Freight 101 – How To Ship With Zip!
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Freight 101 – How To Ship With Zip!. September 25, 2014. Agenda. Transportation Modes Understanding Freight Costs Freight Claims Management Options Q & A. Transportation Modes – Small Parcel. Transportation Modes – Small Parcel. Loose package shipments Shipments under 150 lbs.

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September 25, 2014

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September 25 2014

Freight 101 – How To Ship With Zip!

September 25, 2014


September 25 2014

Agenda

  • Transportation Modes

  • Understanding Freight Costs

  • Freight Claims

  • Management Options

  • Q & A


September 25 2014

Transportation Modes – Small Parcel


September 25 2014

Transportation Modes – Small Parcel

  • Loose package shipments

  • Shipments under 150 lbs.

  • Length + 2x height + 2x width less than 165 in.

  • Hub and spoke distribution

  • Standard $100 per package insurance

  • Very few competitors

  • UPS, FedEx, DHL


September 25 2014

Transportation Modes – Less than Truckload (LTL)


September 25 2014

Transportation Modes – Less than Truckload (LTL)

  • Palletized or crated shipments (generally)

  • Shipments between 150 lbs. and 5000 lbs.

  • Typical shipments are from 1-6 pallets

  • Terminal/Breakbulk network, shipment will travel on multiple trucks

  • Insurance coverage is generally $5 -$25 per lb.

  • Lots of local, regional and national competitors

  • YRC, Conway, FedEx Freight, R&L, Central


September 25 2014

Transportation Modes –Truckload & Partials


September 25 2014

Transportation Modes –Truckload & Partials

  • Lots of equipment types – vans, flatbeds, intermodal, reefers

  • Full truckload implies that you are using the entire trailer - up to 45,000 lbs or approx. 24 pallets

  • Partial truckload encompasses shipments over 6 pallets up to a ½ truckload

  • Shipment stays on same trailer for entire journey

  • Insurance coverage is generally $100,000 per load

  • Thousands of local, regional & national competitors

  • Schneider, JB Hunt, Swift, Mercer, Werner


September 25 2014

Transportation Modes – Expedite


September 25 2014

Transportation Modes – Expedite

  • Expedite – make an action or process happen sooner or be accomplished more quickly

  • Terms – “guaranteed”, “hot shot”, “time definite”

  • Any size shipment from parcel to full truckload

  • Can be via truck or air

  • Guarantees only cover freight charges – not down time, crew costs, client penalties etc.

  • Fragmented competition – lots of carriers offer expedite options

  • FedEx Custom Critical, Panther, Conway Now


September 25 2014

Transportation Modes – International


September 25 2014

Transportation Modes – International

  • Shipments originating or destined to countries outside of North America

  • Full container and less-than-containerload options

  • Can be via ocean or air

  • Lots of insurance and pricing (incoterms) options

  • Most shippers use a broker or freight forwarder


September 25 2014

Understanding Freight Costs


September 25 2014

Basic Freight Cost Elements

  • Distance – zones, zip to zip, mileage

  • Size and weight (dimensions & freight class)

  • Transit time requirements

  • Equipment requirements

  • Additional services – liftgate, inside delivery, residential

  • Capacity – carrier specific and market driven

  • Fuel costs


September 25 2014

LTL Costs – Freight Classes!!!

  • Freight classes are used by LTL carriers to categorize different types of freight for costing and pricing.

  • There are 17 classes: 50 -500.

  • Classes are published by NMFC (National Motor Freight Classifications).

  • Freight class is determined by multiple factors:

    • Density

    • Value

    • Ease of Handling

    • Fragility

    • Special considerations – hazardous, used or new, “dirty” items


September 25 2014

Common Accessorial Charges

  • Liftgate – Free to $100 per occurrence

  • Inside Delivery - $25 to $150 depending on complexity

  • Notification – Free to $25 per occurrence

  • Non-Commercial or Residential - $50 to $100

    • Service is defined by each carrier – not consistent

    • Schools and colleges

    • Farms

    • Military bases and government facilities

    • Churches


September 25 2014

Cost Differences by Service Level


September 25 2014

Strategies to Reduce Freight Costs

  • Conduct a formal review at least annually.

  • Identify metrics that measure freight costs.

  • Incent customers to order in larger quantities.

  • Consolidate purchasing of materials.

  • Eliminate vendor “best way” shipments.

  • Negotiate an FAK with LTL carriers.

  • Negotiate fuel and other accessorials.

  • Utilize a broker/3PL/consultant with expertise.

  • Utilize economy carriers (lower service expectations).


September 25 2014

Freight Claims


September 25 2014

Types of Freight Claims

  • Shortages – portion of the shipment is missing or the entire shipment is gone.

  • Visible Damage – shipment is obviously damaged and notated on the delivery paperwork.

  • Concealed Damage – damage is not obvious and discovered after the delivery has occurred. Carrier will pay a max of 33% of the claim when concealed.

  • Service Failure – applicable on certain “guaranteed” shipments. Only covers the cost of the freight, not any incidental costs.


September 25 2014

Freight Claim Tips

  • Inspect shipments immediately, there is a limited window to notify the carrier that a damage has occurred.

  • Document as much as possible, take pictures. You will need copies of the bill of lading, delivery receipt, vendor invoices and details of your costs.

  • Expressly list both pieces and pallets on the bill of lading.

  • Use proper packaging, pallet sizes, corner protectors etc.

  • Don’t waste time on claims under $200.

  • Be Persistent! Do not accept the carrier’s first denial – you need a “bulldog” mentality to get resolution.


September 25 2014

Freight Management Options


September 25 2014

Customer and Vendor Routed

  • Hands off approach to freight – puts the responsibility on your vendors and customers to choose and pay the carrier.

  • Liability for charges and claims falls on vendors & clients.

  • Don’t have to negotiate freight rates, pay trucking invoices.

  • Zero control / leverage when problems do occur.

  • Dock congestion for larger shippers, too many different carriers / drivers.

  • There is really no such thing as “Free freight” .


September 25 2014

Carrier Direct Model

  • Shipper responsible for managing carrier contracts, selecting carriers and paying carrier freight bills.

  • Allows for complete control over the process, carrier choices.

  • Best possible freight rates for shippers with high volume (over $1M)

  • Must have staff to perform traffic management and freight payment functions.

  • Hidden cost increases in carrier rates and tariffs.


September 25 2014

Outsourcing – Forwarders, Brokers & 3PLs

  • Hiring a company to perform traffic and freight payment services on behalf of your company.

  • Access to better freight rates for smaller shippers.

  • Reduces time involved in dealing with freight administration and problems that occur with shipments.

  • “Must have” option for international shipping

  • Lose some control over carrier selection.

  • Start-up and implementation can be a difficult process.

  • May feel threatening to existing employees.


September 25 2014

Questions and Answers

Thank You!


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