Riverside Logistics

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What is Expedited Freight, and Who Uses it?

Expedited freight services are utilized by shippers to deliver goods to the customer on a specific date and sometimes at a specific time of day. Overall standard, non-expedited, transportation services have delivery accuracy rates that can range from a high of 98% to less than 50% on-time.  This fluctuates based on overall industry capacity and individual carrier management.

The most common mode for expedited freight to move is by air. Freight is picked up and delivered by truck but ends up travelling most of the distance by plane. If possible, expedited freight can be driven in various types of equipment. Of course, the shipment must cross a drivable distance within your timeframe, so sending freight this way only makes sense for short distances (usually less than 500 miles).

The challenge with sending expedited freight by air charter or road is that it is more expensive than standard freight.  Premiums can range anywhere from a 20% to 3 or 4 times the amount normally paid for a standard transit shipment.  Shippers use this method only when it is necessary to maintain customer commitments.

There are six major industries that frequently utilize expedited freight companies for a variety of reasons.

  1. Medical Industry – Used when valuable devices cannot sit in the back of a freight vehicle for long periods of time.
  2. Pharmaceutical Industry – Advantageous for  patients who rely on their medications for survival allowing them to receive  them immediately.
  3. Manufacturing Industry – Meeting deadlines is often a challenge. If parts do not come in on time, projects can get delayed or whole operations can be shut down.  Depending on the size of the operation those costs usually outweigh the cost of the expedited freight.
  4. E-commerce Industry – Retail stores are growing tremendously, and many of them offer their products online. Several big retailers also offer fast shipping options, including two days, overnight, or even same day delivery.
  5. Seasonal – This industry sells most of its products once a year in holiday-themed pop-up stores. With the help of an expedited shipping provider, business should not be running out of stock when customers are buying the most, which helps cut down on inventory costs.
  6. Perishable high value food – For expensive high value food products like Ahi Tuna, getting product across the world in hours instead of days ensures the food can be consumed within hours of receipt.

Expedited freight is used to make sure cargo gets to its location as soon as possible. It is important to consider the increased cost of expedited freight with the cost of not having the product at your location when it is needed.  If you need this type of service reach out to us.  Riverside Logistics can help match your needs with the best value expedited service.

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What is Supply Chain Management?

Supply Chain Management- Warehouse & Transportation, FreightListening to the news the other day I was struck by the fact that there is a Cabinet Level position for Transportation, rather than for Supply Chain. Do not get me wrong, transportation is important, it provides time and place utility to everything. Whatever we make and consume is impacted by our transportation system. But why isn’t there a Secretary of Supply Chain, rather than a Secretary of Transportation? There is a difference. Supply Chain encompasses the entire spectrum of activities surrounding the movement of goods. We are talking storage, transportation, regulation, infrastructure, technology, and much more. Managing a supply chain in today’s world has become more important and more complicated than ever.

What is the Supply Chain? Let’s start with what it is not. It is not the demand for goods and services. It is not the manufacture or development of products, processes and services. What is it?  It’s the manifestation of all the physical aspects of satisfying demand thru the physical movement and storage as well as the information flows, data accumulation, analysis, decision-making and use of this information to move, store, deliver, and pay for demand.

Economics revolves around the relationship of Supply and Demand. Supply Chain revolves around the components associated with Supply to support Demand. One fifth of the world’s economy is tied up in SUPPLY CHAIN activity. One fifth!! It’s important and impactful to just about everything and as trade continues to become more global, so does the supply chain.

Here is a current example of how important the supply chain can be. It also shows how many touch points and how many things need to go right, for it to function effectively. Riverside Logistics, as a third-party logistics company based in Richmond, Virginia, manages the distribution of goods for a number of companies in the medical supply business. In the current pandemic environment, these companies are manufacturing and selling the masks needed by everyone to protect themselves. These masks consist of materials that are sourced from many countries across the globe. These sources are tapped into to provide the raw materials to create masks. The paper, the fabrics, the elastic, etc. These materials are “sourced”, then “procured”, then “shipped” to a manufacturing location, then combined into a mask, then stored until ordered, then shipped, then delivered, then re-shipped, then purchased and finally (then) used by a consumer or end-user. Possibly, even sent into a reverse-logistics system and sent back somewhere for destruction or re-purposing. Is your head spinning yet? All the pieces of this process are part of a “chain” of events, with many moving parts, involving “supply”.  Each link in the chain is a distinct and necessary piece of the overall creation of time and place utility relevant to the goods being made.

Obviously, the Supply Chain is important. How well it functions from a cost, service and capability standpoint determines the overall quality of the “Chain”. Usually the utility of the “chain” is derived from the tradeoff between cost and service. “When” and the “How Much” are key decision-making components considered in the Supply Chain. However, there are other equally important aspects to the chain. Their importance depends on the goods in question, their value, the time of year, the criticality of speed to market and many other important factors.

Supply Chains can be relatively simple or they can be quite complex. There are a myriad of rules, regulations and practices that revolve around executing a quality supply chain. That undertaking can be quite substantial. A third-party logistics company usually can provide services that improve your supply chain, because that is their area of expertise.  They review many complex supply chains in whole or in part depending on the client, their business practices and the role where they can provide value. The key is to improve the supply chain and to provide a client with a competitive edge. Clearly a well-executed supply chain can have a substantive impact on the client’s ability to maintain a strong competitive posture in their business environment. You can make the best products in the world, but they have no value if you cannot get them to the end-user when they need them. Time and Place utility!!

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LTL carriers struggle to move freight

Between the effects and protocols related to Covid-19 and the overall lack of capacity in the trucking market, the carriers are struggling to pick up, move and deliver freight. Over the last 6 weeks we have seen an escalation of this problem, with every week growing successively worse. Now, LTL carriers are either selectively quoting volume moves or have abandoned volume quotes altogether. They are doing this in the “short term” because their pipelines are over capacity and they simply cannot handle any more freight.

So, what does “short term” mean? Could be a couple of weeks, a couple of months, or possibly even longer. This current situation of tight capacity has come about, it appears, due to several factors that have all combined at the same time to exacerbate the situation.

Covid 19 caused a lot of carriers to retire early, furlough and or layoff drivers, not knowing how severe or how long the lockdowns would last. This drained some immediate driver capacity, which is hard to replace in a short amount of time when staffing needs now require more (new) personnel. Shutting down then re-igniting the driver recruitment process takes time. Probably a full quarter or more. In addition, when a terminal in the LTL network has a Covid case or two, or three, or a relative of the workers is in contact with Covid infected individuals, based on protocols, it takes those people out of circulation for at least 2 weeks. This too, strains the labor force and makes it that much harder to operate a terminal and a network. Some carriers have had to embargo certain nodes in their networks to play “catch-up”. When these embargoes (they do not call them that but that is what they amount to) happen, it effectively shuts off the flow of freight in and out of region for a period of time. This has the net effect of straining the capacity of other carriers operating in the same area and or delaying or stopping freight from moving as it normally would. The net impact is more stress on the supply chain.

When the network gets backed up, these backups tend to cascade down thru the various modes of transport. When intermodal rail backs up, then over-the-road trucking backs up, then LTL backs up. Costs rise, sometimes precipitously, and service levels usually go the other way and fall off. The infra-structure simply cannot handle the volume and delays happen. LTL carriers not only pickup and deliver freight they also “line-haul” it. With driver recruitment on hold, carriers are going outside their own networks and “brokering” trucks to handle the line hauls between nodes. Naturally, this takes brokered capacity out of the system, thus making it harder for pure brokers to find trucks to fill clients needs. You can see from this example, that it becomes a “Domino Effect”, where changes in one mode affect others and so on and so on. Everybody pays with lower service levels and higher costs.

The net effect right now is that freight costs are going up in the short term until the capacity equation (supply and demand) returns to an acceptable level. Service levels, which equate to days in transit are also going to lengthen in the short term. Shippers are not going to react favorably to this environment. Budgets will be broken, customer service will degrade, and the norms for conducting business will be altered. All of these “effects” will hopefully last only for a short period of time rather than an extended period. So back to the question ‘ how long will it last”? Good question, which unfortunately has no good answers to go with it. The market will eventually return to some semblance of “normal”, it always does.

The big question is how long it will take to get there and what can a Third-Party Logistics (3PL) do to help? A 3PL normally has multiple client-related contracts with multiple carriers. They (3PL’s) usually can flex modes up or down across multiple partners, to get you, the client, the best mix of desired service levels and cost. Riverside deals with many clients and uses many carriers. This means we have a lot of experience determining who does what better than the other guy. In a pinch, we have very close and effective working relationships with the carriers and can usually make thing happen, when a client can’t. So the bottom line is that Riverside can provide “workable” options to a client to help them navigate the current freight environment and provide a service and cost equation that meets their needs.

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Are your freight costs going up?

If so,  you are not alone. The recent disruption in supply chain due to Covid-19 has been challenging and well documented.  Being able to ship product on demand is a basic business need. The challenge in today’s environment is lack of predictability.  As Covid-19 cases increased, demand for food to restock grocery stores rose dramatically, while demand for food from restaurants and hotels slowed drastically. This shift is just one example of an extraordinary change in freight demand. As demand goes up, prices go up. As demand goes down, prices go down. When both are happening at the same time…it can be very challenging. 

A third-party logistics company can help relieve some of this stress because of the volume of freight they handle and their close monitoring of truck capacity. This volume means they have strong relationships within the transportation industry and warehouse space at their disposal to help provide solutions that many transportation companies cannot offer. A strong 3PL team is dedicated to finding solutions for their customers often in unexpected ways. A 3PL can help “flatten the curve” of your freight cost and reduce the heartburn that comes with high price volatility. Below are a few specific ways a 3PL can help when your freight costs are going up and your demand for freight is changing rapidly. 

  • Local Delivery – 3PL’s have trucks running every day within a 150-mile radius of their location to serve multiple customers. By putting multiple clients product on one truck the cost is reduced for all. As a matter of fact, when more clients that have different products going to the same locations (Example: hospitals) everyone saves money and reliability increases. 
  • Dedicated Lanes – If a 3PL has a truck shipping freight from point A to point B for one client and finds another client who needs product shipped from point B to point A, then the 3PL can “match” the driver and truck with the loads. Everyone benefits from this relationship. More predictability, lower cost, and a knowledgeable and reliable driver who knows what you need and when you need it.
  • Drayage – International shipments, whether exports or imports, can be difficult to time with respect to labor.  A 3PL can help by not only picking up TEU’s (containers) from the port but they can either transport directly to your warehouse or client, or they can cross-dock the product (usually less than a week) at their warehouse to allow more time to find the lowest freight cost available. The Virginia Ports and the Richmond Marine Terminal are very attractive options because of their locations on the East Coast.
  • Change in Mode – Another example of how freight costs have shifted dramatically is in the airlines. The cost of using passenger airlines to ship freight internationally has increased because the number of passenger flights has dropped substantially .  Before, freight was added  to flights that were frequent and reliable so capacity was available at a reasonable cost. Now, with so few flights, there is a  significant decrease in freight capacity.  Shipping internationally may require dedicated freight flights often with an expedited focus which comes  at a much higher cost. How is  this problem solved? Maybe  with a shift in mode of transportation! Instead of Air freight maybe the shipment travels internationally by ship, or domestically by rail or truck. Obviously, timing can be a factor that needs to be taken into consideration. Low Air Freight may be a long way in the future but a 3PL company  can help.
  • Flexibility – A 3PL has many solutions to choose from to help lower your freight costs and offer cost savings from unexpected places. As you navigate the uncertain future cost of freight, it only makes sense to develop a partnership that focuses on reducing costs to help you navigate the challenges ahead.

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Riverside Logistics is a third-party logistics and supply chain management company providing a full complement of third-party logistics, transportation and warehousing solutions.

Riverside Logistics serves the Medical, Food, Chemical, Paper and other mission critical industry sectors.  Riverside Logistics has owner operator’s and dedicated lanes, with routes throughout Virginia, the Mid-Atlantic and the Southeast. Riverside Logistics offers pooled distribution and consolidated delivery services throughout the 48 states that can save you money. They are headquartered in Richmond, Virginia. To contact Riverside Logistics for a quote call 1-804-474-7700 Option 4 or click here.

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Where does a Third-Party Logistics Company (3PL) enter your supply chain?

This is the question many shippers ask, and the answer is anywhere!  A 3PL facilitates movement from origin to storage to final distribution to returns so you can focus on your business and not the business of logistics.  

Let us start at the beginning.  Where are your goods manufactured?  If they are offshore, then your process starts at the port of entry and you will need transportation from the port to your facility or for storage prior to distribution.  If your goods are manufactured domestically, then will your goods be ready for shipment at time of manufacture or do you need pick, pack, and storage services?  Often, all the services outside of manufacturing can and should be outsourced for efficiency and cost savings. 

Moving on through the supply chain, the goods are now ready for distribution.  Most goods will have a short storage period prior to final shipping and space is a valuable commodity in a manufacturing plant.  A 3PL can provide the flexibility for warehouse space needed whether it is just cross docking or preparation for seasonal upswing. 

Finally, the goods are ready to be shipped!  Third Party-Logistics Ccompanies can customize solutions for your supply chain whether it’s kitting or specific packaging. Also, you will have a wide carrier selection to ensure you are utilizing the most effective method. A 3PL’s total volume will ensure competitive rates for full truckload, Less than Truckload (LTL) or small package shipments.

In addition, recommendations can be made for mode optimization and pooled distribution leveraging the volumes of other customers.  This provides the shipper options they cannot negotiate on their own.

All these steps can be managed by your 3PL and you can engage them for one service1 or all.  Regardless of where a 3PL enters the supply chain, they will add value, efficiency and cost savings. Lastly, a 3PL reduces your risk allowing you the flexibility to manage your supply chain without the additional capital needed for brick/mortar.  You can produce higher rates of return by investing in your core business!

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