Do you use Logistics contracts, or do you buy on the spot market? If you spot buy, I’ll bet that’s been painful lately.
The current commercial transportation market is a “mess” right now. “Mess” is a technical term; it means everything is going in the wrong direction. Capacity is hard to find. Rates are going up by leaps and bounds. Service levels are dropping like a stone. Carrier relationships are becoming frayed. It’s just a “mess” out there in the logistics space.
If you have annual contracts in place with your transportation providers, then you are somewhat insulated from the vagaries of the marketplace for right now. Eventually as the environment persists, and it will, this will catch up with you too. Regardless of your contracts, you may still be seeing carte blanche service embargoes from the LTL segment. These have hit a broad base of shippers and 3PL’s, no matter their size and scale. Depending on your location the pain could be severe as you scramble to change carriers (if that’s an option) to get capacity to handle your freight.
If you buy on the spot market, good luck and God bless! First off, you must find a truck to haul your products. Then you must live with the price of the truck. Truck rates have gone thru the roof, with no end in sight right now. It’s a trickle-down effect. As the truckload segment gets maxed out, the freight shifts down to more expensive modes like LTL (less than truckload). As LTL gets overwhelmed the same thing happens to parcel. Networks get out of balance; rates continue their march skyward and good service levels become a thing of the past.
How did this happen? In a macro sense, it’s a simple equation. More freight, less drivers, and workers to handle it. Carriers furloughed drivers anticipating that the Covid pandemic would persist, and freight volumes would reduce for quite some time. The opposite happened. Freight volumes dipped, then came roaring back. Carriers could not adjust their pools of labor, drivers, dock workers, etc., fast enough to compensate and the network became overloaded.
When is it going to change back to the “good old days”? Not sure about the when, but if I were you, I would plan for the long haul well into late 2022.
What can you do about the spot market if that’s where you live? Tap into a reliable 3PL who already has contracts in place and can provide you with consistent rates for FTL, LTL, Parcel, and Intermodal (if you use it). 3PL’s typically negotiate their rates in annual contracts. Because of this they can provide you with rate stability. The biggest problem in business is dealing with the unknown. If you cannot predict your costs, then you cannot predict your future. A 3PL solution to the current mess is a step in the right direction to controlling your logistics costs.
Jim Durfee – Vice President Business Transformation
If you would like more information on our consulting services please call at 804- 474-7700 Option #4
Riverside Logistics Celebrates 25th Anniversary!
Riverside Logistics is proud to celebrate its 25th anniversary! A lot has changed since 1996. Gas prices were $1.23 gallon in 1996 and the median home price in 2000 in Virginia was $125,400.
What started out as a dedicated service trucking company for one customer developed into meeting the need for warehouse services. As that customer grew, others soon followed. Riverside Logistics quickly realized that offering Transportation and Warehouse solutions together added value to their growing client base. As time passed, a fleet of trailers and additional warehouse locations were required to continue meeting customer demand.
Today Riverside Logistics currently manages over 1,000,000 sq. ft. of warehouse space and recently purchased a 183,000 sq. ft. warehouse on South Laburnum Avenue near Richmond International Airport. They work very closely with the growing world class Ports of Virginia and have warehouse space near the Richmond Marine Terminal. And recently, Riverside Logistics expanded their list of services by offering the management of warehouse operations for individual clients in their facilities.
Warehouse services combined with an extensive Transportation Delivery Network provides clients with comprehensive solutions that are critical during supply chain challenges. Our fleet of trailers reduces cost and increases productivity. We look forward to the next 25 years as we continue to expand. We are grateful for all the clients who have allowed us to provide logistics solutions and are excited about the future. This is an exciting time for Virginia and Riverside Logistics!
Capacity Load Freight: More Prevalent and More Expensive
LTL carriers are experiencing a significant increase in large shipments, due in part to tight capacity in the US truckload (TL) and less-than-truckload (LTL) markets. While capacity freight currently applies to a smaller percentage of shipments, that number is growing steadily.
Please be aware of the general capacity load rules and charges that (may) apply to larger shipments.
Capacity loads apply when the quantity of freight, in the manner loaded, utilizes a linear length of between 8ft and 15 ft. Some carriers also have weight limits that trigger capacity loads. The weight limits range anywhere from 8,000 to 15,000 lbs.
The linear length is determined by assuming that handling units will be loaded side-by-side when the dimensions allow. So, if you ship 48 square or 48 x 40 inch pallets then 8 pallets will hit 16 ft. You might argue that if you specify that the freight is stackable, one on top of the other, then you could have more than 8 pallets and still not trigger a capacity load situation. Don’t bet on that!! Most LTL carriers consider the entire load as floor stacked when calculating the linear footage. The point is, be careful. Another scenario is if your pallets are “turnable”, meaning they can be turned so the length is shorter. In this case, if you have 8 pallets that are 40 x 48 and are turnable, then, in theory, the length would be 4 times 40” or 13.33 ft rather than 4 x 48” or 16 liner ft. Although this can make a difference in how pricing applies, be careful. Make sure that you understand how the particular carriers’ rules tariff applies to linear feet.
So, what to do?
One suggestion is to have a 3PL handle the move. There are two strategic advantages to do this.
- 3PL’s are well versed about the rules and how they apply.
- They will quote you a price that applies, even if they have mis-calculated
Many 3PL’s have negotiated higher linear foot rules with their carriers and this allows them to get more competitive pricing on larger loads. If you are a “cubic” shipper, one who ships pallets loads that don’t necessarily weigh a lot but take up a lot of “cubic” feet, then using a 3PL with higher linear foot rates could really help you.
Capacity Rules and Linear Feet can make freight costs go up significantly, potentially causing a shipment to cost more than it’s worth. Using a 3PL on large LTL shipments allows you to take advantage of the 3PL’s basket of carriers and competitive price structure without risking unpleasant freight costs.
How can a Richmond, Virginia based Third-Party Logistics company help reduce your local delivery cost while improving service?
2020 vision has been anything but clear! Especially when it comes to your freight cost and service levels. As companies evaluate different business options, working with a third-party logistics company (3PL) on a local level can be easily overlooked. Because a Third-Party Logistics company has numerous truck routes and lanes that are created by serving multiple customers there is a good chance that they have a local service that could save you money, and improve the flexibility and reliability of your shipments. Below are a few ways that a 3PL can help provide cost saving solutions for your local freight!
Local Routes
Local deliveries range between 0-250 miles from origin. A local 3PL with a variety of customers and deliveries has many options for their customers.
For example, loads shipping out of Richmond, VA for delivery down in the Tidewater area will match up with a local load coming back to the Richmond, VA area. Also, we may have 2 or 3 other customers we can consolidate on the Richmond truck either on the head haul or backhaul. Depending on the size of the load, it may fit on 24ft box truck vs a 53ft trailer which could offer savings.
Another advantage of local routes is accessibility. This includes last minute daily pickups and emergency pickups because drivers are delivering within the local area. A 3PL can also drop trailers at a customer’s location for convenience for loading or unloading their product. Some customers with limited warehouse space utilize drop trailers for storing product at their location or at the 3PL’s location. Matching resources is one of the many ways a 3PL provides value allowing companies to be very flexible in a dynamic market, providing just in time deliveries, and capturing opportunities that may not be able to with your current resources.
Cross Dock
Another advantage of a 3PL with warehouse assets is the ability to cross dock product. Example: An inbound truckload shipment comes in and our customer doesn’t have time or space to unload it. A 3PL can provide this service as well as coordinate transportation that will maximize savings. Another opportunity to utilize cross dock services is receiving ocean containers to be unloaded and reloaded into a 53’ Dry Van for final delivery to the customer. This same scenario would apply with rail cars. Customers can take advantage of lower rail rates and have product deliver via rail for storage at a 3PL facility and then trucked for customer delivery. Cross docking is a great short-term solution to reallocate your freight quickly, efficiently, without limiting your resources.
Drayage
A 3PL has the ability to flex up or down depending on the volume of containers arriving at the port. Businesses may not always have an available driver and truck to retrieve containers from the port nor space to store the container for efficient processing. 3PL’s can often store your container at their facility to save on port demurrage fees then unload and handle for final delivery to the customer. A 3PL can often provide this service for both IMPORT and EXPORT loads.
Riverside Logistics can provide all these services for you so your resources can be utilized to focus on your business not the business of moving freight!
