California looks to pass new bill ending trucker misclassification. State Senator Ricardo Lara, who represents the Port of Long Beach, proposed bill, SB 1402, would create a public list of companies that committed labor violations and failed to render payment to truckers. Retailers who use carriers on the list could then be liable for any future state labor, employment, and payment violations. Such a move would hold major shippers like Amazon and Apple accountable for using trucking services known to commit wage theft. “Port-trucking companies that rip off their workers and are caught in the act often go out of business then pop up under a new name to avoid paying what they owe,” Senator Ricardo Lara told The Nation. “It’s a cycle of exploitation that is driving down wages for many of the 25,000 California drivers who haul for some of America’s biggest retailers.” The bill closes a loophole where carriers pay their truckers as independent contractors to avoid paying hourly wages, insurance, and other forms of compensation.

East Coast imports hit all-time record high in June. The top four eastern seaports saw volumes up 7.31% YoY. Spurred by the Panama Canal expansion in 2016, East Coast ports have invested heavily in improvements to accommodate post-Panamax vessels. That combined with retailers trying to beat trade war tariffs could be the main drivers of the record increase. Despite the elevated container volumes, the 16% increase in spot rates from China to the US indicate normal peak season volumes can be expected.

Imports to US major retail container ports on track to set more records as retailers aim to get ahead of trade war tariffs. June and July both broke records for containers imported in a single month while August projections look to as well, according to the monthly Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates. “Tariffs on most consumer products have yet to take effect but retailers appear to be getting prepared before that can happen,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold to Progressive Rail Roading. “We’re seeing new record levels every month this summer. Much of that is to meet consumer demand as tax reform and a thriving economy drive retail sales, but part of it seems to be concern over what’s to come.”

Broker profits up due to record second quarter load volumes. Net operating profit grew 23% compared to a year ago, according to a survey of 100 brokers conducted by DAT Solutions, LLC. In comparison, gross profits were only up 12.8% as brokers struggled with margin compression due to substantial increases in the spot rate market. With purchased transport costs of dry vans up 37% YoY rates are on trend to remain elevated for the rest of the year. “I don’t hear many [brokers] complaining about margin compression, because they understand the reasons behind it,” Eileen Hart, DAT’s vice president of marketing and corporate communications, told DC Velocity.

Major food manufacturers concerned as high transportation costs cut into growth and earnings. Dean Foods, Del Monte, Kellogg, Tyson, and more report that the capacity crisis has had a staggering impact on profitability which could cause food prices to soar. “Rising freight costs have been a challenge for all of our businesses. We now expect freight to be about $270 million more this year compared to last year,” Tyson CEO Thomas Hayes noted in an earnings call. “If you have a supply chain that was built heavily on taking advantage of transactional interactions with your carrier base, you’re paying a pretty penny right now,” Derek Leathers, chief executive of Omaha, Nebraska-based Werner Enterprises Inc., one of the largest U.S. trucking companies, said at an investor conference in late June, according to Fooddive. Unlike in the past, where shipping costs ebbed and flowed, companies are starting to realize that costs won’t be receding any time soon. “The increases aren’t coming as fast as they were a year ago, but it took us a solid nine months to realize…that these increases are indeed being permanently secured with metal bolts to our costs,” J&J Snack Foods Corp. Chief Executive Gerald Shreiber said in an earnings call last month.

CEO of American boat manufacturer says Trump’s tariffs hurt US business in three ways. Bill Yeargin, the CEO of Correct Craft, wrote of the challenges that US companies and the economy will face in an op-ed for the Washington Examiner. Yeargin identified increased costs of imported parts, market distortion, and reduced exports as his main concerns with the administration’s trade policies. “Many Americans are understandably tired of longstanding and unfair trade agreements, and President Trump should be applauded for concentrating the world’s attention on the issue,” the Correct Craft CEO wrote. “However, his administration’s current trade policies of increasing protectionism are unfairly targeting US manufacturing industries, and will cause lasting damage to US businesses, jobs, and families.”

3D printing is changing the way trucks are manufactured. 3D printing has opened the door for additive manufacturing, an industry term for using data to create parts on demand. “The challenge in the spare parts business lies in securing supply even for model series which are no longer produced,” said Stefan Kurschner, senior vice president of aftermarket for Daimler Trucks North America, to Trucks.com. “Tools often have to be retained and maintained for years. With the 3D printing process, these challenges are a thing of the past.” The technology helps companies lower tooling costs, reduce inventory, and accelerate manufacturing. 3D printing also allows automotive engineers to reduce the number of parts needed and overall weight of components by combining and refining parts. Although, 54% of automakers had tried 3D printing, only 4% are using it in scale use, according to a survey conducted by McKinsey & Co.

Are your supply chain costs going up? Contact a trusted adviser at Aborn & Co. today for a complimentary consultation and learn how we have empowered data to save our clients over $5 billion in freight expenses.
Schedule A Complimentary Consultation

Further reading

– The LTL Capacity Crisis Survival Guide for Shippers
– The Industry Report
– Shipper of Choice: A How To Guide
– The Truck Driver Shortage and the Rising Cost of Everything

Listen to our podcast Consulting Logistics presented by Aborn & Co.

 

Download a high resolution copy of our infographic by submitting the form below

Submit form for high resolution copy

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Are your supply chain costs going up? Contact a trusted adviser at Aborn & Co. today for a complimentary consultation and learn how we have empowered data to save our clients over $5 billion in freight expenses.
Schedule A Complimentary Consultation

Further reading

– How LTL Accessorials Work
– Shipper of Choice: A How To Guide
– The Industry Report
– The Truck Driver Shortage and the Rising Cost of Everything

Listen to our podcast Consulting Logistics presented by Aborn & Co.

        

 

Second quarter intermodal volumes up 6.2% annually. This represents their highest level in over four years, according to the Intermodal Association of North America’s (IANA) quarterly “Intermodal Market Trends & Statistics Report.” IANA attributed the robust numbers to: a strong economy, capacity shortages in the inland trucking market, higher diesel prices, ELD restrictions on HOS, and increased exports. E-commerce is also a main driver as most of the gains in intermodal business have been from parcel and LTL carriers. Logistics Management also notes that total loads are up 10.6% and total revenue is up 28.6%

Uber freight isn’t going anywhere, according to Uber. Although the company shut down its self-driving truck division, OTTO, Uber still believes that there’s life in Uber Freight. “There are no implications for Uber Freight with the shutting down of the self-driving truck program. They were operating separate programs before this even happened, so there really is no effect. Uber Freight will continue on as usual, and it’s one of our fastest growing businesses within Uber, so it’s not going anywhere,” an Uber spokesperson told Freight Waves. The company has delivered a mixed message of sorts as they went on to say, “[Uber is] building out the network first to ensure we have a viable place to put this technology.” Still, some see the move away from automated trucks as a way for Uber to ingratiate themselves with carriers and drivers as they’re no longer openly trying to displace them.

According to one British trucker, US trucking issues start with driver pay. Instead of being paid hourly, US truckers are paid by the mile. This can lead drivers to press on in bad weather as well as force them to wait through long detention periods without being compensated. “Driver detention is an urgent issue that must be addressed by our industry. It’s a matter of fairness,” said Don Thornton, a senior vice president at the freight marketplace DAT Solutions. “Many shippers and receivers are lax about their dock operations, but it’s the carriers and drivers who are forced to pay for that inefficiency.” Nearly 2/3rds of carriers reported in the DAT survey that their drivers were regularly detained at docks for more than 3 hours. “In England, if the roads are icy, cars pull over because you’re still going to get paid,” truck driver Mick Flynn said to Business Insider. “If we pulled over in the US or Canada, we’re not earning anything. So, we were driving in worse weather than we would in the UK.”


Truck orders hit monthly record as carriers order 52,400 big rigs in July. That is nearly triple the orders from last year, when fleets ordered 18,726 trucks, and a 24% jump from June’s orders according to The Wall Street Journal. July caps off a half-year ordering frenzy that has seen carriers investing heavily in their equipment. So heavily that manufacturers can’t keep pace with demand. Strong confidence in the trucking market fueled by rapidly accelerating profits has carriers using short-term earnings to invest in long-term upgrades. “We believe that the current freight market fundamentals will remain in place for the remainder of the year,” said John Wiehoff, chairman and chief executive of C.H. Robinson Worldwide Inc.

Amazon takes a page from Uber’s playbook to help stem capacity crisis. Amazon Flex, the company’s new independent driver program, allows anybody with a vehicle to become a delivery person. Drivers can earn as much as $25 an hour delivering regular Amazon packages from warehouses right to your front door, according to MH&L. In a recent article in The Atlantic, Alana Semuels profiled a day in the life of an Amazon Flex driver. She found that the program is even more similar to Uber than it appears. “Flex workers get no health insurance or pension, and are not guaranteed a certain number of hours or shifts a week. They are not covered by basic labor protections like minimum wage and overtime pay, and they don’t get unemployment benefits if they suddenly can’t work anymore,” said Samuels.

Container ship intercepted at sea with over a ton of cocaine on board. The Cap San Tainaro was boarded by the Colombian Navy in the Caribbean on August 2nd, off Cartagena where the ship was enroute to Caucedo, DR, according to FleetMon. The 1144 kilos of cocaine were found hiding amongst a load of wine in a shipping container. The ships ultimate destination was Antwerp, Belgium. Although there were no arrests, the ship was detained in Columbian waters while an investigation is performed. Somewhere, a transportation manager wonders, “where’s my freight.”

Are your supply chain costs going up? Contact a trusted adviser at Aborn & Co. today for a complimentary consultation and learn how we have empowered data to save our clients over $5 billion in freight expenses.
Schedule A Complimentary Consultation

Further reading

– The LTL Capacity Crisis Survival Guide for Shippers
– The Industry Report
– Shipper of Choice: A How To Guide
– The Truck Driver Shortage and the Rising Cost of Everything

Listen to our podcast Consulting Logistics presented by Aborn & Co.

 

Download a high resolution copy of our checklist by submitting the form below

Email *

 

Are your supply chain costs going up? Contact a trusted adviser at Aborn & Co. today for a complimentary consultation and learn how we have empowered data to save our clients over $5 billion in freight expenses.
Schedule A Complimentary Consultation

Further reading

– How LTL Accessorials Work
– Shipper of Choice: A How To Guide
– The Industry Report
– The Truck Driver Shortage and the Rising Cost of Everything

Listen to our podcast Consulting Logistics presented by Aborn & Co.

        

 

2018 has been an extremely challenging year for shippers. We’ve covered the capacity crisis in great length on this site here, here , and especially here , and in this article we continue our series on LTL freight. Note that you can listen to this article here.

As shippers scramble for bargains in a market with few to find we’re always trying to answer questions about how we can better help our clients lower costs. When it comes to LTL freight that is easier said than done. That’s because the rules that apply to other forms of transportation don’t necessarily apply to LTL freight.

What are accessorials?

Let me explain, when you have a full truckload shipment, that freight is typically picked up by one truck, hauled by one driver, and delivered to one location. Whereas with LTL freight, that same shipment would likely be moved by multiple trucks and handled by several drivers before ultimately being consolidated with other loads that are headed in the same general location as your freight.

Since LTL shipments of all shapes and sizes are comingled into one trailer with freight from multiple consignees that is headed to a handful of different destinations, an LTL carrier is unlikely to be dealing with the same conditions at each delivery point. To account for that, LTL carriers use accessorial charges.

Accessorial charges are fees that are applied to shipments when additional services are required to handle the cargo. In many cases accessorial charges will be added after the fact as the carrier was unaware of whatever specialized delivery requirements the shipper may have had. Due to this, they can be incredibly difficult for some shippers to factor in to their transportation budgets. However, nearly all accessorial charges can be predicted in advance so long as the shipper has some awareness of what their freight is and where it is going to. Although most can’t be prevented, many can be mitigated, negotiated, and prepared for.

How do accessorials work?

Here’s how accessorial fees work: When a shipper has a load, they’ll go out to the market and get a variety of quotes on the move. If they don’t note any special conditions they’ll receive a base rate quote. This quote assumes that the shipper is moving the exact freight that they described, that freight will be available for pick-up when the driver arrives, it will be delivered to a location with a proper dock, and it will be unloaded without delay. Under these ideal conditions a shipper is unlikely to see anything more than a fuel service charge (FSC) on their bill.

Unfortunately, many LTL shipments are not as straight forward as what the base quote assumes. For example, say you must send a pallet of goods to a trade show in Manhattan that is on the third floor of an event center. Your base quote could be $500 but then you may be subject to all of the following accessorial charges which are based on a major LTL carrier’s list of fees:

Exhibition or Trade Show Shipments (Minimum fee $35)

Positions not immediately adjacent to vehicle
– Street level delivery (Minimum $110)
– Service to each additional floor above street level (Minimum $14)

Liftgate (Minimum $85)

Total = $500 (base rate) + $244 (accessorials) = $744

As you can see in the above example, accessorial fees have raised the base quote by almost 50%!

While that may be an oddly specific example, let’s take a look at something a shipper is likely to see every day. The liftgate charge.

A liftgate charge is applied whenever a shipper doesn’t have a proper dock to load and unload freight. However, since liftgates are specialized equipment and not standard on all trucks, it is up to the shipper to alert the carrier that they’ll require one. If the truck arrives and there is no dock nor is the truck equipped with a liftgate then the shipper will not just be charged a liftgate fee, but the shipment will have to be redelivered by a truck that does have a liftgate. That shipment would then also be charged with a redelivery fee. Those can range anywhere from $85 to over $900 per shipment. As you can see, it is vitally important that you notify your carrier about the need for a liftgate.

Here’s where it gets complicated. Not all carriers charge the same amount for accessorials, even for common charges like liftgates. Some may charge minimums and maximums based on weight while others use flat rates.

Take this real-world example for instance: A shipper has a 3,000 lb shipment that’s headed from Staten Island, NY to Hartford, CT. The receiving facility in Hartford does not have a dock so the shipper needs a carrier with a liftgate.

Carrier 1 base rate: $2,750
Liftgate $4.85/100 lbs = $145.50
Total = $2895.50

Carrier 2 $2,775
Liftgate flat fee = $85
Total = $2860

Carrier 3 $2675
Liftgate flat fee = $350
Total = $3025

Depending on the carrier that this shipper selects, their rate could increase by anywhere from $85 to $350. Therefore, it is of utmost importance to not just review base quotes when booking LTL shipments but to also only consider the bottom line when determining your true cost. That $100 in savings that you thought you were getting with carrier 3 is actually a $165 loss compared to other options. A savvy transportation manager working with a freight managed solution provider like Aborn & Co. would be able to make the distinction between these rates while providing access to services with the lowest total cost.

What you should know about every shipment

Liftgates are just one of a laundry list of accessorial charges. Below is a checklist of basic information that every transportation manager should know about each LTL shipment.

– Total weight of the shipment
– How many pallets there are and are they stackable
– The dimensions of each pallet (L x W x H)
– The origin & delivery addresses and zip codes
– What you are shipping, how it is packaged, and if any goods are over length
– The freight class (your LTL carrier can help with this)
– Any special conditions, needs, equipment (e.g. liftgate if you don’t have a receiving dock)
– Accessorials that have applied in the past (if delivery conditions are the same then you’ll likely be subject to the same fee)
You can download a handy version of this checklist here

Base rates are the door busters of the freight world. The whole point is to lure in shippers who aren’t taking the time to do the math. Quiz your transportation manager on this checklist. If they can’t answer the above questions, there is a very good chance that they may have no idea what your company will end up paying for any given shipment. If they have no idea what the final cost would be then how can they make an educated decision on which carrier to choose?

Since each carrier has their own set of accessorials it behooves the shipper to refer to their tariff with each individual trucking company. That said, accessorials can typically be broken down into one of three basic categories.

Administrative – This can cover anything from errors and omissions on a bill of lading to improper weighing of freight. Some common mistakes that shippers make are not letting the carrier know that pick up and delivery appointments need to be made, inaccurate piece or pallet counts, and/or incorrect weight, class, or National Motor Freight Classification (NMFC.)

Equipment – Lift gates, fork lifts, pallet jacks, dry ice, additional packaging materials, temperature control units, etc. All these specialized pieces of equipment may come with a fee. Not having the equipment can lead to delivery delays, loads that are turned down, as well as other time and cost factors.

Delivery – This is where charges can really add up. The most common delivery charge is also usually the most avoidable. That’s the redelivery fee. This occurs when the consignee requires a delivery appointment, however this hadn’t been noted on the bill of lading, so the carrier must now redeliver the freight. Redelivery can also happen when the right equipment isn’t on-hand for loading and unloading. Excessive delays and difficult deliveries also come with their own set of charges and penalties. Time is money for LTL carriers and when a shipper cuts into it, that shipper is usually the one paying the bill.

How to avoid, control, and save on accessorials

The bad news is that some accessorials are just the cost of doing business in the LTL world. The good news is that they shouldn’t be too hard to negotiate, mitigate, and budget for so long as you are aware of what it is that you’re shipping. If you understand your freight than it makes it much easier to negotiate away the bulk of these charges when you’re putting your carrier contracts out to bid. The more you can tell your carrier about your freight, the more transparent your billing will be, and the more opportunity you’ll have to leverage your easier lanes with your more costly and challenging ones.

Sometimes to solve an outward problem you need to look inward. There are accessorial fees that shippers can easily eliminate or reduce simply by doting their i’s and crossing their t’s. Redelivery fees due to not alerting the carrier on the bill of lading about the necessity for delivery appointments or not requesting lift gates for facilities without docks are all things where the onus falls directly upon the shipper. Your transportation manager and/or a freight managed solutions provider needs to take ownership of those responsibilities.

Rule of thumb: if your shipment is anything but general cargo, that is accurately weighed and classified, and is being delivered dock-to-dock under ideal conditions then you might be paying accessorials. With rapidly escalating LTL costs and an ongoing capacity crisis, shippers who aren’t taking control of their freight are falling further behind in a market where so few can afford to do so.

Don’t forget to download our LTL Checklist here!

Are you paying too much in accessorial fees? Contact a trusted adviser at Aborn & Co. today for a complimentary consultation and learn how we have empowered data to save our clients over $5 billion in freight expenses.
Schedule A Complimentary Consultation

Further reading

– The LTL Capacity Crisis Survival Guide for Shippers
– The Industry Report
– Shipper of Choice: A How To Guide
– The Truck Driver Shortage and the Rising Cost of Everything

Listen to our podcast Consulting Logistics presented by Aborn & Co.