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August 23, 2022 by Logistics

When should I consider using a different mode for my domestic freight?

First, let’s go over what the domestic modes of transportation are. In commercial transportation there are 6 modes of note: Truck, Rail, Water, Air, Pipeline, and Intermodal. In this article we will be discussing all of them except pipeline.

Domestic Water and Rail transport usually revolve around bulk commodity movements.

Water/Barge traffic moves commodities like sand, coal, paper, lumber, stone, chemicals, and ash. Rail does too. Rail moves a significant amount of coal and other mined products. Most railcar fleets consist of flatcars, hopper and tanker cars used for handling chemicals, wood, stone, coal and mined product, dimensional lumber, and timber. Very little rail traffic is in boxcars. In fact, the railroads are not really building or leasing any new boxcars for their fleets. They have determined that the money is to be made in bulk commodities, particularly coal. Domestic water traffic handles (mostly) bulk commodities as well. Both Rail and Barge traffic are usually used when the commodities being handled are low in value and in bulk form. Tradeoffs between water and rail depend a lot on access to each mode, and whether time in transit is a concern. In addition, seasonal factors can come into play.

Water

Domestic water traffic shuts down when their bodies of water freeze or flood. There is uncertainty in delivery times attached to the water mode at certain times of the year, primarily during winter and spring. These can be disruptive to travel schedules. So, if consistency of delivery throughout the year is a concern, then waterborne traffic will be problematic during certain times of the year. Water has some inherent advantages over other modes. It can handle significant weight with little change in operating cost. The added cost of another barge in the tow is minimal. Water can charge extremely low unit costs for transportation. Their costs per ton mile as a unit of measure are the lowest across the modes (except pipeline, which we won’t discuss here). If you have access to water transport and produce a bulk commodity, such as those listed above, then it is a viable form of transport and should receive consideration. If you would have to truck product to the on-load and off-load sites to use water transport, then those costs must be factored into the equation, as does the cost of managing multi-modal interchanges to get product from A to B.

Rail

Rail on the other hand, doesn’t have a seasonality issue like water. It does have an access issue, in that, without railroad spurs at your Distribution Center (DC) or your manufacturing site, you would have to move product to and from the rail siding by truck. That also holds true for the delivery sites as well. Once again, a potential added cost that needs to factor into the equation. Rail moves, steel wheels on steel track, is much more cost effective than trucking when you consider the length of haul. The rule-of-thumb is over 1000 miles rail is much more effective than truck. One rail car can usually haul as much product as 4 trucks. One train can usually carry the equivalent of 400 trucks. Rail is the cheaper alternative on land versus trucking. However, trucking can pickup anywhere and deliver anywhere. Rail cannot. Trucking can also move product faster than rail. For example, a typical coast to coast shipment will take between 7 to 10 days via rail. That same shipment will take only 4-5 days by truck, even faster (2-3 days) if team service is used. Truck has a decided advantage over Rail for time sensitive shipments and on movements of perishable goods. Since truck is faster, the integrity of the movement will be better as well. Less opportunity for shrinkage or damage than rail. Rail can’t compete with truck for short hauls of less than 500 miles. Truck can’t compete with Rail for bulk goods and long-haul freight that is not time or travel sensitive. There is an alternative in the middle. It’s called intermodal, and simply put, it takes advantage of the best of both modes.

Intermodal

A truck picks up the load, it then goes to a rail yard and the contents (usually a container) are then loaded onto a rail flatcar designed for this purpose and moved close (as close as possible) to the destination, where the contents are then put on a truck for final delivery. One key factor is how close the rail pickup and delivery sites are to the actual shipping locations. The closer the more competitive intermodal becomes to truck.  This mode is perfect if you want to move product faster than normal rail, since intermodal trains are typically setup to run thru the system faster, and if you want overall costs lower than pure truckload. Intermodal looks like trucking to the shipper and to the receiver but utilizes the advantages of rail for the largest segments of the movement. One caution with intermodal is that you can’t stop an intermodal shipment while it is on the rail. So, if you change your mind or need to re-reroute it, you usually can’t do that until it completes the rail segment of the journey. With truck you don’t have that issue, it can be re-routed or stopped at any time.

Air Freight

The last mode available is AIR freight. Air freight is the most expensive mode; however, it is also the fastest mode from point A to B when the distance is over 500 miles. If time is the enemy for your freight, then air freight makes sense. Usually, products that are most conducive to air freight are high value, time sensitive products that must be at the destination as quickly as possible. Think computer parts as an example. Air freight movements are not usually large either. Typically, one to three pallets.

Mode Mix

When considering your mode mix you are basically balancing time and place utility against cost. When comparing modes make sure you look at total cost, which includes cash cycles due to terms of payment. Truckers are more lenient than railroads for example. Also look at damage and loss factors, inventory requirements, reliability, and flexibility.

Parcel Ground vs LTL vs Truckload

I will now take a deeper dive and compare Parcel Ground vs LTL vs Truckload. There are some key considerations to make in these evaluations. Ground parcel has what’s known as hundred weight programs for shipping amounts over 150 lbs. These programs make a competitive run at pure Less than Truckload shipments in the 200 to 500 lbs. range. After that, LTL usually is cheaper and a better choice. At the same time, LTL has what’s known as volume rates for shipments over 6 pallets that allows them to try and compete with truckload when the shipment size goes above 10 pallets. In most cases, if you are shipping over 12-13 pallets you are better off cost-wise to use truckload service. There will always be exceptions to the above, so use these as general guidelines only. However, it is important that you explore your options and use those options that provide the best fit to your shipping needs.

How a Third-Party Logistics Company (3PL) can help.

One alternative to making your own selections is to let a 3PL, like Riverside Logistics, handle your shipping needs. They have the tools and experience necessary to make optimum routing and mode selections for any client. Their Transportation Management Software allows for efficient and effective routing applying cost and service parameters geared specifically towards your business model. If you would like more information regarding what Riverside can do for you, please call us at 888-999-0734 and a Logistics Management Consultant will be happy to assist you.

Filed Under: News & Events, Third-Party Logistics (3PL), Transportation News Tagged With: #PL, Air Freight, Domestic Water and Rail, Freight Options, How a Third-Party Logistics Company (3PL) can help, Intermodel, Mode Mix, Parcel Ground vs LTL vs Truckload, Rail, Rail Intermodel, Richmond, Riverside Logistics, Third Party Logistics, VA, Virginia, Virginia 3PL Services, Virginia Ports, Water

February 5, 2021 by Logistics

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.

Filed Under: News & Events, Transportation News Tagged With: Air Freight, Certified Transportation Broker, E-Commerce Industry, Food Warehouse, Freight Brokers, Freight Services near the Virginia Ports, Full truckload (FTL), Less than Truckload (LTL), Manufacturing Industry, Pharmaceutical Freight, Richmond, Riverside Logistics, Seasonal Freight, Virginia, Warehouse

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