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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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  • Transportation Modes
  • Understanding Freight Costs
  • Freight Claims
  • Management Options
  • Q & A

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

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

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

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

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

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

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

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

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).

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.

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.

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” .

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.

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.