Van Rates Increase From the Beginning of the Year

June freight volumes finished the month strong, and rates responded to close Q2. Over the past six weeks, van rates have climbed about 10% on the top 100 van lanes. Last week, rates increased on 66 of those lanes and fell on only 24 of them. The remaining 10 held steady.

The national average van rate for June was $1.89/mi., which was 10¢ higher than the May average and the highest monthly average since January. That included large increases in major freight markets like Los Angeles (up 14%), Memphis (up 12%) and Atlanta (up 11%).

Freight volumes up 6% in 2019

Although van rates are lower this year compared to last June's record prices, freight volumes — the number of loads that actually moved in June — are about even with June 2018. For the first half of the year, van volumes are up 6% compared to the same period in 2018.

Rising Rates

Lanes with the largest rate increases were generally those moving West to East. The big surge came on lanes going from the Central U.S. to the Northeast.

  • Chicago to Buffalo surged 31¢ to $2.56/mi.

  • Memphis to Columbus, OH, jumped 27¢ to $2.51/mi.

  • Buffalo to Allentown, PA, rose 15¢ to $2.99/mi.

  • Memphis to Chicago gained 13¢ to $2.41/mi.

  • Out West, Stockton, CA, to Portland also added 13¢ moving up to $3.02/mi.

Falling Rates

While almost all of the major van markets showed price gains, rates coming out of Seattle dipped last week. Seattle has seen prices slip 6% over the past month.  Also, rates coming out of Houston were slightly lower last week.

  • Houston to Oklahoma City slipped 15¢ to $2.02/mi.

  • Houston to Dallas moved down 5¢ to $2.27/mi.

  • That's about it. Other dips were just pennies per mile.

Credits: Mark Montague

Warehouse Management Problems and Solutions

Warehouse management is commonly associated with six basic tenets: accuracy, cost control, efficiency, cleanliness, safety and security, but the underlying processes are complex and dynamic, presenting major problems for warehouse managers across industries. Distributors have to deal with trade-offs due to resource limitations, leading to under performance in key functional areas.

Warehouse managers face the challenge of maximizing performance while balancing trade-offs under uncertain conditions. This article examines the top five warehouse management problems and their solutions.

Redundant Processes

Traditionally, warehouse employees have been likely to handle a product several times due to the nature of the warehousing process. This tendency lingers on in current practices. A notable redundant process in warehouses is where warehouse workers pass the same ticket through multiple hands.

While necessary in some instances, such redundant procedures are time-consuming and increase the cost of labor. Using barcode technology streamlines the warehousing process, removing redundant processes while maximizing resource utilization. Automated systems are evolving fast, a trend that compels warehouse managers to maintain up-to-date systems to achieve the desired results. 

Poor Facility Layout 

Efficient use of space is a critical success factor in warehousing.  Inadequate storage space and inefficient use of available storage are common problems in warehouses with poor facility layout. Poorly configured warehouses are a major cause for worry for managers because of the inherent potential for negative impacts on profits.

The optimal layout factors both the floor space and the vertical space available for use. In addition to maximizing the use of space, a good layout maximizes the use of equipment and labor, accessibility to all items and the security of all items. Using forklifts that reach the roof of the warehouse allows for a configuration that maximizes both the horizontal and vertical space.

The complementary solution is to ensure that the highest-selling inventory is easily accessible by placing it at the most accessible point.

Seasonality in Demand

Fluctuations in demand pose serious challenges for warehouse managers. The dip in sales due to the recent global financial crisis resulted in major cost problems for warehouses due to increased inventory levels. Although it did not affect all industries alike, the problem highlights the challenge of fluctuations in demand due to forces outside the control of the warehouse.

Managing seasonality in demand requires timely and accurate information about manufacturing, retailing and the industry. Information gaps between the warehouse and other relevant entities or the industry limit the ability of the distributor to monitor and respond to changes in demand effectively. It is necessary for warehouses to use timely and accurate information in planning and forecasting demand as well as in providing supply chain visibility.

Rearranging the products to match changes in demand helps minimize the negative impacts of seasonal demand. Such a rearrangement involves correct positioning of the items by placing the products with high demand during the current season at the front of the picking aisle and at the correct height.

Dealing with seasonality in demand, however, goes beyond just layout and picking. The problem also requires proper management of transportation networks and strategic sourcing of transportation services. These long-term solutions build a lasting capability with strategic value for the distributor.

 High Labor Costs

Warehouse managers strive to increase productivity while minimizing labor costs in a labor-intensive environment. Inbound Logistics estimates that labor constitutes about 65% of the operating budgets of most warehouses. A typical warehouse uses expensive equipment and employs a large labor force, presenting a challenge that is for the most part unique to warehousing operations. 

The staff ranges from cleaners and packers to managers and administrative personnel. Attempts to reduce the cost of labor should take into consideration the impacts of the move on other costs. The two major strategies for addressing labor-related problems include maximizing available labor and replacing labor with automated systems.

Developing the right mix of expertise through workforce planning helps managers hone the skills necessary for successful labor force practices. A combination of the right skills and motivation, through practices such as excellent working conditions, training and flexible hours, enhances employee productivity and the performance of the warehouse.

Inaccurate Inventory

Accuracy and efficiency in handling inventory in warehousing go hand in hand. Inaccurate inventory causes problems such as maintaining improper stock levels and buildups of obsolete inventory. Picking problems also arise when pickers rely on inaccurate information, leading to inefficient processes. Other costs of inaccurate stock information include increased expenses, lost revenue and low productivity. Automation is a key factor in solving accuracy-related problems.

Automated systems offer real-time, accurate information about stock levels and composition. The technology employed in managing inventory in a warehouse is critical to success because the value of the automated system is just as good as the quality of the system itself. A low-quality system retains some of the risks associated with inaccurate inventory. A careful and informed selection process reduces the risk of procuring an automation system that does not meet the needs of the warehouse.

Warehouses face increasingly dynamic environments as remote events in the global supply chain become more relevant to local business environments. The desirable approach when dealing with the challenges that arise due to new developments is to use inexpensive solutions that offer sustainable best practices. Warehouse managers should monitor and track changes in the business environment and adopt responsive solutions.

Common warehouse problems such as redundant processes, poor facility layout, seasonality in demand, high labor costs and inaccurate inventory information require robust systems that keep managers informed about changes and gaps that require attention.

Acquisition of Cargo Building C, The Plan for Growth

Worldwide Flight Services, an air cargo handler, is extending its North American network to Atlanta after winning the bid to operate in the airport's newest cargo facility. In attempt to grow its cargo business, Hartsfield-Jackson International Airport agreed on a long term lease with WFS to support the growth of the air cargo intake at the airport. The newest of of cargo buildings in the airport will begin operations in late 2019, while also revealing its customers more specifically in the coming months.

Air cargo is a crucial economic generator for Hartsfield-Jackson, creating more than 27,000 jobs in Georgia and more than $6.7 million in revenue for metro Atlanta, according to the airport's website.

In 2018, cargo volumes at Hartsfield- Jackson Atlanta International Airport rose 4.7% to over 700,000 tons, which followed a 7.5% increase in the previous year. However, global cargo demand fell 4.7% in April from a year earlier, according to the International Air Transport Association, with the biggest declines coming from manufacturing hubs across Europe and Asia. New export orders have also been falling recently due to Brexit-related trade uncertainty in Europe and trade tensions between China and the US, according to the IATA.

To contradict the decline, Hartsfield-Jackson recently came to the agreement with Amsterdam Airport Schiphol to create a catalyst of air cargo coming from The Netherlands!

Transportation Management System: Why You Should Invest

If you are a manufacturer, the owner of a distribution company, or anyone else who ships freight on a regular basis, investing in a transportation management system — aka TMS — could help you lower your shipping costs. That’s not the only potential benefit, though.

A transportation management system enables you to transport freight from its origin to its final destination with efficiency and reliability. Therefore, it can help you save money and drive value for your business. Investing in a TMS can also help with things like improving customer service, managing inventory better, and increasing warehouse efficiency.

If you are still on the fence about whether a TMS is right for your business, keep reading to learn more.

What Is a Transportation Management System?

A transportation management system is used in supply chain management. It deals with the planning, optimization, and execution of the transport of goods from one place to another. Simply put, it is a logistics platform that allows business owners to better optimize and manage their transportation fleet’s daily operations.

Using tools such as route planning and optimization, yard management, load building, order visibility, operations execution, carrier management, and freight payment and audit, a TMS helps businesses transport both inbound and outbound freight. Such a system is typically used to improve efficiency, reduce shipping costs, improve customer service, and gain real-time supply chain visibility.

TMS has become more widely used in recent years, enabling seamless logistics management and global trade. It is predicted that the global TMS market will reach $1.72 billion by the year 2019.

Benefits of TMS

Improved Customer Service

Using a transportation management system that offers reporting and analytics capabilities enables you to see exactly how your choices affect customer service. You can keep track of things like which carriers you use, how often they deliver on time, how much they charge, and more. Through the reporting capabilities of the TMS, you may discover that while you tend to use a lower-priced carrier for most shipments, they only deliver on time a small percentage of the time. This, of course, means that you have to waste time and money on customer service.

The other carrier, however, may deliver on time 100 percent of the time. While they may cost a bit more up front, they end up costing you a lot less time and money in the long run. Without a TMS, you may struggle to detect such opportunities for improving customer service. Through reporting and analytics capabilities, however, you can assess several different factors that could have an impact on customer service.

When you schedule shipments using a TMS, you can also let your customer know that an order has been shipped and provide tracking information. This enables you to seamlessly create a better customer experience while maintaining greater supply chain visibility.

Greater Warehouse Efficiency

Warehouse efficiency is extremely important. A disorganized and inefficient warehouse can cost you a lot of time and money, so finding ways to maximize efficiency is important.

A transportation management system can help with that. The more you use your TMS, the less time you are forced to spend on managing freight. This enables you to spend more time tending to more important warehouse duties.

Plus, if you integrate your TMS into other systems, you can reduce common issues like data entry mistakes. When used with a warehouse management system, your TMS helps provide greater overall supply chain visibility that enables you to make smart business decisions to reduce costs and improve efficiency.

Better Inventory Management

With a TMS, you can monitor and track the lifecycles of orders and shipments in real time. You are able to get status updates at each step in the process to give yourself a clear picture of how much inventory you have and forecast your future needs.

Reduced Costs through Carrier Selection

The more you use your transportation management system, the more you can save. A TMS allows you to keep track of all the carriers you use, along with their fees and the number of transactions you would need to complete daily to unlock additional savings. With this information at your fingertips, you can easily choose the carrier that provides the maximum cost savings for your business.

Improved Cash Flow

In addition to helping your company save money, a transportation management system can improve your cash flow. Centralized billing support and freight bill audit and payment features enable you to keep money flowing into your business with ease. By standardizing payment terms for your shipments, you can more accurately budget and plan your cash flow because you will have a clearer picture of what to expect in terms of payables and receivables as well as freight invoicing.

Who Benefits from Transportation Management Systems?

Transportation management systems are beneficial for any company involved in the logistics and transportation industries.

They benefit truckload carriers, third-party logistics companies, freight brokers and less-than-truckload (LTL) carriers. Because both desktop and cloud-based TMS solutions are now available, they can be used by all types of transportation companies to maximize profits, reduce spending, increase revenue, and handle growth.

Whether you ship items that fit in small corrugated boxes or you need to transport massive shipping containers, having a TMS helps simplify the process.

Better Your Business with a TMS

Investing in a transportation management system improves efficiency in your business while enhancing customer service and saving you money. It can also help you avoid costly mistakes and keep track of all shipments and loads in real time, thus improving supply chain visibility both for yourself and for your customers. Transportation management systems provide proven return on investment, and they offer exceptional value for any business involved in the transportation or logistics industry.