Now that Hurricane Michael is starting to fizzle away, and numbers of devastation start to come in, lets look at how Hurricane Florence affected the east coast.
Hurricane Florence has brought an estimated $40+ billion in damages to North Carolina. There has been about 60 percent drop off in freight activity coming out of the state, as well as the closures and slow re-openings of both ports and I-95. Some truck routes in and out of the state are still unreliable. Most reports indicate it could still take several weeks for deliveries and freight traffic to return to normal levels.
On top of this, the flooding has caused scenes straight out of a science fiction movie, with giant swarms of large, aggressive mosquitoes. Often called gallinippers, these mosquitoes are three times the size of an average mosquito, or larger, and pack a much more painful bite. These swarms are multiplying fast with all the stagnant water. There has been a push to bring these pests under control, as North Carolina Governor Roy Cooper ordered $4 million in control efforts to help counties hit by Hurricane Florence.
One of the hardest hit sectors in North Carolina has been agriculture. Hog farming in North Carolina is a $2 billion industry. Hurricane Florence took direct aim at the state’s hog farming counties of Sampson and Duplin, leaving farmers scrambling to take action. First, the farmers had to evacuate their animals to higher ground to ensure they would survive the storm. But there was another major challenge ahead of farmers – waste lagoons. Waste lagoon is the pork-industry term for a large pit containing the liquid and solid waste from these animals when grown in a confined feeding operation for slaughter. These giant pits run the risk of overflowing with heavy rain and floodwaters, which will contaminate surrounding waterways.
According to North Carolina’s Department of Environmental Quality, as of last week, more than 130 of the state’s 4,000 hog waste lagoons had been compromised. That number has recently been reduced to 85. However, this is not the first time the state has dealt with this issue. In 1999, flooding from Hurricane Floyd caused waste lagoons to pollute rivers and groundwater, which many people rely on for wells. Then governor Jim Hunt called for elimination of waste lagoons over the coming decade; that clearly has not happened. This puts an added burden on farmers to bear the cost of cleanup, which could take months.
On top of these costs, and the environmental impact, is the hit on the hog supply. Most farmers were able to successfully move their animals to higher ground, under the assumption that the floodwaters could not reach them. However, the flood waters rose to levels never before seen, and at least 5,500 hogs have perished in the storm. This came from a combination of drowning and wind damage to barns. The hog and poultry industries alone have seen about $4 million in lost animals from Florence.
Other areas of agriculture have been hit even harder. Soybeans and corn crops in North Carolina have lost an estimated $1.1 billion. For these farmers, they had to decide whether to harvest early or hope the crops could weather the storm. For most farms, the crops were so heavily damaged that they could not be salvaged. The same is true of the peanut crop. While some crops turned out alright, many suffered severe water damage and began to sprout. Farmers have indicated that this will severely impact the quality of their goods.
Tobacco plants are another area of major losses. In total, the state has lost roughly $980 million in tobacco crops. From reports I have seen, many farms were able to partially clear their fields before the storm came. However, those plants that were not harvested are destroyed. The same is true with the cotton industry, as cotton fields are left with cotton basically melting off the plants onto the ground.
Farm labor is the other major industry that has been affected by Hurricane Florence. In a recent report I heard on NPR, many migrant workers from Mexico make the rounds through different states to pick crops – Michigan for blueberries, Florida for tomatoes, and North Carolina for tobacco and sweet potatoes. In a normal year, at harvest time, a crew boss will bring in anywhere from 40 to 60 workers per day to pick the sweet potatoes. Workers will generally receive an hourly wage plus a small bonus for every basket they fill. This year, the problem is two-fold. First, like other crops, the decision had to be made whether to harvest early or ride out the storm. For those that rode out the storm, the result is sweet potatoes that are rotten and cannot be salvaged. Some farmers have indicated declines in their crops of at 20 percent this year due to the storm.
The second problem is a labor shortage. When Hurricane Florence swept in to North Carolina, it destroyed houses that the migrant workers had rented. These workers lost their possessions and ability to work. With the flood waters, there was simply no work to be done. This equates to no paychecks. The end result was that many workers moved on to Florida to get ready for the tomato harvest. Crew leaders are lucky to get 10 to 20 workers in the field on any given day. This slows down the harvest but also leads to more spoilage and less product available for the market.
In the end, Hurricane Florence has caused $40+ billion in damages. The agricultural sector has been hit hard, and the losses will only continue to pile up. For many farmers, crop insurance will cover nearly 75 percent of their profit losses. However, the insurance does not cover labor, or the cost of materials and machinery used to plant in the first place. It also does not aid in the clean-up and overall destruction of fields. For family owned farms, this is an especially difficult time, as they have poured everything they have into farming. It could be a long road to recovery for the agriculture supply chain in North Carolina.
In this post, we’re going to double down and get even more uncomfortable; we’re going to talk about money. Specifically, we’re going to discuss the importance of identifying and anticipating all logistics costs ahead of time when entering a relationship with a third-party logistics company (3PL).
Logistics Costs: The Honeymoon
The start of a new relationship. It’s a happy and exciting time. You are happy to have found the expert 3PL who is going to take all or part of your supply chain operation off your plate (Elite). The 3PL is happy as it has signed new business and gets to wow a new customer. To arrive at this happy place, you will have signed a contract that clearly spells out the responsibilities of each party. But, does it truly cover everything?
As part of your contract, you will have identified key metrics that each side is to meet as part of their given responsibilities. For instance, a metric may be that the 3PL is to ensure that 99.5% of orders arrive to the customer “on time” (whether “on time” means within 2 business days from order, or 3 days etc., that will be laid out in the contract).
While, of course, the 3PL strives for perfection, 99.5% is a reasonable metric given disruptions outside the control of the 3PL. So, both parties agree to the 99.5% metric. And, let’s say that the 3PL exceeds that metric; everyone would be happy, right? But that’s not where the story ends.
Logistics Costs: The Argument
Say, for instance, that you’re shipping 100,000 orders a year. A 99.5% success rate could still mean that 500 orders are not successful. What happens with those orders?
They can trigger finger pointing between the company and the 3PL about fixing the problem and covering the logistics costs of these fixes.
The customer’s perspective: “My customer is not happy. The 3PL needs to pay to make these orders right.”
The 3PL’s perspective: “At 99.8% perfect order performance, we’re exceeding the agreed upon metric.”
Discussions reach an impasse and a great relationship turns sour over the little things left unsaid.
Anticipate ALL Logistics Costs
The eCommerce company and the 3PL both have the same goals: 100% customer satisfaction. However, both parties know that things don’t always go as planned and there will likely be small hiccups along the way. It is VITAL to the success of the relationship – and ultimately to the happiness of the customer – that any scenario in which things could go wrong are anticipated and addressed at the outset.
For each possible problem that could arise:
Who owns it?
What actions will be taken to remediate the problem?
Who is liable for the logistics costs?
There is no right or wrong answer to these questions. The important thing is that the questions are asked and answers are agreed upon BEFORE orders start flowing.
No one wants to think about these messy “what if” scenarios at the start of a relationship. But it’s far better to deal with these questions before the fact than when emotions are high.
You will never reach 100% perfect order nirvana, but having clear alignment about how to deal with mistakes - and related logistics costs - when they arise results in fast action to fix problems and a better relationship with your provider based on open, honest, transparent communication.
While shippers face the difficult market conditions of tight capacity and increased consumer demands, they are also being challenged to find transportation cost savings and improve customer satisfaction. As shippers compete for capacity, many are asking what they could be doing to secure the best truckload performance and rates. Why do some shippers receive better service, and which best practices can others learn from them?
These are questions posed to MIT graduate students for a research project that focused on service and pricing in the truckload market. The researchers examined more than 2 million shipments across 3 years of full truckload van moves over 250 miles in the lower 48 U.S. states to identify which attributes and best practices separate shipping “Leaders” from the “Laggards.”
To determine whether a shipper fell into a Leader or Laggard category, researchers measured three commonly-used performance metrics: on time pickup, on time delivery, and first tender acceptance.
They found that common attributes of Leader groups include:
A rationalized truckload carrier base. Leaders receive better performance and price from carriers when that number is reduced to a finite amount. Research found that the two Leader groups worked with averages of seven and 30 suppliers, respectively, while Laggards worked with an average of 45.
Select and use providers with focus. In the research, using transportation providers with focused roles in the route guide was one of the strongest indicators of performance. Leaders use fewer suppliers that highlight lane focus over a narrower geographic region. Carriers naturally have varying degrees of capacity in some lanes; some focus their efforts in a smaller geographical coverage area while others may have more national coverage. Matching their strengths with your service corridors leads to better performance and having a routine procurement process will ensure your carrier networks are aligned with your current demand.
The right strategic blend of top performing providers. Researchers found that Leaders had certain freight attributes that worked together to improve freight performance. These included longer lead times, consistent load volume, geographic and lane focus, younger price ages, and the use of both asset carriers and brokers.
So how can you start adopting these Leader best practices? It all starts with having visibility and quality data around your freight operations and carrier performance. Look to a transportation management system (TMS) plus managed services provider to help. It’s extremely difficult to achieve proper carrier alignment, a strong execution strategy, and sufficient internal collaboration without the data a TMS can provide—domestically and globally—across all transportation modes.
Here are four key ways that you can leverage your TMS to gain the business intelligence and process optimizations to become a leader in your field:
Carrier scorecards and performance: Some TMS platforms have built-in business intelligence tools with carrier and supplier scorecards ready. This tool allows you to track and benchmark carrier performance to help narrow down your carriers to a dedicated core group and reduce freight costs. The data can be used to help facilitate negotiations with your carriers and drive internal process improvements. For example, with this business intelligence, you’ll gain visibility to delivery delays so you can better understand and address root causes for these issues by location, lane, and customer.
Network analysis: To maximize asset utilization and minimize costs, TMS power users can conduct route guide analysis and review carrier performance at the facility and lane level. A TMS can measure and analyze costly detention or delivery issues to find out where they occur, so you can implement procedures to reduce them. It allows for benchmarking your locations against each other, providing visibility into potential facility-level issues that wouldn’t normally show up in a blanket carrier performance review.
Mode and route optimization: Research suggests that when you bundle low-volume lanes together, you can increase the density, allow carriers to optimize their networks, and make the lanes more attractive to serve. With your freight management centralized in your TMS, you can achieve savings through load consolidation and mode optimization. While this research project focused on truckload specifically, it’s important that your TMS can manage all modes of transportation so you can get a holistic view to manage your entire supply chain operation.
Order management and shipping planning: The more lead time a carrier has between the tender and the pickup day, the more likely the first carrier in the routing guide is to accept the load. Using a TMS, you can monitor and collaborate to drive date, quantity, and lead time compliance within all your locations.
The ability to utilize technology to drive strategy and data to improve performance—and ultimately creating financial value—are now imperative for today’s complex global supply chains.
With the increase in the popularity of e-shops and delivery companies, the logistics e-commerce business keeps growing. It faces more and more challenges, as the customers need companies to be quick and increase their logistics performance more than ever before. What does it mean for your business? This fact explains why understanding and following the key trends in logistics e-commerce are crucial for organizations that want to save their place in the supply chain and get better results with less effort.
Now market offers the fast shipping, high quality, and reliability. To do it right, companies need to increase the speed of delivery and quality of their services or, otherwise, they won’t be able to compete with other companies. However, there are no reasons to panic yet. On the other hand, there are many tools and technologies that help companies in e logistics industry and let them organize their business well to get the needed results and keep rolling in the competitive market.
Digitalization And Automation For Logistics E-Commerce Providers
People keep talking that each company that wants to win in the competitive world should get digital and use automation. However, not everything is that simple! It is not enough just to buy a PC for each employee’s desk, provide packages tracking, extend corporate website functionality, and install corporate software that will calculate the data faster. More and more new technologies are being invented every day so the company needs to obtain them before its competitors do and follow the latest trends in electronic logistics.
There is also an opportunity to use Big Data technologies. There are more and more solutions in this area, which means that companies can apply them for making their services even faster and more convenient. With the increase in the number of delivered goods, it becomes more difficult to gather the necessary data and analyze it in real time. However, there is a simple solution. By using the Big Data, companies can solve these problems and manage a much bigger amount of data than they are managing now.
Today, we can observe the following digital trends for e-commerce and logistics:
Decreasing usage of cash and wallets, support of more convenient digital payment methods such as mobile devices;
Predicting market behavior by using special software;
Using database of clients and special software to understand what they want from you;
Mobile integration, using the power of small screen devices;
The automation of the delivery process in every point where it is possible.
Managers should also keep their teams well-educated. If any technology is going to be implemented in the company, its employees have to understand what it is and how it can be used to do their jobs well.
Flying Drones And Other Unusual Logistics E-Commerce Solutions
Earlier, Amazon has announced that it is going to use drones for the delivery of goods. There are also many predictions on the role of self-driving transport in delivery. If Uber is going to use such vehicles for providing taxi services, it would be relevant to use them for delivery as well. Of course, the industry of automated logistics based on using drones and cars is not yet implemented but some big companies keep talking about it. It is possible that logistics technologies will go this way very soon.
It doesn’t mean that every logistics company needs to buy delivery drones and invest in self-driving cars – it means that companies will keep looking for unusual delivery methods and it is better to follow such trends as they are growing before these ideas are implemented.
Personalization And Collaboration With Customers
Personalization technologies are very common in e-commerce for now because every client likes to feel special and get interesting offers. With time, the role of a personal approach to each customer becomes even bigger.
With the “Made in America” trend popularized by the current US president, it is possible that people would buy more American products. They also would think more about buying goods that were produced in their own regions.
The other trend is changing the concept of Black Friday. Many retail and e-commerce companies are going to turn the Black Friday to the Black November by prolonging this period till the Christmas sales, which would bring them much better results than usual chaotic weekend deals.
the five most common fallacies surrounding supply chain management. Some of these are fallacies that have been around a long time and never seem to go away. Others are more recent in origin.
Fallacy 1: Companies win with functional excellence
Avoiding this trap is the core tenant of supply chain management. It is the very reason the profession was created.
Historically, it was thought if you had metrics for core functions – like sourcing, manufacturing, logistics, and sales – and those functional areas performed well on their key performance indicators (KPIs), that the company would be maximizing its performance. But if sourcing buys based on price, which makes them look good, but the quality is bad, manufacturing is hurt in their attempt to do well on their KPIs. In each functional area, we can find things that function would like because their metrics would improve. Unfortunately, the things that improve performance in one area can adversely impact not just other functional areas, but the overall ability of the company to hit its revenue and margin goals.
Everyone that gets a business degree learns this concept. But avoiding this trap is still devilishly hard to do. One functional area – often sales – can be more powerful than other functions. Further, when companies choose to benchmark one functional area’s performance in isolation, they can fall into this trap. Integrated business planning helps to break down these barriers, but many companies still do not engage in this process, and those that do approach it with varying degrees of maturity.
Fallacy 2: Better forecasting leads to lower inventory levels
Demand management optimization solutions do improve forecasts. And these solutions are getting better because of machine learning. Inventory optimization solutions have also gotten better.
But these solutions don’t ALWAYS lower inventory levels. If a company continues to add new products without retiring old ones, increases inbound lead times, adds new sales channels, or promises quicker deliveries and higher service levels, then inventory levels can go up despite these solutions. Further, if you have the bad luck to implement a demand management solution right before a recession, your forecasts will degrade despite these solutions; recessions are difficult to forecast.
But if we are not entering a recession, lead times are held stable, stock keeping unit levels are not increasing, no new channels are added, and service levels remain the same, then these solutions will absolutely lead to lower inventory levels!
Fallacy 3: There is a driver shortage because young people don’t want to do this work
There has been a slew of articles written on the driver shortage recently. Now we are beginning to hear the same thing around warehouse workers. Across a range of industries and nations, these kinds of articles have appeared for hundreds of years. Industry associations generally respond by attempting to allow lower wage workers from other nations to enter the market, or by reducing regulations that impact productivity. In this case, the trucking industry has worked to reduce Hours of Service regulations and the use of ELD devices which make these regulations much more enforceable.
According to Salary.com, the median annual truck driver salary is $42,553 as of March 29, 2018. What if the average salary was $60,000? Would there be a driver shortage? Basic economics tells us there would be an influx of new drivers into the industry. In short, there is not a driver shortage; there is a shortage of drivers willing to work for the prevailing wages.
Wages are going up. The American Trucking Association, a trade group that represents fleet owners, said annual truck-driver salaries rose between 15 percent and 18 percent from 2013 to 2017. Over time (drivers must be trained and certified) this should start reducing the driver shortage.
In many industries, wage increases lead to increased use of automation. In this industry, however, we are probably years away from autonomous trucks.
Fallacy 4: Corporate Social Responsibility initiatives will improve a company’s financial performance
When a company commits to corporate social responsibility (CSR), the company’s supply chain must respond. Manufacturing may try to reduce pollutants and use less clean water, transportation reduce the amount of emissions associated with shipments, and product development create products that will be easier to recycle at the end of the product’s life.
Executives understand that CSR programs may improve profits and revenues. They understand that a CSR program can promote higher sales; that these programs can enhance employee loyalty and attract better personnel to the firm.
Also, sustainability activities may lower costs and improve efficiencies. For example, transportation emissions can be reduced by better routing and more fully filling trucks. The transportation management system that enables this will simultaneously lower the company’s freight spend.
But, younger employees argue that sustainability will improve the bottom line. There is some evidence that more sustainable companies perform better financially. The evidence would be more compelling if it was not produced by CSR action groups. Or if it was replicated by academics.
But not all companies that engage in sustainability will perform better, as much the young might wish this was true. And I admit, I wish it was true as well.
Sustainability matters more to the young, it matters more in wealthy nations, and more to liberals. Further, it matters more for businesses that sell to consumers than to businesses that sell their goods to businesses. These kinds of customers are willing to pay more for sustainable products. But a company that targets poor customers, in third world nations, may get a negative return on investment from their sustainability initiative. This is particularly true if the program does not simultaneously lower operating costs.
Fallacy 5: Blockchain will solve the traceability problem
Blockchain is all the rage. Every week a new startup focused on blockchain for supply chain management seems to pop up. But the technology is not well understood. One explanation, that uses the kind of vocabulary supply chain personnel are familiar with, can be found HERE.
It is widely thought that the best application for blockchain in supply chain management is traceability. Walmart and some of the largest food companies in the world have teamed up to explore how to apply blockchain technology to their food supply chains.
Here is a quote from the journal of Quality Assurance & Food Safety: “By providing a permanent record of transactions which are then grouped in blocks that cannot be altered, blockchain could serve as an alternative to traditional paper tracking and manual inspection systems. Food products can be digitally tracked from farm to table through the digital connection of a food item to its farm origination details, batch number, factory and processing data, expiration date, storage temperature, shipping details, etc., with the information entered into the blockchain along every step of the process.”
There is only one problem with this. Blockchain does not solve the “garbage in, garbage out” problem. We may want to certify, for example, that a consumer is buying grass fed beef. If the first step of the process involves a farmer stating that their beef is grass fed, but this is not true, then the blockchain is providing an indelible record that the beef is grass fed. In short, blockchain does not eliminate the need for certification companies who inspect whether upstream suppliers are really doing what they say they are doing.
This is obvious once stated. But the vocabulary of blockchain is so arcane, and the rhetoric so inflated, it is easy to miss this.
When we think about visibility and tracking in our daily lives, our consumer mindset probably turns on and we think of online ordering. We’re concerned with questions like, “Where’s my stuff?” or “What time can I expect my order to be delivered?” In a Business-to-Consumer environment, visibility is about tracking.
But in Business-to-Business, it’s so much more. Visibility covers the technology and tools you use for supply chain management. It’s about amassing data from all sources with intelligence and workflow to react in-line. How do you do that efficiently and in a timely way? How do you translate all of that intelligence into action?
The Unexpected Reality
Having visibility into your own logistics, as well as offering visibility to your customers, is complex in the Business-to-Business world. It’s all about supply chain management, which encompasses:
Customer service management
Location load/unload performance
Profitably by service/product
Visibility in these areas is more than just an understanding of what’s happened; it’s about taking action before small issues become big problems. Visibility is the “so what?” of your transportation data.
Translating and communicating everything that’s happening is a tall order for any supply chain software, but the answer to the problem may surprise you because it’s often overlooked: A modern, highly configurable transportation management system (TMS) that can act like a transportation control tower for your operations.
New Heights of Visibility
With so many logistical considerations to track, a TMS that helps you optimize with visibility-driven workflows will push you to new levels of optimization. With the right architecture, a TMS can integrate and manage different data types flowing in from multiple systems, shippers, carriers, mobile applications, financial systems, emails and portals. Now, you have a single point that provides full visibility into the flow of data and the tools to act on the data in order to achieve:
In-line process improvements
Automated exception management that lessens the need for manual intervention
Proactive, advanced notification of issues
Intelligent workflow creations that drive carrier management
The creation of operational data for visibility
How does it work?
A TMS that acts like a transportation control tower can enable an intelligent “rally point” that brings together different sources, translates that data and automates or presents actions as appropriate. For example, it can relate and communicate many-to-many relationships, such as orders to shipments. When a customer asks, “Where’s the truck?” they don’t really care where the truck is; they want to know when they’re getting their freight. The TMS answers that inquiry at the order level because it has the power (backed by the intelligence of your TMS) to slice and dice the information many different ways.
Another example of the benefits of a TMS with visibility-driven workflows is when a carrier arrives on time but didn’t get in to the dock. As a result, your customer sends you a detention charge. With the power of a TMS that’s acting as your transportation control tower, you can flag that as an exception and fight the detention automatically. The extraordinary visibility into your operations opens up new opportunities for efficiency and automation like never before.
Integration is key
Data aggregation and communication are impossible if you can’t translate the data coming in. A TMS with visibility-driven workflows can read and translate vastly different data types and put them into the same format from which you can take action. With the ability to integrate with so many systems, your TMS enables you to meet your customers where they’re at, rather than force them to do extra work to fill the gap of your technology’s limitations. It’s also a far more cost-effective approach, as you have the ability to leverage what exists, rather than rip and replace with a solution.
Set Yourself Apart
In an industry where many services can appear commoditized, a TMS with visibility-driven workflows transforms the way you gather and translate intelligence so that you have a powerful tool that’s shareable with your customers and sets your services apart. Increase your opportunities for new efficiencies; meet each of your customers’ unique requirements with the ability to dissect data in myriad ways; and increase your own profitability with deeper insights, faster reaction times and better-informed decisions that impact your margins.
To view more blogs, or if you're inquiring about learning more about a possible Transportation Management System, make sure to contact us through our email at email@example.com.
On June 15, President Trump announced another round of tariffs on $50 billion worth of Chinese imports. These Section 301 tariffs are separate from the recently imposed Section 232 additional tariffs on certain steel (25%) and aluminum (10%) products from various countries of origin. The Section 301 additional 25% tariffs will take effect on July 6, 2018 and will apply to 818 HTS products made in China. There are 284 “proposed” HTS products pending public comments and hearings and not expect to be finalized for several weeks.
If indeed these additional tariffs go into effect, it will become more likely that many of our customers here at Elite will have products impacted, whether is be air cargo, ocean cargo, or anything of the like.
If that is the case, there are five essential things you can do to prepare now:
It’s all about the Continuous Bond: Duties (regular, anti-dumping, and countervailing) are taken into account when calculating your company’s bond limit requirements. Surety companies, who provide the bonds, may require importers to obtain larger bonds and possibly provide financial statements and collateral in order to secure bonds with higher limits if their commodities are subject to the new tariffs. Bonds deemed insufficient cannot be used for import and may delay incoming shipments. It is recommended for importers to forecast the possible impact of tariffs on their business for the next 12 months and if necessary, obtain increased bond coverage now, rather than wait for an insufficiency notification from the surety company.
With the new proposed tariffs, the new bond limit required may be significant. If US Customs deems your bond to be insufficient, you may receive a letter from Customs’ Revenue Division requiring an increase in your bond. Insufficient bonds cannot be used to cover the import of merchandise and this may lead to additional costs and delays.
It is the importers responsibility to ensure that their bond limit is sufficient, so act now!
Use the ACE Tools US Customs provides: If you have not set yourself up on Customs’ ACE portal yet, do so now. It is an incredibly useful tool, and the link is below. Once you are using the portal, we suggest you monitor your import activity closely and on a regular basis via various ACE Reports in the portal. ACE Reports are a great tool to determine bond sufficiency and to ensure compliance.
Here is the link from US Customs website with instructions on how to apply for an ACE Portal account for importers that currently do not have one: https://www.cbp.gov/trade/automated/getting-started/portal-applying
Review your credit limit: – Additional tariffs will increase your duty obligations, and perhaps your credit needs with your broker / forwarder. So please review what the impact could be and assess your credit needs and communicate with your broker. To avoid shipment delays due to credit holds, clients can pay duties directly to US Customs via their own ACH bank account. They can select to have duties withdrawn from their ACH account within 10 days of clearance or once per month through Periodic Monthly Statement. Links to both are below:
US Customs ACH application process https://www.cbp.gov/trade/automated/ach
Importer Periodic Monthly Statements info: https://www.cbp.gov/sites/default/files/documents/section_1_pms_3.pdf
Discuss with your team: Share the above with your internal supply chain and finance stakeholders. And to remain compliant, implement internal measures to ensure additional duties are applied at time of entry and prior to statement.
And Stay Informed! A great place to start is US Customs & Border Protection website – Trade section (www.cbp.gov).
Freight audits may seem like a cumbersome task to many shippers, or something that isn’t necessary in the grand scheme of things, but there are many cost saving benefits to ensuring proper billing for all of your logistics needs. In the world of big data, a decimal point can make all the difference. Because freight charges represent up to 10 percent of a company’s total expenses, identifying and correcting freight bill errors through auditing is crucial, and shippers want to glean the same insights for their global transportation moves as they capture from domestic carrier data.
Up to 30 percent of all freight invoices are incorrect, according to market research. But performing freight audit and payment internally is challenging, requiring specialized expertise, and extensive time and effort—resources many companies lack. Freight bill payment and auditing services can help companies more easily track where their dollars are going, and ensure they are paying the correct carrier fees.
So how can outsourcing freight auditing save you money in both the short and long term? It’s simple. When you devote your own resources and labor to audit your freight bills, you’re taking away precious resources that could be spent on your core business. And whether you recover overpaid freight charges or not, you still have to pay your employees to audit a paid freight bill one by one by one.
But because the best third party Freight Bill Audit and Payment companies work on a contingency basis, there are no costs unless overpaid charges are found. That means there’s no cost to you whatsoever unless over payments are identified. Plus, because professional freight auditors have extensive experience identifying errors and dealing with carriers, they can manage this process much more efficiently.
That means you can stop wasting the time of your Accounts Payable department on the grueling, time-sensitive process of freight auditing, while also bringing in extra money at the same time. If no over payments are found, there’s no cost to you.
Unfortunately, in the shipping world, over payments occur far too often. A carrier like FedEx delivers an average of 9 million packages in 220 countries every day, and mistakes are inevitable. There are also a host of other benefits as well, like receiving reams of actionable data that can be used as leverage in negotiating better rates in the future.
Audit a Paid Freight Bill with a Third Party: How Does It Work?
The process is straightforward:
Your company sends freight invoices from the past 180 days in bulk to your freight auditor.
Invoices and bills are compared with pricing agreements to identify errors.
A claim is filed on your behalf.
When payment is made, your company receives a check.
There have been many significant changes in the LTL freight industry over the past 30 years that are changing the face of the transportation industry. In order to remain current, it is important to understand what these changes are and how they are affecting the cost of doing business.
Within the last few years, less-than-truckload (LTL) rates and capacity have fluctuated. Many carriers have shifted from the traditional National Motor Freight Classification (NMFC) rate-setting formula to density-based pricing, which prices freight according to the amount of space the shipment uses in the truck. This new pricing model, along with other recent industry trends, has had a significant impact on shippers – making it important to understand the new pricing methods for LTL shipments, what’s currently happening in the LTL industry, and some of its key market challenges.
More recently, the LTL industry has incorporated density-based pricing, which considers the actual weight of a particular item, classifies it and determines how much volume it will take up in a trailer. The first step many carriers have taken is introducing “Dimensioners” into their network to efficiently capture the density of each shipment as it travels through their network. This helps the carrier better understand the actual cost incurred for each shipment in order to more accurately price each account. This method is comparable to how large parcel shipping companies such as UPS and FedEx determine their costs to ship products.
This change in pricing modules, combined with an increase in capacity due to the influx of ecommerce shipments, the driver shortage, hours or service being regulated more tightly with the ELD mandate, and natural disasters such as hurricanes and earthquakes, and environmental regulations have all added to the price the shipper can expect to pay, in many cases by 2,3,4, or 5%. Gone are the days that the shippers can be beaten up over pricing because the reality is that they won’t be able to have any trucks, which have increased in price by as much as 100% in recent years with the advent of all of the newest technologies.
Shippers can also prepare themselves for many more accessorial charges than were seen in the past. These charges have always existed but have been applied much more stringently due to anything deemed as extra work or risk to the driver.
The best carriers are telling their customers to brace themselves for this new era of pricing by collaboratively working together to create efficiencies where there once were bottlenecks. The biggest advice given in the industry is to work with your carriers to take costs out of their networks, reduce waiting time at docks and other facilities and realize truckers have to make a profit as well. For the carriers, ninety-nine percent of the industry is just making pennies on the dollar as far as profits. They are making huge investments in trucks, drivers and facilities in order to maintain the status quo, and that cost will inevitably be passed along.
As technology evolves and demand increases, supply chain managers are facing new challenges particularly as they attempt to compete on a global level. Traditional supply chain operations utilizing an optimization engine based on a single network can no longer provide the service that businesses and consumers require.
Complacent companies struggling to meet customer demands with the systems of yesterday will be left behind as forward-thinking companies grab market share.
What can supply chain leaders do overcome the common stumbling blocks? Technology is one part of the solution; companies must also shift from managing the supply chain as a cost center, to a modern model that makes supply chain a strategic, competitive asset.
A collaborative, connected model
Embrace a supply chain that relies on cooperation and collaboration versus siloed, internal operations. This “macro-optimized” approach offers the speed and flexibility needed to compete in today’s market. It supplies access to partners around the world, allowing businesses to locate the resources needed on demand, and provide capacity where and when needed.
Macro-optimization involves looking at opportunities available through multiple networks. To accomplish this, businesses must have access to a global trade network that allows access to a broader, wider community of other shippers, trading partners, carriers, freight forwarders, and so on. A single-instance, multi-tenant environment for the accumulation of all of the data involved is also necessary, giving companies the ability to manage all transactions and activity in one place.
Macro-optimization vs. micro-optimization
There is a basic limit to the effectiveness of a traditional micro-optimized model because it is inherently limited to a business’ own orders, rates, and carrier capacity. This means that there is a finite amount of opportunity for consolidation and backhauls. On average, logistics teams see four to 10 percent sub-optimal output from micro-optimization. Macro-optimization gives companies the tools to deal with that inefficiency, helping them find new opportunities with partners within the global trade network, and encourages the sharing of resources for a better return on investment.
An example in real life: Shippers sharing capacity
Capacity constraints can be a daily issue for shippers. In a market with a fixed amount of capacity, you have the same group of shippers trying to outbid each other for a less-than-truckload pick up. The “winning” shipper ends up overpaying, and the carrier ends up sending a truck down the road with empty space. With macro-optimization, shippers can share capacity on less-than-truckloads or on backhauls. If a shipper always moves freight on a lane to California, but never has a return load, another shipper could use that empty capacity on the backhaul for one of their difficult lanes. Now, both shippers saved money, and the carrier didn’t waste empty miles.
An example in real life: Parcel zone skipping
A group of small parcel shippers located in one major city can use macro-optimization to pool together their freight. Now, they can engage in the cost-saving option of zone skipping. They move their freight by carrier several zones away, and then distribute the parcel to a major distributor like UPS for delivery to save money. This option is not available if they stay in their own siloed operation. But with macro-optimization through a global trade network, the power of the network takes hold and provides new cost-saving opportunities.
The benefits of changing your supply chain model do not stop with cost savings. Companies that have already shifted to a global trade network model are experiencing remarkable velocity, with flexibility to adapt quickly. Sharing resources within a network makes for a better return on investment, creating a more efficient process that can meet the demands of today’s competitive market. A macro-optimized, global trade network approach is the future of supply chain.
Books have been written, tools like Six Sigma have been embraced, and most people seem to agree that companies retain customers by providing good service and poor customer service results in lost business. Further, the cost of acquiring new customers is much higher than maintaining positive relationships with existing customers.
Data consistently supports these theories. A Business Insider Intelligence Report about customer service states that 66 percent of U.S. consumers are willing to spend more money with a company that provides excellent customer service. However, up to 60 percent of potential consumers have not completed an intended purchase because of a poor customer service experience. The report also states that it can take up to 12 positive experiences to offset one negative.
Many functions, including supply chain management, contribute to customer experience
But, where does customer service begin and end? While it is easy to equate the customer experience with those individuals on the front line dealing directly with customers, the root cause of many service failures can be found much earlier in the process, beginning with sourcing, inventory, and delivery.
For example, would someone recommend a friend stay at a hotel that offered a free continental breakfast, but was out of coffee five days out of seven? Or buy the latest “must-have” technology device if it was not available in stores as advertised? And does free shipping really matter if the flat screen TV is damaged? When viewed from this perspective, it is easy to see how supply chain performance can impact customer satisfaction.
High expectations, increased complexity as carriers become the “face” of their clients
The customer service challenge is also getting more complex with the growth of e-commerce and the presence of Amazon-like business models. Consumer expectations are high, and competition is fierce. And, in many instances, a delivery person may be the “face” of a company’s brand to its consumers, with carriers that traditionally operated in a business-to-business world being asked to go beyond that model and also serve customers directly.
Finally, the more steps that are added to the lifecycle of any shipment, the more chances there are for errors that can ultimately result in a less than ideal customer experience. If a product that once went directly from a distribution center to a brick-and-mortar store as a less-than-truckload shipment is now being sent from a distribution center to multiple regional centers to be broken down into single unit shipments, with each being tendered to a courier for delivery to a unique residential location, the opportunities for a missed step in the process increase exponentially.
Digital era may require supply chain professionals to rethink their use of technology
In this environment, the days of managing transportation using spreadsheets and institutional knowledge may have a short “shelf life.” However, technology solutions, like a Transportation Management System (TMS), can empower supply chain managers with greater control and visibility across their entire operation. In the age of speed, agility, and few second chances, technology may be the best way to improve supply chain performance and boost company sales and customer satisfaction.
In today’s increasingly fast-paced world, visibility and access to information are critical to supply chain management. One technology that is proven to increase supply chain visibility is a transportation management system (TMS), and both shippers and logistics providers seem to agree. According to a report, 52 percent of shippers and 21 percent of logistics providers rank TMS technology as a top IT priority for 2018.
As TMS technology continues to evolve, and a wide range of options available today, choosing the best system can be a bit daunting. As with many major changes in business, it is best to approach technology selection with a well- planned process.
Here are seven steps to a successful TMS solution selection:
TMS Solution Selection Step 1: Identifying the Issue(s)
It is important to understand the issue(s) or problem(s) the TMS is expected to solve as well as the circumstances that have led to a decision to invest in technology. Most software purchase decisions begin for one of three reasons:
The current system, manual or automated, is not producing the desired results or is filled with inefficiencies.
The company is going through a merger, acquisition, or divestiture, and it must re-evaluate or even consolidate its systems.
To align with strategy, such as growth, a company may need to upgrade its technology.
Regardless of the specific circumstances that have led to the purchase, maintain clear expectations about what the technology is going to accomplish.
TMS Solution Selection Step 2: Requirements Gathering
The second step in the process is documenting the critical requirements (technical and non-technical) of the business. This will allow potential solutions to be identified, and those that are not a fit to be put aside. In this phase, it is critical that the voices of all stakeholders are heard. Include everyone who may have a role to play in the purchase, implementation, or use of the system, including IT, purchasing, finance, and possibly manufacturing or sales. This is also the time to document the current state versus the future state.
TMS Solution Selection Step 3: Build the Business Case
In many larger companies, simply identifying requirements is not sufficient, and a business case must be built and presented to various members of the executive team. At this point, it is best to have assessed the Total Cost of Ownership (TCO), including how, or if, the new technology will integrate with existing systems, how quickly the solution is expected to yield a return, and how long the implementation process is anticipated to take. This is also the time to thoroughly investigate one-time costs and ongoing costs as well as service commitments.
TMS Solution Selection Step 4: Demo Phase
Once a list of top contenders is developed, it is time to ask for demonstrations. If possible, customized demos based on a company’s own data are preferred. It is also important to ensure that the demonstration stays within the scope of the documented requirements. This will save time, avoid delays, and keep the process on track.
TMS Solution Selection Step 5: Evaluation Phase
As each demo is completed, it is important that all decision makers make notes and rate the vendor based on a pre-determined list of criteria. Relying on memory alone is not the best way to approach a purchase of this significance to a business. A running scorecard will be very helpful at this point.
TMS Solution Selection Step 6: Validation and Selection Phase
Once the demos are complete, the final selection often comes down to two or three finalists. If there is little differentiation from a quantitative perspective, it may be important to factor in whether the TMS is scalable or if regular releases or enhancements are planned. The way that the vendor’s team responds to questions and requests during the evaluation phase may be a good barometer of what can be expected in terms of customer service going forward.
TMS Solution Selection Step 7: Post-Selection Phase
The real fun/work begins after a selection is made. To ensure the chosen solution is a success, buyers should keep the momentum on the project moving forward from selection to implementation to integration. Keeping all stakeholders apprised of milestones and progress will go a long way towards getting high-fives from co-workers, rather than pointed questions like, “Who picked this clunker?”
As the JOC white paper stated, the transportation industry is rapidly moving in the direction of greater use of technology, and specifically TMS solutions. The steps listed above can help buyers navigate “the road ahead” with the destination being improved business results, while avoiding wrong turns and potholes along the way.
To a lot of people, the word “creativity” doesn’t come to mind when they hear about transportation or logistics. Maybe some of us in the industry don’t even think of ourselves as the “creative type.” If that’s the case, I think we sell ourselves short. Every day, logistics planners have to be immensely creative in how they move freight with a seemingly endless number of changing constraints.
To be creative, however, you need technology that supports flexibility for handling your operations in the best way for your organization and customers. Although transportation management system (TMS) vendors can’t build software that addresses every possibility a logistics planner might come across, the goal of the TMS should be to support your work with a level of flexibility that enables creativity.
We’re seeing a lot of change and new offerings in the TMS market today, including two of the most recent and innovative approaches: A new capability called continuous pool optimization (CPO) and the enhanced ability of rating systems to better handle real-world complexities.
Continuous pool optimization
Sometimes being creative means waiting to take action until you better understand your options, rather than deciding to act and getting locked onto a certain path – even as new information is introduced into the freight equation.
This is the riddle that continuous pool optimization addresses. It allows for a pre-determined or dynamic routing of orders through a consolidation network. Routes can be split in to a consolidation point and out of the consolidation point independent of each other. These inbound and outbound movements can also be independently managed, letting the optimization out of the consolidation point be delayed until the user has a better understanding of the freight accumulated at that consolidation point.
By enabling this creativity and flexibility – even when all of the factors aren’t yet known – CPO lets you maximize freight savings through optimization while still adhering to pickup and delivery constraints. This is relevant in situations where pickup windows are tight but delivery windows are more flexible. Logistics planners can provide complete deliveries in a single shipment, even when product may be sourced from multiple locations. Customers get better service, and a company could potentially eliminate the need for warehouses or distribution centers in their supply chain.
Continuous pool optimization helps planners embrace those unknown, future options and to be patient, change plans, and get creative with routes.
In the old days, a TMS needed simplification. Transportation execution practices grew out of a need to simplify and streamline the process because it was really complicated to figure out the best carrier and mode.
In the attempt to create apples-to-apples comparisons, however, we started overlooking the fact that not all carriers are created equal. They all have strengths and weaknesses; they have good lanes and bad lanes; or they want more of some type of freight and less of others, for instance. By striving to simplify the selection process, we, as an industry, have boxed in carriers too much.
The latest TMS rating engines don’t need old-school simplification. When asked to rate a shipment, they can compare carriers across all factors, like neutral versus carrier tariff, FAK versus class rating, or blanket versus specific.
The ability of a TMS to handle more complexity is good for the carriers too, because now they have the flexibility to give you better rates. Depending on your needs and constraints, you could use either the carrier’s rate base or neutral tariff, or work with the carrier to improve operations rather than just cherry-picking lanes. And with big industry changes like TL contract rates increasing by eye-popping amounts or the ELD mandate, you’re going to need a TMS that gives you the flexibility to manage carriers and rates creatively.
Look hard at your transportation practices. Are they flexible? Can you be creative with them? Or are you forced to simplify for the sake of your TMS? Every organization is going to have drastically different business models, and you are the expert of your business. Sophisticated rating engines and continuous pool optimization can help you create a better business model by delivering the power and programming to do the hard work, plus give you the freedom and flexibility to work with more options and uncover more savings.
The proper management of inbound transportation is multifaceted. As a national retailer, one can expect partners in business to send shipments to facilities numbering in the thousands. Large manufacturers can have suppliers numbering in the hundreds. What is the most significant challenge of inbound freight management? Cost control.
The going rates for transportation are rising. Shippers are reporting not only higher premiums on shipping that is expedited but added accessorial charges and elevated base rates. In an effort to manage these expenses effectively, search for logistics solutions, and control costs businesses are literally scrambling.
Inbound Freight Management
In order to effectively manage inbound freight, the goods and raw materials entering a facility must be moved in a cost-effective, efficient manner. Is estimated that 40% of a typical organization’s annual budget for freight is used for this process.
The Best Ways to Improve Processes and Cut Costs
Not only will companies notice an improvement in service, but when inbound freight management is improved, costs are reduced significantly. And cost is a concern to everyone. The following are ways of improving processes and cutting costs:
Optimize the process:
When you take control of inbound freight transportation you are essentially granting yourself the ability to optimize freight moves and visibility into the true costs of transportation.
You could be paying extra, however, if your suppliers are the ones controlling inbound freight moves. This is because the suppliers not only utilize the service like a profit center but bundle services for shipping into product prices.
LTL routes inbound shipments to various facilities and is routinely responsible for approximately 75% of all inbound shipments. But there are ways to avoid the payment of excessive LTL transportation rates by shippers. By highlighting attractive freight, asking for a discounted fuel surcharge, using service levels that are guaranteed, and leveraging the Czar Lite Tariff, it can be accomplished.
Gain visibility into costs and identify vendors:
Your TMS software should be used to its full advantage. You may be able to minimize hours of labor and reduce congestion at the dock. By viewing custom reports, you can see if there is a way to consolidate your inbound LTL freight down to a single truckload shipment. This technology can be used to trace shipments, track them, and to monitor performance, check insurance, and monitor safety.