Shipping Large Items
The online buying revolution is not limited to items that neatly fit inside a parcel delivery box. Even the most “industrial” of businesses are shifting their marketing and fulfillment operations to cater to the online buyer.
Unlike most products, large, heavy items, like building materials and furniture, are either too large or heavy to be capably handled by the average parcel carrier. Plus, their delivery stakes are weightier, because each time a big-ticket delivery goes wrong, companies risk losing everything, from money to repeat business.
That’s why the following heavy goods fulfillment “DOs and DON’Ts” could prove to be so useful. Although they won’t help your company prevent every potential mistake that can be made while shipping larger items, they should help you steer clear of the worst.
DO place additional emphasis on inbound damage control
Whether it’s scratched, torn, cracked or broken, a large item that’s delivered with damages will almost always result in an expensive request for re-delivery, not to mention considerable customer annoyance.
Your fulfillment professionals can head off many of these issues at the pass by adopting a more rigorous inbound inspection processes during receiving. This will help hold your inbound LTL carriers more accountable for any damages they cause and compel them to handle your products more carefully. It also will allow your company to request replacements sooner rather than later.
DON’T forget a careful pre-shipment inspection
process in the warehouse
Large items are just as susceptible to damage at the last-mile stage, so ask your fulfillment professionals to put some damage-related checks and balances in place on the outbound side, too.
We recommend taking photos of goods just before they’re shipped and using a distinctively colored shrink wrap to protect and secure products. The first helps verify that a product and its packaging were undamaged and intact when they left the facility, so that any subsequent damages can be traced to a last-mile carrier, cross-dock or customer. The second helps ensure that carriers don’t damage product packaging or alter packaging configurations and then simply cover it up by affixing new shrink wrap (and yes, that does happen).
DO make sure your fulfillment centers are customer-friendly
The ability to offer customer pick-up is particularly important in the heavy goods arena, where deliveries usually cost a significant amount and many buyers are eager to avoid the extra expense.
In light of this, keep customer service needs top-of-mind as you choose your large-item fulfillment centers or providers. This doesn’t mean that you have to make your fulfillment warehouse look like your showrooms, or bring In HGTV to give a makeover. But it does mean that providers should have clean, well-marked and safe loading areas for customers, as well as adequate personnel on hand to greet customers and assist them with loading.
It also means that these centers should operate during the hours or days of the week that are most convenient for these customers’ work schedules.
DON’T forget about soft skills
A truly customer-friendly, heavy goods fulfillment operation isn’t just about having adequate infrastructure and personnel in place. It’s also about making sure that your fulfillment associates have strong customer service skills, because heavy goods deliveries or pick-ups typically involve a higher number of phone calls, emails or in-person interactions. The last thing you want is to have these interactions handled by people who are as “cuddly as a cactus and as charming as an eel,” unless you’re okay with customers deciding to purchase big-ticket items from a competitor the next time around.
Dimensioner
In short a dimensioner is a proprietary system of cameras and software that scans and measures freight. Similar technology is used at sawmills to measure and count various pieces of wood. Now this technology helps automate a previously manual process. As freight enters an LTL carrier’s terminal overhead cameras are able to get measurements of length, width, and height. Meanwhile a forklift which often has a scale built in , will weigh the skid.
These system tout extremely high accuracy (98%+ in many cases). Across the board adoption of dimensioners has quadrupled over the last 3 to 4 years with even more wide usage coming. The LTL carriers main reason for quicker adoption? Simple, they want more accurate data. As the LTL carriers and the NMFC as a whole move toward density based pricing this will help both customers and carriers maximize the new density based programs.
Over the last decade the LTL carriers have made huge strides in accurately costing out their freight. While prior to 2006 carriers might have inspected or weighed 50% of shipments or less today many carriers strive to inspect 90% or more. The carriers view ugly freight with any or all of the following characteristics: Unprotected, low density, high class, extremely long, high propensity for claims.
LTL carriers first made a push to recover hidden revenues by hiring more inspectors at every terminal.
As shipment volumes picked up it became more important to accurately price out space on the truck. Aside from service, at the end of the day the trucking companies make money selling space on a trailer. So inspectors payed a critical role in that regard.
Now this technology is taking some of that load away from inspectors. Keep in mind there are still manual inspections being performed and many of the smaller LTL carriers have not invested in this technology. Expect the most shipments to be examined at high volume terminals through a dimensioner.
How Managing Service Parts Can Affect Customer Loyalty
Acquiring new customers is 10 times more expensive than retaining an existing customer, customer loyalty is the golden goose for a driven and growing company. Replacing parts for complicated products that might require a repair like appliances and power tools is often a headache to a customer. How your company handles that replacement can make all the difference in keeping or losing that customer forever.
By The Numbers
Customer loyalty has become more and more important (and competitive) because companies have figured out just how much money they save through retention. What adds up to successful (or failed) customer loyalty, then?
US consumers are 46% more likely to switch providers than they were 10 years ago
“Failure to solve a problem in a timely manner” is the top 2 reason for customer loss
You have a 70% chance of repeat business after a customer complains if you resolve things in their favor
These statistics suggest that it’s easy to lose customer loyalty, especially when they experience a problem. Thankfully, you still have a chance at retaining them when you resolve their issue positively and quickly.
The Role of Service Parts Management in the Customer Journey
Telling you that the customer journey doesn’t end at checkout would be preaching to the choir. Continued experience with the brand contributes to lifetime value through repeat purchases and positive word of mouth recommendations or reviews. When a customer’s product is in need of a repair or replacement, their experience is in the hands of your customer support and technicians.
Needing a repair or replacement also gives the customer a perfect opportunity to test out your competitors. Quick, accurate and helpful service parts management helps narrow that gap.
Service Parts Management Challenges
Resolving issues positively and quickly means having streamlined customer service contact and processes in place. But it also means making it easy for customer service employees to do their jobs. Behind the scenes, your service parts management process must run efficiently in order for your employees and technicians to have the tools they need when they need them.
That’s much easier said than done. The biggest challenge lies simply in the breadth of capabilities required for effective service parts management:
inventory forecasting
vendor management
procurement
order management
value-added warehousing
fulfillment
There are numerous possible roadblocks in each step that can affect the whole system. A matter of hours lost in one step can mean the world to your customer. In order to provide the best possible customer service, the process requires a backend that runs like a well-oiled machine.
A Solution for Service Parts Management
Addressing the challenge of seamless service parts management gives you the opportunity to lock in customers for life. A proper strategy connects every step in the process, from customer support’s ability to take returns, to forecasting future service demand, to the physical fulfillment of a part to the field technician. Decreasing the number of links in the chain by consolidating services ensures smoother communication, quicker fulfillment, happier customers and reduced costs.
Increasing eCommerce Sales
You’ve been working on your eCommerce business for a while now. Your sales are steady, but not rising. What can you do to increase eCommerce sales?
Understand Who Your Customer Is
Without a defined marketing persona, you may find it difficult to target your consumer. You need to be sure that your ads are being seen by the right people. Make sure you understand who you’re selling to and why. Create a buyer persona by answering the following questions:
What is your buyer’s background?
What are the buyer’s goals and values?
Define demographics, such as age and gender
Identifiers—how does your buyer communicate?
What are their challenges and pain points?
Increase Your Ad Spending
Without getting in front of your customer, they won’t know you exist! Start with spending small amounts to test out your campaign. Many people think paid traffic needs to be a big expense, when the reality is, a few well-placed ads do not need to cost an enormous sum. Trying out multiple ads in multiple places is a good way to test for your ad campaign. Test before you spend more. Though you may not get it right the first time, testing should give you information and data that will allow you to refine and adjust your campaign, as you increase eCommerce sales.
Increase Your Traffic using Social Media
Are you marketing your store appropriately? Without getting your message across in a clear way, you may find that your sales dwindle significantly. Instagram is perhaps the most useful platform when it comes to social media and eCommerce. Using influencers on Instagram (individuals with large followings) to market your product is a highly effective way to reach customers. Offer a free product in exchange for a review and a social media post that will reach more followers.
Simplify the Checkout Process
Nobody likes taking the time to create a new account, register, input all of the information, and THEN purchase an item. Customers are far more likely to drop out of the sales cycle when they are forced to go through a lengthier checkout process. Simplify your process by providing the ability to easily check out as a “guest.” Customers are more likely to return to a website with an easy checkout process…like Amazon.
Change Your Shipping Rates
It’s been shown that consumers are actually willing to pay more for a product when there’s free shipping involved. The primary reason for abandoning a shopping cart is unanticipated shipping costs. It’s not necessarily recommended to opt for free shipping as a response to your dwindling checkout rates, as this can seriously affect your margins. But considering cheaper or more shipping options can help lead your customers to a sale, as they can choose which option works best for them.
A good way to implement these tips is to track each individual factor as a metric. You’ll likely find that some tips work better than others for your business—choose those and continue to watch your eCommerce store grow.
Advantages of Hiring a 3PL
There are a multitude of advantages that businesses can realize by outsourcing their supply chain management and logistics needs to a value-added third party logistics (3PL) provider. While most providers are unique in how they operate, many 3PL companies offer comprehensive solutions for the packaging, warehousing, fulfillment, and distribution of clients' products. And that's just the tip of the iceberg.
Utilizing a 3PL company provides businesses with a dependable logistics advantage. Additionally, a professional 3PL and supply chain management company can help maximize profitability through combined knowledge and resources. The following are 5 advantages of using a 3PL provider.
1. Benefit From Professional Supply Chain Expertise
An experience 3PL provider is a knowledgeable source of industry best practices. Such companies stay current with the latest advancements and developments in logistics technology, manufacturing processes, and overall logistics. 3PL software, such as JDA Warehouse Management used by United Facilities, is capable of handling inventory management, providing advanced reporting, improving the overall visibility of a supply chain to monitor and track processes.
Outsourcing logistics allows your company to leverage supply chain expertise while focusing on your core competencies. 3PL services allow businesses and manufactures to have confidence knowing that all logistics needs are being handled by reliable and experienced professionals.
2. Leverage a Stronger Resource Network
Most 3PL companies offer a vast resource network that lends to significant advantages over in-house supply chains. By leveraging the resource network of 3PL provider, steps in the supply chain can be optimized and executed in a more efficient and cost-effective manner.
3PLs can often utilize exclusive relationships as well as volume discounts for their clients, which can result in minimized overhead costs and timely service. Outsourcing your supply chain management and logistics needs to a 3PL provider enables your business thrive with resources that may otherwise be unavailable in-house.
3. Free-up Valuable Time & Capital
Outsourcing your logistics services can free-up a wealth of money and time for your business. A 3PL company can help eliminate the need to invest in transportation, warehouse space, technology, and staff to execute essential supply chain management processes.
3PL companies can also help minimize costly mistakes while allowing your business to develop a stronger logistical network with higher returns and lower risks. In addition, 3PLs save your company the time and capital required execute essential steps in the supply chain. Billing, auditing, training, staffing, optimizing and improving your supply chain functions is all take care of.
4. Utilize Flexible & Scalable of Services
A major advantage of investing in a 3PL provider is the ability to effectively scale transportation, labor, and space according to your company's unique inventory management requirements. Seasonal businesses can benefit from smoother transitions between market highs and lows, as well as having the ability to utilize more warehouse space and logistical resources when needed.
Also, working with a 3PL provider better enables your business to grow into new territories with less barriers to entry. As your company grows, your 3PL provider can help you scale in accordance, as they offer the resources and capabilities to seamlessly support your growth into new markets and regions.
5. Continuously Improve & Optimize Your Supply Chain
3PL providers like United Facilities have the resources to make adjustments and continuous improvements to each link in their clients' supply chains. Logistics professionals will ensure your company's needs are met by leveraging highly-efficient and cost-effective strategies and systems.
Top 3PLs offer the tools and expertise to optimize and restructure the supply chain, as well as utilize software and technology to ensure orders arrive when and where you need them. Supply chain software solutions can analyze and monitor logistics practices to pinpoint and eliminate inefficiencies as well as streamline the supply chain.
Outsourcing your 3PL services to United Facilities will ensure continuous improvements are implemented to your logistics and supply chain process. Professional 3PL solutions can help maximize profits, minimize wait times, and improve the customer service of your company.
Congestion Tax
Congestion pricing, the concept of charging more during periods or lanes of greater demand in an effort to maximize profits, has been around for many years. For example- compare prices to book a flight during the Thanksgiving season as opposed to the beginning of November. This allows companies to control activities in certain areas of particularly higher demand and provides an incentive to move more activity to off-peak times.
In NYC, Governor Cuomo’s Fix NYC panel submitted a proposal for vehicles driving in Manhattan below 60th Street to be subject to a charge: $25.34 for trucks, $11.52 for cars, and between $2-$5 for taxis and other for-hire vehicles. The money collected from the endeavor would go to funding repairs to the city’s ailing public transit system, while also easing the record traffic in Manhattan. The plan defines a geographic “pricing zone” and recommends the installation of technology to monitor traffic and charge vehicles electronically.
The central business district for Manhattan is bounded by 60th street on the North, Battery Park on the south, and Hudson River and the East River. Under the panel’s plan, automobiles entering between 6am and 8pm on work days would pay additional fees.
The proposed plan would raise revenue of $810 million and reduce traffic into the zone 13%, according to the panel. It also would help increase average vehicle speeds by 9%.
Cuomo, second-term Democrat, created the panel in October and asked it to devise congestion-reducing proposals for this year’s legislative session. Mayor Bill de Blasio, a Democrat who has long feuded with the governor, opposes congestion pricing and calls it a “regressive tax”. In April 2008, the state Assembly rejected then-Mayor Michael Bloomberg’s proposal to charge cars $8 and trucks $21 upon entering the most congested parts of Manhattan, which he said would reduce the pollution and raise close to $500 million. The new proposal, should it become legislation, is likely to look very different from what it is now due to the political climate surrounding it.
New York City has always been a difficult destination to ship to or from- with charges for freight shipments averaging 20%-40% more than a regular shipment outside of this area. The high cost of moving freight into and out of NYC will only increase with this legislation, possibly deterring many manufacturers and retailers out of the city or out of business. However, it is clear that the city has a real congestion issue that needs to be addressed with revenue that should be pumped into the disintegrating public transit system.
3PL's Can Help Businesses with Complex Freight Requirements
Third-party logistics (3PL) providers are companies that provide the resources, capacity, and solutions to help various businesses better manage and execute the logistics of warehousing, order fulfillment and shipping transport.
Value of Third-Party Logistics Providers
3PL companies that handle transport logistics and freight forwarding make it easier for businesses to concentrate on their primary objectives without having to worry about the transportation and distribution of inventory. In essence, 3PL companies monitor and manage warehousing operations, the transportation of goods, and order fulfillment.
In addition to helping businesses manage complex freight requirements, advanced third-party logistics providers go one step further by factoring-in cyclical market trends, road transport laws and limitations, as well as clients' unique needs and demands. Advanced 3PLs provide a fluid means to adapt and achieve the supply chain goals for particular businesses so as to maximize profit margins.
Advanced 3PL Providers Have Proficiency, Resources, & Experience
One of the most significant elements that distinguish dependable 3PL providers is to be strictly aware of service requirements for the delivery of products. Reputable 3PL companies have the proficiency and experience in the storage and routing of goods. They also employ skilled logistics management professionals, engineers, IT specialists, and supply chain managers to support day-to-day operations.
As a result, advanced 3PLs combine strategic thinking with hi-tech software and logistics resources to attain the most efficient and value-added supply chain possible for their clients. Below are a few ways in which 3PL companies can help businesses manage complex freight requirements, all while optimizing the management of their supply chains.
1. Freight Carriers Contest for 3PL Business
Freight carriers often rival with one another in serving third party logistics clients. Since 3PL companies contract with several carriers, they can often provide various service levels and shipment times. As a result, clients of 3PLs can benefit from more timely shipments, and often times at a lower cost.
In addition, since freight carriers contend with each other for the business of third party logistics providers, 3PL companies have higher bargaining power and control than a single shipper. This implies that you as the client have access to more reasonable rates, better time allocations and booking options, reduced demurrage, and per-diem penalty rates.
2. Hiring a 3PL Company is Often More Affordable than In-House Supply Chain Management
If your business currently does all of your shipping and logistics internally, you can encounter dramatic managerial savings by contracting a third-party logistics provider. Since 3PL companies cater to your whole supply chain from beginning to the end, they can save your business valuable time and resources.
Because of their size and trading power, they can broker freight for far less than you could likely attain independently. This saves your operations both time and revenue, and lets your workforce concentrate on your company's greater business goals and strategies.
3. 3PL Companies Offer Improved Control and Better Information
3PL companies apply state-of-the-art software for tracking and routing all the warehousing and logistics operations under their control. Many 3PLs employ skilled engineers and math wizards to manage accounts personally. By synchronizing all processes of the supply chain and transport modes, they’re capable of combining and reporting distinct data via value-added information services.
Lastly, 3PL companies offer better control via vendor relationship management and pro-actively communicating with foreign suppliers to ensure everything goes as planned. They even provide performance reports so you can accurately see where and how much you are saving. When using a third party logistics, shippers eventually have somebody to hold liable for all shipments along the legs of the supply chain.
Solutions for International Shipping
Many companies manufacture and source materials from outside their borders and overseas. Consequently, controlling costs remains a high priority for firms involved in global trade and international shipping. One critical factor that companies make a strategic decision to monitor more closely concerns logistic management.
Logistics covers all activities associated with the procurement transportation, cross-border shipping logistics services to and from Mexico, overseas freight shipping, transshipment and storage of goods. Depending on the industry, supply chain logistics can comprise 5 to 50% of the product’s total landed cost.
Issues affecting logistics costs
Companies consistently encounter a variety of challenges that affect logistic costs. Issues may include high fuel prices and port delays, which increase transportation fees. Transportation costs rates high on the list for most enterprises because it makes up as much as 50% of all logistic costs.
Inventory carrying costs also has a significant impact, comprising more than 21% of total costs, according to Hofstra University. Companies incur the following expenses when holding goods in inventory:
Capital costs
Warehousing
Insurance
Taxation
Depreciation
In addition, management must take under consideration labor costs, which involve the physical handling of products— receiving and processing customer orders, labeling, packaging, and customer service. Furthermore, complicated international trade laws and security concerns may also lengthen delivery times and increase warehousing expenses.
Three tips for reducing costs
There are multiple approaches firms can take to reduce their supply chain logistic costs. Here are three of the most common solutions:
1. Accurate cost of overseas sourcing
Companies who have lived in surprise supply chains must work harder to ascertain the true cost of sourcing overseas. This includes accurately calculating freight, to the, brokerage, and inventory carrying costs. Management must also factor in other such as the cost of flying personnel overseas. Gaining an accurate understanding of the true total landed cost and total impact to the operations can help you make better comparisons when it comes to domestic procurement. Sourcing from the United States to a Canadian plant, distribution center, or customer may provide a more cost-effective alternative than sourcing from Asia.
2. Cost-efficient compliance processing
Transportation companies understand the value of implementing software solutions that automates the trade compliance process. These applications speed up the cycle time for many tasks routinely performed manually, such as document preparation and evaluation. Software can also eliminate common mistakes associated with manual responsibilities, improve internal controls, and enhance overall operational efficiency. Companies that automate compliance processes experience fewer delays at border crossings, which is improve on-time delivery. Firms can also maintain adequate inventory levels, increase customer satisfaction, and avoid costly penalties and fines.
3. Minimize express shipping costs
When some companies encounter a supply-chain issue that causes a delay, many will panic and approve an express global cargo shipping solution—the highest cost service level—for the product order. Control expedited overseas freight shipping costs or other international shipping expense by calculating the amount of goods the customer requires immediately and ship only that amount at the express service level. Transport the balance of the goods using the standard service level and lower cost.
How to Use Twitter for Your Advantage
For some, it might seem like Twitter is too new for the logistics industry—after all, it’s a mature industry meeting a brand-new way of expressing oneself online. But there are plenty of ways Twitter can benefit your logistics company, even if you’re wary of using social media. Here are three ways that Twitter can help you to communicate more effectively as a supply chain provider.
Connect with People in Your Industry
Connecting with others is a crucial element of leveraging your Twitter world and creating a space for community. If you’re not using Twitter because you think there aren’t enough users from your industry, you’re probably wrong. Especially for a third party logistics (3PL) company, it might seem like the older world of logistics and the far younger generation affiliated with Twitter wouldn’t connect. Nope. There are hundreds (and probably thousands) of accounts related to 3PL warehousing, trucking, technology, transportation, and so much more. Retweet, ‘like,’ and follow those people in your industry when you see something you like. You’ll probably be surprised at the response.
Connect with Customers
Twitter can be yet another way of staying on your customers’ radar, apart from emails and phone calls. You could send updates to clients about new advancements in the company or share resources with your customers about exciting news in your industry. On the other hand, Twitter could be used to send delivery status messages when product is going to and from carriers, or coordinate pick-ups. This would create a chain of tweets that would allow for easy tracing—if there was ever an issue, you could immediately look back and find what the issue was, and keep a client informed.
Promote Your Brand and Leverage Your Content
We’ve all heard that content is key. Sprucing up your brand with engaging content is a great way to reach your customers. Write blogs, create eye-catching graphics, and tweet about them. Share your white papers, case studies or articles from other key figures in your industry. And make sure to share that content on a regular basis so you get in front of the people you want to connect with. And if you’re already well-connected with both customers and people in your industry, you’re more likely to receive retweets and likes in return.
Here’s a few fun facts about Twitter
“There are 310M monthly active users.”
“80% of active users access the site via mobile.”
“Tweets that include links are 86% more likely to be retweeted.”
“42% of Twitter users use Twitter to learn about products and services.”
“85% of followers feel more connected with a small business after following them.”
“67% of Twitter users are more likely to buy from the brands they follow on Twitter.”
“70% of small businesses are on Twitter.”
“63% of people follow [small businesses] to show their support for them.”
“The more you tweet, the more followers you will have.”
Cargo Freight Claims
Today’s freight industry runs at rapid speeds to meet customer delivery demands. One event that can disrupt the flow of your freight management operations and supply chain is damaged or lost cargo. The majority of shipments are picked-up and delivered on-time and intact, but knowing what to do and who to contact if you need to file a freight claim can be a key differentiator to minimizing downtime.
These 4 guidelines will help keep your supply chain operating efficiently:
How to Avoid Freight Claims
What to Do the Moment a Claim Occurs
What Are the Common Reasons Carriers Decline Claims
Tips for a Faster, More Efficient Freight Claims Experience
1. How to Avoid Freight Claims
Choose quality over price when selecting a carrier
Sourcing a carrier based on price over quality of service could result in a lot of headaches (as the saying goes, you get what you pay for). If you’re shipping products regularly, do your research and make sure the carriers you use have been thoroughly vetted with the highest level of safety and quality standards. Know the ratio of a carrier’s total shipment count versus their claims count, and find out what other shippers are saying about their experience with that carrier. Front-end research can eliminate potential disruptions.
Package your shipments properly
Proper packaging is critical to preventing cargo damage. If you’re packing items in boxes, make sure your commodity doesn’t exceed the weight limitations of the box. Select a proper box size that allows your item(s) to fit securely inside without excessive empty space. Ensure your product is protected by cushioning material on the inside of the box and stacked on proper pallets and shrink wrapped. If items are shipped loose, your cargo could experience a lot of turbulence, so make sure to package your items to withstand typical LTL shipping treatment. Freight claims can’t be filed on packaging damage alone. The purpose of packaging is to protect your goods from damage.
2. What to Do the Moment a Claim Occurs
When receiving a shipment, be sure to take your time examining the delivery and paperwork. Using the Bill of Lading (BOL) and delivery receipt, verify delivery address, shipment information, count the items on the BOL compared to the quantity being delivered, and inspect the condition of the shipment. If you identify any damage or discrepancies, follow the below tips.
Record specific damage and/or loss details on the delivery receipt
The delivery receipt is a legally-binding document. You must notate all damages, shortages or evidence of pilferage to cartons and containers on the delivery receipt and Bill of Lading (BOL) prior to signing. If a shipment is accepted without exception (i.e., the receiver doesn’t note specific information about what is damaged and/or shorted on the delivery receipt at the time of delivery), then a freight claim will be considered “concealed,” and difficult to resolve in your favor. All damage and loss notation must be clear and specific. Phrases such as “subject to count/inspection,” “potential damage,” and “subject to review,” will not be considered an exception. It’s also a good idea to take pictures of the damage for claim documentation.
Gather documentation to support your freight claim
By law, you must provide three pieces of evidence to support your claim:
Prove the goods were in good condition when shipped.
Prove the goods were damaged when delivered (or weren’t delivered at all).
Support the value of what you are claiming as damaged/missing.
Ensure you complete the appropriate claim form, detailing every item you are claiming. Include quantity, weight, and value. Collect the invoice showing what your cost was (i.e., your vendor invoice or manufacturer invoice) and the sales invoice (i.e., indicating the amount for which you sold the goods). Also, provide pictures, packing list, signed BOL, and signed delivery receipt.
Pay your freight bill
If you don’t pay your freight bill, then the contract hasn’t been completed between the two parties. Throughout the claim process, the freight bill remains valid—the invoice is not put on hold and isn’t voided automatically. If the carrier provides a legitimate declination on the freight claim, they are still owed payment on the freight bill. If a claim is approved and carrier negligence is demonstrated, the carrier won’t pay if the freight bill remains outstanding. If shipping with a 3PL, note the 3PL isn’t the liable party unless otherwise stipulated in your contract.
3. Common Reasons Carriers Decline Claims
When presented with a claim, a carrier must prove they were not negligent. The carrier may also decline liability by using one of these five defenses outlined in the Carmack Amendment, a law created for uniformity in rules governing interstate shipping.
Act of God – Hurricane, weather, driver sustains injury outside of control (i.e., stroke)
Public enemy – terrorism, armed robbery
Act, or default of the shipper
Public Authority – the Government, vehicle impound
Inherent vice or nature of the goods transported
It’s not often we see claims declined for reasons one, two or four. If a carrier does reject a claim, it’s usually for reason three or five. The following are the principal reasons carriers deny claims:
Improper/Insufficient packaging
The carrier will deny the freight claim if the shipment wasn’t packaged according to industry standards, or if it couldn’t adequately protect the load.
Concealed claim
The carrier cannot decline a claim because the receiver didn’t notate damages/shortage on the delivery receipt, but if no additional evidence can be provided to prove the carrier caused damages during transit, they will decline the claim.
4. Tips for a Faster, More Efficient Freight Claim Experience
Give carriers time to investigate
Carriers have 30 days from the date of the claim submission to acknowledge receipt of the claim, then 120 days after that to investigate. The National Motor Freight Traffic Association (NMFTA) also allots carriers additional 60-day blocks of time after the initial 150 days, if they haven’t reached a decision, as long as they provide written status updates. Create a calendar reminder every 15-20 business days to track the age and status of the claim.
Provide additional documentation or information if the carrier requests it
Throughout the process, there may be multiple people reviewing a claim, especially for high-value shipments. One person may spot something that another person missed and need information from you to properly investigate. These requests can come any time within the 150-day process, and the clock is paused when the carrier sends an inquiry. Sometimes, a phone call to the carrier is all that’s needed to clarify the inquiry.
Purchase shippers Interest Insurance
Unless otherwise stated in your contract with a carrier and 3PL, every LTL shipment will fall under the carrier’s limits of liability. The liability limits may be based on class/weight (e.g., class 60 pays $1.50 per pound), products (e.g., furniture pays $2 per pound), and whether the product is new or used (i.e., used is typically $0.10 per pound). The carrier may pay per a general maximum liability (e.g., $15 per pound) or decline the claim entirely because the products are listed on their “restricted/excluded” list. Purchasing shippers interest insurance confirms your products are covered at the invoiced value, and not limited to carriers’ published tariffs.
Truck Shortage
A nationwide truck shortage is forcing thousands of shippers into a tough choice: postpone all but the most important deliveries, or pay dearly to jump to the front of the line.
For Example, Michelin North America Inc. cut its daily shipments of synthetic rubber from one plant by a fifth earlier this month and is at times paying double its usual price for temperature-controlled trucks, said a logistics manager at the tire manufacturer.
Several factors have converged to overwhelm the trucking market. Freight volumes in December hit near-record levels for that time of year, on the back of a strengthening economy. Retailers are replenishing stocks after one of the strongest holiday sales seasons in recent years. Manufacturers are also shipping more cargo; in December, industrial production had the largest year-over-year gain since 2010, according to the Federal Reserve.
What’s more, bad weather and a new federal safety rule that took effect in December have crimped the supply of available trucks. Diesel prices are near a three-year high, adding to transportation costs.
In the spot market, where shippers hire trucks on short notice, there were about 10 loads waiting to be moved for every available truck in the week ending Jan. 20, compared with three in the same week last year, according to online freight marketplace DAT Solutions LLC. Spot-market prices for dry vans, the most commonly used big rig, are up more than 20% year-over-year. Analysts expect long-term contract rates that shippers negotiate with carriers to rise by between 5% and 8% this year.
Beer distributor Constellation Brands Inc. and food companies Campbell Soup Co. and the J.M. Smucker Co. have all cited rising freight costs in recent earnings calls.
“Literally every possible thing that could be going against a shipper is happening right now,” said Michael Redisch, a principal at Chicago-based freight broker Atomic Transport LLC.
Trucking fleets are adding capacity, but it can take months or even years to catch up with demand. Meanwhile, they are getting pickier about which manufacturers and retailers they work with. Companies sometimes find it hard to convince truckers to pick up cargo at warehouses known for long loading times or traffic jams at the gate.
A new federal safety rule in December requiring drivers to track their hours behind the wheel with electronic logging devices, or ELDs, has exacerbated the problem. Prices shot up for some routes that now might take two days instead of one because of stricter timekeeping.
January is typically a quiet month for freight. But in the first three weeks of January, national average spot truckload rates were higher than during the peak season in 2017, according to DAT.
Extreme weather has made trucks even harder to come by. During the “bomb cyclone” that closed roads and ports along the Atlantic seaboard this month, trucks were in such short supply.
Analysts expect capacity to become scarcer in April, when produce shipments pick up and full enforcement of the ELD rule kicks in. Vehicles without the devices may be removed from the road.
International Shipping
There are various parts and parties to an ocean bill of lading or air waybill for an international shipment. The parties involved and listed on the bill of lading or air waybill are the shipper, consignee, and the notify party.
The Notify Party is the name, address, and contact information of the person or company who should be notified prior to or upon the arrival of the cargo. Depending on the type of bill of lading that is issued, the notify might be the actual buyer or consignee that is receiving the cargo, or the notify could be the customs broker or forwarding agent. In some cases the notify party may be a trader or commodities broker.
While the ocean, air carriers, and forwarders involved do not have a contractual obligation to provide an arrival notice, most carriers will send an arrival notice to the notify party either prior to or upon arrival of the cargo to the final port or airport of discharge. The arrival notice contains vital information that is required in order to obtain freight release, customs clearance, and track the cargo. This arrival notice will only be sent to the notify party, and most carriers will not send the arrival notice to any other party that is not shown on the bill of lading or air waybill.
In order to avoid delays with release processing, and unnecessary storage charges that may arise due to failure to receive the correct arrival information, it is very important that the correct contact information is provided and shown on the documentation for the notify party. In many situations, it would be advisable to list your customs broker or freight forwarder as the notify party.
Can Transloading Reduce Costs?
Transloading is the method of bringing ocean containers inland to distribution centers without sorting the contents to a single destination. Transloading can reduce shipping costs by reducing total landed costs through reduced handling. Below are some specific things to consider when analyzing the potential for shipping costs savings via transloading:
ASSESS CARGO
Additional fees will accrue for containers with more than a specific number of cartons. The additional price of several thousand small cartons could negate the freight savings of transloading.
CONSIDER DESTINATION
Locations farther east from the U.S. West Coast discharge port are more costly. Be sure that your destination would still bring you freight savings.
CONSOLIDATION IS KEY
Ocean containers that can be consolidated into fewer, larger domestic trailers will bring you the highest cost savings. Also, shipping full loaded ocean containers to a single container freight station is optimal so that it can be transloaded at the port of discharge and be merged with other inbound cargo to be shipped to its destination using the best transport mode for your needs.
PALLETIZING
Ocean cargo is rarely palletized at the point of origin in order to maximize space in ocean containers; however, Palletizing during the process of transloading may improve efficiency once it arrives at the distribution center.
TRANSIT TIMES
Be aware that unloading, handling, and reloading ocean containers at the port of discharge is time consuming and will affect transit times. You should allow up to three days for this process to avoid any delivery commitment issues.
CONSIDER MERGING
Merging in transit enables products to be combined even when they are arriving in containers from different origins and shippers. International products can also be combined with domestic suppliers who share the same distribution center to aid in efficiency.
CUSTOMS CLEARANCE
Ocean containers are commonly cleared through Customs at their final inland destinations; however, it could be beneficial to make entry at the port of discharge. This way there is no need for the shipment to be moved in-bond, which brings additional costs; and it also increases flexibility in handling cargo.
EFFICIENT DELIVERY
Transloading gives you the option to bypass distribution centers and expedite delivery to the customer. This reduces distribution center charges and improves transit time to keep supply chain expenses lower.
Tips for a Successful Freight Business Plan
Designing a successful Freight Business Plan
There is so much that goes into getting your freight business off the ground. Without the right business plan entry into the freight industry will be far too competitive and you will find yourself constantly losing out to your competitors. One way to build your business up from the ground up smartly for endurance is to have a successful freight business plan. What goes into that business plan will determine the steps necessary to create the type of company that you want. The more detailed your plan the better though the numbers will change almost daily. Here are our 6 freight agent tips for designing a successful business plan for your freight business that will get you off to a solid start.
#1: Let Your Executive Summary and Mission Statement be Your Guide
Every business plan begins with a Mission Statement or Executive Summary. Both should be included in your business plan as well as a Company Overview/Summary. They are three separate animals and should be treated as such. They have one thing in common; they lay the path and vision for your company. Here is a brief overview of how to craft all three:
Mission Statement
Your Mission Statement tells prospective investors and reminds you what is at the core of your business ethos. What is it the problem that you want to solve? Your mission statement should be no longer than a short three or four sentence paragraph.
Executive Summary
Your Executive Summary is your roadmap for reaching your destination as a freight business. This is where you state how you will execute your vision in practical terms in a brief one or two sentence overview.
Company Summary
Your Company Summary defines what your freight business is all about. This is a short paragraph stating your specialty or focus and your long-term business goals. Do you want to be the leading freight broker in the country or just one of the players?
#2: Use Real Market Research to Define Your Target Market
The most important freight agent tip in this regard is to use real numbers to make your pitch. Go beyond just stating the problem here. Include real data showing that there is a real need in your area for your types of services and that there currently isn’t anyone fulfilling that need.
Who will benefit the most from your services? Who else? Those are the questions that should guide your market research for your Target Market Analysis. Your location, your specialty, and your local and regional competition will all factor into your analysis.
Once you know your market, your business plan should include a marketing plan segment detailing how you will attract those who need your services to use you. Start with defining your services:
What types of cargo will you specialize in?
Will you provide your own trucks?
Is there a weight limit for load size in your services?
Are your service rates comparable to other providers in your area?
Don’t forget to include your Market Summary. This should be a concise one-paragraph explanation of the findings of your market research and what those findings mean for your business prospects and your strategy for using that data to build your business.
#3: Map Out Your Long Term Goals Too
Your business plan is not just for mapping out your goals over your first few months or first couple of years. You should include your long-term business plan as an addendum to your overall business plan. Mapping out your future will help to guide you as you work to get there.
#4: Describe the Type of Business You Ultimately Envision Having
Today you are a startup freight agent. What will you be in a year? In five years? In 10 years? When you retire or sell your freight agency what will your company look like then? Describe your ultimate goal and where you envision your company at its peak. Write that into your company’s vision.
#5: Explain How You Will Finance Your Freight Business
Finally and most importantly if you are seeking investors, explain how you are going to finance your freight business. Map out your estimated monthly expenses versus anticipated monthly revenues. Be as detailed as possible and include any business loans, grants, or personal funds available to you.
You may also need help with the Business Financing section of your business plan. A licensed accountant or CPA could help you to determine your financial risks based on your industry specific niche, your operating costs, your revenues, and your market analysis to give you a levelheaded projection of your financial prospects.
Freight Agent Tips to Approach Inflation
If you pulled into any gas station today and saw a sign that read $.21/gallon, you would think you were dreaming. Gasoline has not cost 21 cents per gallon since 1945. In 1945, that would have been a reasonable price especially considering that minimum wage was only $.40 per hour back then. Costs go up and when they do wages have to go up as well otherwise sales for products and goods go down; businesses start to lose money, jobs are lost, the economy begins to spiral, etc.
Conversely, if you walk into the store and a loaf of bread costs a thousand dollars, hardly anyone would be able to afford bread anymore. The business has to bring the price down or else they will never be able to sell their loaves of bread; that is unless you have the last few loaves of bread on earth, then the price keeps going up. That is generally how inflation works. Paying only a thousand dollars or so for a brand new car seems unimaginable in today’s dollars and cents. However, if you only bring in $40 or $50 per week with a good job, it makes more sense.
Freight Agent Tips for Inflation
As a freight agent, how do you account for inflation when setting your rates? Here are 5 tips to help you set your prices where you will make a fair profit while keeping your rates and fees competitive.
#1: Factor in Overlooked Costs
You are an independent freight agent. You are the one responsible for your insurance costs, your employee costs, your medical costs, and taxes. Instead of narrowly focusing on transport and fuel costs, remember to factor in overlooked costs that go into meeting your obligations at the end of each pay period.
#2: When Your Costs Go Up Review Your Rates
Reviewing your cost structure versus your rates schedule is something that you should be doing each month if not every week. When your carrier’s rates go up, you have to reevaluate your rate schedule as well as:
Cost Margins
Financing Structures
Competitive Bidding
In order to stay competitive you have to give yourself wiggle room for negotiations with your highest paying customers and heaviest loads. Going too far below your breakeven point will keep your business floundering financially in the red. Balance your need to retain and attract business with your need to cover your monthly expenses.
#3: Reduce Overhead Not Service
If you are staying ahead of the trends then you know that as an independent freight agent, you have the tools today to compete with national chains without paying the exorbitant overhead costs.One way to combat inflation through overhead reduction is by doing your job well. With a team of carriers with clean driving records as a freight agent you can keep costs down for things like:
Licensing
Bonds
Insurance
Legal Fees
Taxes
Still, the best way to stay on top of inflation is to reduce your overhead costs so that you can be more nimble as a business. Using tools that reduces your overhead greatly by giving you the power to manage shipments like a pro without paying for additional employees or third party services.
#4: Using Advanced Technology to Your Advantage
Advanced technology is your playing field leveler if you are a small or startup freight agent. Transportation Management Software (TMS) and shipping interfaces are making it much easier for brokers and freight agents to build their niche in the industry. You will need to master:
Online Marketing
Social Media Advertising
Mobile to Desktop Interfacing
Mobile Scan Technology
Direct Pay and Invoicing
Many of the biggest names in shipping are doing their best to reduce their competition from firms like yours that are using advanced technology to compete. You can choose to sell them the freight agency that you have built up or you can continue to compete on your own terms as an independent freight agent as long as you please.
#5: Focus on Giving the Best Service
Finally, all of the technology in the world cannot replace good old fashioned business sense and customer service. Even in a digitized world, you need to get to know your customers. You can do that using a high-quality customer relationship management (CRM) program.
A CRM will help you analyze past customer behavior in order to better predict future behavior. You can look back over your sales history and create reports that will help you improve on your sales numbers in the future.
ELD Rulings - Are There Advantages?
In December 2015, the Federal Motor Carrier Safety Administration (FMCSA) released a rule that requires trucks to use electronic logging devices (ELDs). The mandate has received mixed reactions from those in the trucking industry. The ELD rule is intended to help create a safer work environment for drivers, and make it easier and faster to accurately track, manage, and share records of driving data. The way that the ELD functions is by synchronizing with a vehicles engine to automatically record driving time, allowing for easier, more accurate hours of service recording.
On December 18, 2017, the new regulation took effect, requiring by law the use of ELD for truckers to keep track of their hours of service. In addition to keeping exhausted drivers off the road and limiting accidents, the new rule is designed to better hold companies and drivers accountable for hours of service compliance. How vital is it to reduce driver fatigue? According to information from the National Highway Safety Administration, drowsy driving caused 72,000 accidents and 44,000 injuries in a recent year. It has even been estimated that up to 6,000 deaths are caused each year by drowsy drivers. Commercial drivers are among those who are most likely to fall asleep behind the wheel.
The FMCSA believes the new ELD mandate will eliminate 1,844 truck-related accidents per year, saving 26 lives and preventing 562 injuries. The rule also stands to force those drivers and carriers that make a living breaking the rules off the road.
Besides the projected safety improvements, this new regulation has caused quite a stir in the transportation arena, but what does it all mean?
PROS:
1.) The ELD will save drivers precious time that they no longer have to enter data into paper logs, increasing efficiency and saving wasted time.
2.) Increasing dispatch efficiency by allowing fleets to better plan out their loads and deliveries.
3.) Decreasing fuel costs by reducing trucks downtime and lowering crash rates all translates into more money for companies and drivers.
4.) The ELD can also assist in additional regulatory compliance, such as driver vehicle inspection reports, etc.
CONS:
1.) Opponents argue the ELD actually produces a decrease in productivity, cutting down the number of miles traveled, and essentially increasing spending through the necessity to add more drivers to haul freight.
2.) Small firms are at a disadvantage, and the new regulations will make it difficult for them to afford the new devices and continue to pay for their other expenses.
3.) Drivers are opposed to being micromanaged and having their every movement tracked electronically.
4.) The safety improvements are all just projected.
5.) The Owner-Operator Independent Drivers Association feels that their Fourth Amendment Right are being jeopardized, and see the ELD ruling as unconstitutional.
Overall, it is very difficult to project exactly how the new ELD mandate will pan out once the regulation goes into effect. Many truckers have already abandoned paper logs in favor of ELDs because of the safety advantages they offer. For smaller companies who have not yet adopted the ELD program due to expense, according to one estimate, using an ELD will cost an average of about $500/truck per year. Many smartphones and tablets can even be used as ELDs, reducing the need to buy new equipment.
The biggest concern surrounding ELDs is that they may force a decrease in driving hours and thus hurt productivity. The ELD will not give them the authority to decide when they can take breaks or not drive through inclement weather. These concerns may be valid, especially given that there is already a shortage of qualified commercial drivers in many areas. If the existing drivers are held to extremely strict regulations, the industry as a whole could suffer. Eventually, the FMCSA may have to revisit the mandate and adjust it to strike a balance between safety and productivity
The Industry Can Not Run Only on Techonology
In the early days of the Internet, movies like The Terminator gave humanity a pause to reflect on the possibility that machines could one day take over. The way technology is advancing at a lightning pace nowadays, it seems more possible than ever in the workforce – but is it?
Could Machines Really Do it All?
Every industry, not just freight logistics, has seen a complete revolution in the way that they operate due to technology. Prior to the Internet, most of the work of a freight agent was done over the phone or via fax.
The type of next day demand that freight agents deal with today would not have been possible just two decades ago. But now technology has made automating many business operations, even the more complex ones, much easier to do and extremely more efficient. Humans, on the other hand, have to be paid a salary, be given time off, and add tens of thousands of dollars to overhead expenses; machines do not. The debate touches on all levels and has even been at the center of the national political discussion.
At the heart of it is a simple question that businesses continually circle: “Why can’t we just handle every transaction with a machine?” If a business owner can save more money by automating everything, why would they burden their budget with payroll?
Automation is Cheaper, Faster, and more Consistent
Expense is not the only benefit of technology’s ability to automate transactions. Automation makes logistics move smoothly and reduces the chances for human error. Our software is designed to automate as many of those processes as possible – to save time and make logistics more efficient.
Furthermore, without automation your competitors hold a decisive advantage over you. Just to compete in any industry today, technology has to be a part of your overall strategy. In logistics, technology has automated many transactions including:
Shipment Booking
Supply Chain Management
Administrative Tasks
Real-Time Delivery Confirmation
Claims Submissions
With all that technology has brought to the logistics industry particularly, is humanity becoming obsolete? Of course not! Trucks need drivers and drivers need directions, but technology needs humanity for more reasons than just that.
The Human Element is Irreplaceable
The most advanced technology could never replace the human element. Even with automated booking, shipment processing, and delivery receipt confirmations, there are still humans throughout the chain that add elements that machines cannot.
#1: Problem-Solving
If the problem is a series of numbers, machines have the clear advantage over humans. However, when it comes to more complex problem solving that requires reasoning, machines just cannot compete.
#2: Human Understanding
When an emergency occurs and the world comes to a standstill, your machines have no clue. They continue to operate regardless until the power is shut off. Human understanding enables people to deal with unanticipated and unexpected events, which is critical in the logistics business.
#3: Glitch Fixing
Man created machine so when the machine breaks down, it cannot fix itself. Humans are needed to fix glitches and problems in the works. Machines are not a self cleaning oven and when it needs fixed, humanity is necessary.
#4: Creative Thinking
Machines cannot think and therefore cannot think outside of the box. Many business transactions and dealings require creative thinking for future planning and for problem solving. The human element here is simply irreplaceable.
#5: Can Do
Finally, technology can provide the ability to build a robot that can do a lot of things but no machine can replicate a human. There are extraordinary machines that defuse bombs, perform delicate surgeries, but none move and function the way that humans can.
Weather-Related Shipping Challenges
Weather-Related Shipping Challenges Add Up to Big Bucks
Every business is vulnerable to weather variances, but freight brokerages are particularly vulnerable. While most delays caused by weather happen on the ground for trucking companies, freight agents can experience challenges even when operating a multi-modal transportation business.
Say your ground carriers are unable to fulfill a shipment because of a weather-related challenge. If your alternate is air transportation, those same challenges may impact air transportation, too. Almost three quarters of all flight delays are due to weather and nearly 85% of weather delays prevent planes from ever taking off.
Recent weather models show the increasing erratic nature of weather patterns are creating daily weather variances that make predicting weather-related challenges harder. Not to mention the practically annual unprecedented natural disasters recently:
2012: Hurricane Sandy in the U.S. shut down the Northeast corridor and disrupted ground and air travel for weeks.
2013: Massive tornado outbreak spans 15 states east to west from Arkansas to Mississippi and north to south from New Jersey to Florida, resulting in record flooding and damage preventing air and ground travel.
2014: Unprecedented winter storm spans 20 states completely clogging transportation routes in the Northeast.
2015: Record-breaking wildfires shut down California’s ports and airways burning over 10 million acres in the Western states and causing over a billion dollars in damages.
2016: NOAA reported that the U.S. experienced a dozen weather-related disasters.
It’s clear that no matter what region, what state, or what country you operate in, every freight agent needs several alternatives for managing weather-related challenges.
Understanding the Risks to Your Supply Chain Due to Weather
Did you know that last year, at least three ocean vessels sank because of hurricanes and tropical storms? Weather will affect or disrupt every mode of transportation. Evidence shows that these extreme weather events are going to grow increasingly more severe and happen more and more routinely for the foreseeable future. If the roads are closed, planes are grounded, and you can’t get your cargo out of port, what do you do? As a freight agent how can you safeguard your deliveries against delays, cancellations, and mass transportation disruptions due to weather?
Here are 3 safeguards to mitigate your damages and avoid being caught without a viable alternate when disasters strike.
#1: Strategically Placed Warehouses and Distribution Centers
Many industries from retailers to pharmaceutical companies maintain an excess of goods in different locations to prepare for typical business fluctuations. If a retailer’s sale leaves shelves bare, they can access additional goods from nearby warehouses.
This concept is called “nearshoring” when it applies to freight logistics. Instead of having to ship a load cross-country, you have distribution centers strategically located so that if part of your supply chain is shutdown, your operations can still move forward.
#2: Broad Carrier Network Including Ground, Air, and Ocean
One of the best ways for a freight brokerage to avoid weather-related challenges is by having a broad carrier network across multiple modes of transportation. If the roads are shut down, do you have an air carrier in your network?
If flights are grounded, can you still ship via ocean? The broader and more diverse your carrier network, the easier it is to manage weather disruptions.
#3: Utilize Data Analysis to Anticipate Weather-Related Challenges
If you are only analyzing data where you have historically shipped but you have since expanded to new territories, you are not getting a full picture of the challenges you face. Data analysis helps you proactively analyze weather-related risks wherever you operate so that you can predict disruptions.
Does Location Affect My Freight Brokerage?
Different States Offer Different Benefits
Some states have higher registration fees than others. Some require additional inspections or certifications to operate that can add up to lots of money. Even to become a freight broker, you will find different states have different standards for licensing and titling for instance.
Another area that can affect your bottom line by location is local and state taxes. Even though you can operate your business from any location, your tax treatment will depend on where you establish your freight brokerage. On the plus side, you can rely on uniform national standards for most of your operation costs.
Some states have heftier tax burdens for businesses than others, however, many offer special tax incentives and credits for independent contractors and small business owners. Nearly everything you use to operate your freight business is deductible including your home office as well as:
Internet Fees
Continuing Education and Licensing
Marketing
Employees
Costs for Health Insurance
But these are not the only outside costs associated with operating a freight brokerage from state-to-state. One factor in particular can be hugely important when deciding where to establish your freight brokerage; the gas tax.
Factoring in the Gas Tax
A study recently conducted by the API determined which states had the most favorable tax treatment when factoring the gas tax. They ranked the top 5 states with the highest gas tax this way:
Pennsylvania
California
New York
Hawaii
Connecticut
Overdrive rates the states based on overall business burden using numbers from www.truckstop.com and found that southern and Midwestern states dominate the market for freight brokerage-friendly states. According to their rankings, the top 5 states stack up this way, # 1 being most friendly:
Arkansas
Virginia
Tennessee
Wisconsin
And Michigan
You can take a look at the different regulations by agency at the IRS website Trucking Industry Overview. Always keep track of your business expenditures on a daily basis and verify your deductions and tax burdens with a tax professional.
The Size of Your Freight Brokerage Matters
The bigger your freight brokerage the more costs you will have. From hiring more employees, to renting office space and buying office equipment, the size of your freight brokerage matters. In addition to operating costs, your insurance costs will go up as you expand your business as well as:
The Weight of Your Loads
Costs by State For Business Licensing
Local Regulations
And Other Preconditions for Business Operators
Some states have fewer restrictions, regulations, and business operator requirements than others. Overdrive also ranks the worst states for freight operators based on rates for outbound loads. They noted that out of all of the states over the previous two years it has been Colorado who has had the worst rates on outbound loads. On this end it was the northeastern states that topped the list of the worst including:
Rhode Island
Connecticut
West Virginia
Colorado
South Dakota
When you factor in gas taxes, business operator costs, excise tax, and load rates it really does matter where you decide to build your freight brokerage. Individual freight brokers and agents earn higher salaries on average in bigger cities but when comparing apples to apples, freight brokerages located in the south and Midwest have the lightest overall operating burden.
TMS Matters the Most
You can establish your freight brokerage in Colorado and still make more money than a brokerage operating in say, Virginia and save more on overall costs using a top flight transportation management software program. TMS cuts your costs exponentially and reduces overhead to just a few thousand dollars a year by:
Providing Real-Time Data
Reducing Hours Searching on Load Boards
Practically Eliminating Empty Returns
Offering Analytic Tools
Automating Documentation Processing and Transmission
And Much More