Jadd Freight Services

The summer of 2011 has come and gone since I wrote part 1.  In part 1 I discussed some of the market conditions that are affecting higher freight rates.    As we enter October 2011 fuel prices have for the most part remained above average costs.  Fuel prices are not fluctuating as much on a week to week basis. For the past couple months, the spot market pricing has truly been driven by supply/ demand of the lane.  Some lanes are demanding premium rates while other lanes with higher volume of available trucks and lower volume of freight continue to put downward pressure on rates.  When carriers are forced to take below cost freight rates, these carriers have to charge extra on the return trip to ensure they remain profitable on the round trip.  The battle of supply/demand of available freight in a given lane vs. available trucks for that lane will continue to be driving factors determining the rate/ mile.  How can shippers reduce their freight costs in the market place?

Here is a list of idea's that shippers can consider to reduce freight costs:

Regular Lanes = Negotiation Power 

If your company is currently shipping truck loads in the same lane either as a single pick-up and single drop or as multiple pick-ups or drops, this is your opportunity to negotiate a lower rate.  How to do this?

1. Identify how many loads per year are shipping for each lane.  

2. Use the last  3 to 6 months of actual loads shipped out, plot out on an excel sheet or calender the days of the week you have shipped out to determine any trends.  If you are shipping out say 20 loads a month for a given lane, are you shipping them equally during the month or do they get pushed out the last two weeks of each month.  If you see that you are always having big month end pushes, now is the time to have some planning meetings with your suppliers/ sales/ production/ warehouse/ and most importantly your end customers.  Identify opportunities to establish advance ordering to create a consistent shipping schedule and guaranteed volume.
   

3. If you are able to establish a regular shipment schedule, example Tuesday and Thursday every week, now you are in a position to submit an RFQ to freight brokers to negotiate a consistent base rate + fuel surcharge.  The ultimate goal is a contract for consistent pricing.  However, in exchange for a freight brokerage to lock in lower rates, you are required to have a consistent shipping schedule and guaranteed volume. 

Negotiating contract rates can be a great strategy for high volume lanes but for many shippers the product being produced or distributed does not allow for advance planning.  Many products are subject to the demand of the end customer and can only be planned from one week to one month in advance.  For this situation, if you are still shipping full truck loads, your freight broker is their to negotiate the best spot market rate on your behalf.  

Consolidate LTL shipments

If you are purchasing products as LTL (Less than truckload) shipments from various suppliers, take the time to plot on a map where your suppliers are located in relation to each other.  If you can establish that some of your shippers are close to each other, look at opportunities to order from these suppliers at the same time.  Do the same for your outbound shipments.  Plot out your customers who order LTL and see if any are close together.  If so, work with your sales people to try and have these customers order at the same time. This could not only save money on consolidating the LTL freight but possibly make some efficiencies in your warehouse or production planning.

Contact a representative at Jadd Freight to see how consolidating LTL shipments can reduce your freight costs. 

Rail vs.. Road

There is money to be saved when shipping by rail but rail is the slowest method of transport and rail can't service all points.  I have managed projects where we shipped 80% of the loads by rail and 20% by road.  The added bonus of shipping by rail is the reduction of CO2 emissions. Contact a Jadd Freight Representative to see if rail is a viable option for your company and your customers needs. 

Customs documents and paperwork

To avoid driver wait time at the border or extra charges by your customs broker, ensure the customs documentation is accurate. I will discuss what is needed for successful border crossing in a future blog.  Best advice I can provide is when you are working with a new supplier or customer, take the time to triple check all customs documents are correct before sending the truck to pick-up the shipment

Human Errors, Damaged product, and waiting time can be costly

• We are all human and errors do occur but the hope is when they do, it does not cost the company money.  Things like loading the wrong product on the truck can make a shipment costly.  I have experienced shipments where 3 hours after a driver has been loaded and left the shipper, I was instructed to have the driver drive back 3 hours because the wrong product was shipped adding extra costs.  Some shipments arrive at a consignee to be found out the wrong was product loaded or produced.  Again, someone has pay to get the product exchanged.  These situations are never planned but if errors occur on a regular basis maybe some extra checks need to be in place to ensure the correct product is being loaded.
• Damages is something no one plans.  Some damages that occur are due to poor packaging, other times it is the carrier not taking care if the shipment is being cross docked.  If damages rarely occur for your company that is great. However, if your company has had several freight claims in the past 6 months, it might be time to focus on the reason.   In the event there is damage on a shipment, it must be noted on the bill of lading at the time of receiving.  If nothing is noted on the bill of lading when consignee unloaded the shipment, the carrier will not accept a claim after the fact.  If you have any questions about this contact Jadd Freight services. 
• Driver wait time can add extra unplanned costs to freight.  Nobody likes to wait around and many carriers will charge after an initial free period of time for loading or unloading.  The industry standard for Full truck loads is 2 hours free at the shipper and 2 hours free at the consignee.  If loading or unloading take more than 2 hours, the carrier will charge back hourly wait time.  For LTL shipments via common carriers, they generally allow 30 minutes free load and unload time.  For Private carriers doing LTL will generally allow 1 hour load and unload time.  My best advice is to know the conditions set out by the freight broker or carrier.  One of the key services Jadd Freight offers is advance planning.  We will contact your consignee to confirm unloading arrangements and any restrictions the driver will need to know prior to arriving.

I hope some of these tips are helpful to your company and give you some idea's to potentially reduce your freight costs.  I encourage you to contact a Jadd Freight Services Representative with any questions and how we can review your freight needs and identify how to possibly reduce your freight costs.