inventory levels for just-in-time manufacturing and build-to-order solutions.

By leverage postponement strategies, your 3PL partner can help with production flow-throughs and also help reduce inventory carrying costs.

They Have Omnichannel Logistics Capabilities

As mentioned previously, technology is changing the nature of logistics at all levels. Because of the need for shipping transparency, omnichannel logistics technology is unifying inventory tracking , logistics and distribution across sales channels.

Choose a provider that understands the intricacies of omnichannel commerce and how to deliver the best customer experience – preferably with experience with your business or industry category.

They’re Financially Stable

A 3PL company that has a long history of hanging in is one thing, a 3PL company that has a history of growth through reinvesting in equipment, facilities, manpower, systems expertise and financial stability is another.

The results of good management carry a business through the harder times, and as we’ve seen in the last few years anything can happen. The types of third party businesses that continually invest in themselves are the ones you want to do business with.

They Have Location Diversification

Having multiple locations and types of facilities provides a high degree of ability to handle your current and future shipping needs effectively. Thus, a better choice in a 3PL partner will be one that has set up a network of strategically located facilities and warehouses that are already a good match for your shipping criteria.

Focus on Customer Service

It was recently reported that a trucking company Sisu Energy out of Texas, is offering to pay truck drivers “14,000 a week — $728,000 a year” due to a “nationwide shortage of truckers.”

That’s a mighty tempting offer – if it’s true.

The problem is most truckers operate as independent contractors – who are not on salary as the above example would lead you to believe. And the costs of owning and maintaining your rig are considerable – which leaves little on the table.

If There Is A Truck Driver Shortage, What’s Behind It?

Surprisingly the trucking industry has been struggling with a shortage of truck drivers for decades. The lobbying organization for the United States’ big trucking employers, the American Trucking Associations (ATA), has been making this argument since the 1980s, yet store shelves somehow remained stocked.

But in most recent times, the situation has been aggravated by the pandemic as the ripple effects impact virtually every element in the supply chain.

Hence, the aggravated truck driver shortage affects the entire economy as nearly 70% of all freight is moved on North American highways. And due to the demand for drivers, the shortage is increasing driver pay, which can have a significant impact on supplier costs and therefore consumer pricing.

Because the various pieces of “stuff” we all need still have to move from point A to point B, or port to final destination, this bottleneck effect increases shipping delays and shortage at stores.

“If you bought it, a truck brought it”

Truck Driver Demographics and Churn

As mentioned, standard economics implies that if you don’t have enough workers, you raise wages. And within a reasonable amount of time, theoretically, you have no more shortage.

Is trucking somehow broken?

According to a a 2019 study published by the U.S. Bureau of Labor Statistics the labor market is “tight” — meaning that companies are competing to fill open jobs — but it functions in the same way as any other labor market.

The latest average age of a commercial truck driver in the U.S. is 48 years old. And an alarming number of these drivers will be retiring within the next 10-20 years. Without replacing these drivers with competent younger generations the problem will persist.

Digging deeper, the real problem may not actually be a shortage, but the result of a lack of retention. According to the ATA’s own statistics, the average annual turnover rate, or churn, for long-haul truckers has been greater than 90% for decades.

Meaning, for example, if a company has 10 truckers, nine will be gone within a year or, using a different math, three driver positions will have be refilled three times in a single year because so many new drivers leave within a few months.

What About Female Drivers?

As with many socially-skewed labor markets, women make up 47% of the nation’s workforce but only account for 6% of commercial truck drivers. The problem is changing the stereotype in that the trucking industry is perceived as a “man’s” job. Considering the upside of a potentially huge workforce to draw from, it would indeed be a good idea convince women that they are not only wanted but needed in the truck driver career pool.

The Truck Driver Lifestyle

Long-haul truckers commonly work extremely long hours, often 60 to 70 hours per week or more. And drivers are typically paid only for the number of miles they drive, not by the hour. If weather or traffic slows them down and extends their working day, they get paid the same. Plus they’re not compensated for the significant time it takes to load or unload their trucks.

The life of a long-haul trucker also means living out of your truck. Motels are relatively expensive and often don’t have parking for big rigs. Additionally, finding parking to rest anywhere is a growing problem.

Truckers are prone to sacrificing their health; sitting on their butt for hours and hours and eating junk food on the road. A high calorie, high sugar diet can lead to major health problems such as diabetes, high blood pressure and digestive issues. Not to mention the job itself is dangerous: Constantly being on the road means truck drivers are 10 times more likely to be killed on the job than the average worker.

Furthermore, truckers face the pressure to get their freight to its destination as quickly as possible, leading to the chronic problem of sleep deprivation as truck drivers often skip sleep breaks. This takes its toll on the driver both physically and mentally. Mental fogginess, poor judgment, and forgetfulness are all side effects making truck drivers more prone to accidents.

Solving the Truck Driver Shortage

The ATA argues that the “shortage” means the government should relax regulations and make it easier for more prospects to become truck drivers. For example, lower the regulated driving age, this is perhaps the heart of the matter in fighting the truck driver shortage.

The insurance industry and rental car companies know young drivers are much more likely to get into an accident — which is why they charge them more. But the “shortage” would be lessened by drawing from a younger demographic as early as age 18.

Other potential policy solutions that could possibly reduce the driver shortage:

• Increase Truck Driver Pay – Most carriers have been offering pay increases, coupled with a comprehensive benefits package and course or tuition reimbursement options.
• Target Untapped Sources – Trucking companies could look for ways to entice more women, minorities, and veterans. Minorities and Women are an overwhelmingly under-represented group within the trucking industry.
• Decrease Road Time – Take the “lifestyle” issues out of the equation. Make LTL more desirable by decreasing the average length-of-haul and keep truckers more localized.
• Autonomous Trucking – By reducing daily driving stress and boredom, automation in certain sectors is sure to attract younger, tech-savvy drivers to the trucking industry.

Statistically speaking, there is indeed a current driver shortage of approximately 48,000. Without some measure of intervention, we could see a shortage of 330,000 drivers by 2024. Meaning there’s an obvious demand to fill the void, and an opportunity for the right individuals to capitalize on it.

If you’re a qualified and conscientious truck driver looking to work with a company that respects their partners, connect with Brimich today!

Dealing with a single carrier may be easier, but in many situations, overall total shipping costs can be better controlled by leveraging the individual expertise of multiple individual carriers.

In such cases, the logistics also become more complicated. Therefor, in order to achieve the full benefits of multimodal and intermodal freight transport systems, it’s up to you to understand exactly what they are, the terminologies, and how they work.

Multimodal Transportation

Multimodal transportation is a combination of at least two or more different modes, such as air, sea, rail, or road, to move your cargo from one point to another using one single bill of lading for the entire journey.

Since the movement can often be from country to country. but the contracted carrier issues a Combined Transport Bill of Lading or a Multimodal Bill of Lading.

Though it includes the various modes and carriers for transportation, it also means the carrier is fully liable for the entire carriage.

Put differently, multimodal shipping is where one company or one contract handles all legs of the journey. This means the same company is responsible for moving your shipment in all legs, in all modes.

This can be done in a couple of different ways: you could partner with a company that has all of these modes available to them, or set up a single contract for yourself to use an agent.

As a representative, the agent does all the negotiation on the back end for you while you only have one contract to keep track of. The agent could also take on the  responsibility of coordinating loading, unloading, and managing delays.

Example of multimodal transport

As an example, let’s look at a freight shipment moving from Hamburg to Shanghai using multimodal transportation. After the cargo is packed in the containers in Hamburg. the carrier sends their own designated trucking company to pick up the containers and bring them to the Hamburg Port.

After its journey by sea to Shanghai, it’s then brought to its final destination by a trucking company working under the carrier. During the entire process, the carrier takes full responsibility from the point of pick-up to the final destination with one contract serving the entire stretch.

Advantages

The multimodal  transportation method holds several advantages, the first being less cost for you the shipper. Companies that handle multimodal shipping have systems in place to handle delays in one leg of the shipment with respect to the other legs without you needing to be involved.

Therefor, the insulated multimodal system provides a convenient one-stop-shop service where every single aspect is handled by one provider, giving you that ease and peace of mind.

Advantages of multimodal transport:

• Shipment tracking efficiency – continuous monitoring with one transport carrier delivering from door to door
• access to remote parts of the world with responsibility and liability assumed by one transport carrier
• efficiency in delivery time and management
• minimal logistics coordination at the expenses of a shipper

A good example for multimodal transport is Rail-Truck or overland solutions. Carriers like UPS and DHL  are offering such services, for example along China’s Belt-and-Road initiative for goods to move from Asia to Europe.

An additional example is Sea-Air, which is less expensive than air freight alone, but quicker than shipping only.

Relying on one contract minimizes coordination and communication costs for you as a shipper. As mentioned, with Multimodal it’s easy to track your cargo’s progress because you only use one tracking interface instead of several.

Intermodal Transportation

In simple terms, intermodal transportation is defined as the movement of cargo from the point of origin to its destination by several modes of transport where each of these modes have different carriers responsible, each with its own independent contract.

In short, each leg of the shipment is handled by a separate transport carrier. Therefor, the shipper has to deal with several contracts, one with each transport carrier that handles their specific leg of the shipment.

Getting the best routing is not the same as getting the best total shipping cost. Though in some cases, using multiple transport carriers is sometimes better in achieving the best total door-to-door shipping cost. The downside is that it requires more logistics coordination and hands-on involvement.

Example of intermodal transport

As an example, let’s say you need to move a large amount of freight to another site, and both sites are land locked and on different continents.

This could mean that in order to move your cargo, you’ll need to contact a trucking company to transport your shipment by road to a rail yard. Once the shipment is delivered to the rail yard, it then moves by train to a shipping port.

The freight is then loaded onto a cargo ship and moved overseas to another port. From there it’s unloaded and moved to another rail carrier.

To complete the journey, the shipment is trucked from the rail yard to your final destination location.

As a result of using intermodal shipping, each leg of that shipment is handled by a separate company. This means you have to have several contracts, one with each carrier to handle their specific leg of the shipment.

Advantages

The advantages that come with using intermodal transportation. One of which the ability to negotiate terms separately with each company.

The downside is it comes at the cost of more overhead for you. You’ll need to keep track of several contracts with different companies. And you may be responsible for managing delays, as one company may be blind to the delays another company might be having.

Advantages of Intermodal transportation:

• Shippers can negotiate lower rates for each transport leg
• benefit from flexibility and specialized handing of goods at different ports
• reduce their carbon footprint by choosing environmentally friendly carriers
• more access to equipment, control capacities, and select transit schedules

Is Multimodal or Intermodal Transport Better for You?

Both Intermodal and Multimodal freight transport systems have their own advantages and disadvantages with one element setting the two transport modes apart: with Multimodal you sign only one contract, and with Intermodal, more than one.

The two modes of transport optimize delivery times and reduce shipping costs. However, many businesses tend to favour multimodal transportation when balancing cost and convenience.