We’ve kept track of the many news stories and topics affecting transportation, supply chain and logistics this month. Here is quick summary of some of the trendiest topics out there:
BF Goodrich Recalls Commercial Light Truck Tires. BF Goodrich Tires recalled about 129,000 commercial tires. The recall was reported to the NHTSA because the tires have experienced a rapid loss of air pressure. The product recall greatly effects the US market since about 104,000 of the recalled tires were sold in the US. To date, there have been no injuries or deaths reported due to the tires.
Foxx Sued by Bankrupt Bus Company. Allegations surfaced that Andrew Foxx, US Transportation Secretary, was paid nearly half a million dollars by a bus company during his former role as mayor of Charlotte, NC. The company, DesignLine, is now bankrupt. Foxx’s lawyer said that he expects the suit to resolve in Foxx’s favor.
Platooning System On-Highway Testing. In 2016, Pelton Technology’s platooning system will be introduced to a trucking fleet’s operations. The plan is to show how effective the technology is for fuel economy and safety. So far, Pelton has tested its platooning system for about 15,000 highway miles. (What is platooning? Learn more here.)
Diesel Average Falls (Again). Throughout August, diesel prices continued to drop. For the week of August 3rd, the average price of a gallon of on-highway diesel fuel was down for the 10th consecutive week, according to the US Energy Department. The following week marked an 11-week slide; the price dropped 5 cents per gallon. Then, the week of August 17th the average price showed a slight fluctuation, barely extending a 12-week streak of falling prices.
UPS Completes Acquisition of Coyote Logistics. The acquisition was made official on July 31. The deal, closed at $1.8 billion, is significant because it equips UPS as a major player in an increasingly crowded truckload brokerage space. UPS said Coyote will operate as a wholly owned subsidiary of UPS.
Catch up on news you’ve missed from the past couple of month’s here:
The Commercial Driver Act (S.1672), introduced last month by Sen. Deb Fischer (R-NE) would let truck drivers under the age of 21 operate commercial motor vehicles across state lines. Now, 18- to 20-year old drivers are only allowed to drive intrastate. Participating states would have to enter the agreement and standardize the licensingrequirement for drivers who will travel between states.
The American Trucking Association supports the legislation. “Right now, an 18-year-old can drive a truck within the borders of his state, but not to deliver goods across state lines—this means a young adult could drive a truck from El Paso, Texas to Dallas—a distance of more than 600 miles—but couldn’t cross the street to deliver that same load from Texarkana, Texas to Texarkana, Ark.,” said ATA President and CEO Bill Graves. According to the ATA, a main benefit of the Commercial Driver Act is that states would be able to impose safeguards to ensure young, inexperienced drivers learn safe trucking practice for the road.
The ATA believes the change will draw younger people to trucking jobs; the legislation creates jobs for high school graduates who suffer from high unemployment rates. And, the US trucking industry is experiencing a driver shortage that is estimated to be short about 50,000 drivers, and will increase to 240,000 drivers by 2023.
On the other hand, Sen. Deb Fisher’s legislation meets strong opposition by the Truck Safety Coalition (TSC). The TSC opposes Fischer’s language, mentioning an increase in truck-related crashes and injuries since 2009. According to the TSC, drivers under 21 lack experience and have a higher crash risk.
The American Transportation Research Institute may have an idea to resolve the issue: it will work on a “younger driver assessment tool” that identifies experienced drivers’ behavior features and finds ways to teach young drivers such behaviors.
The legislation is supported among professionals in the trucking industry; it proposes changes that could engage more young people to drive and will help relieve the driver shortage. Alternatively, there are safety concerns when it comes to young, inexperienced drivers who will operate long hours. The disputes will continue, while the highway bill is set for debate in the Senate.
PLS Logistics Services Named One of Pittsburgh’s 100 Fastest Growing Companies
CRANBERRY TOWNSHIP, PA – August 24, 2015
PLS Logistics Services (“PLS”), a leading provider of technology enabled transportation management and freight brokerage services, was named one of Pittsburgh’s 100 fastest growing companies by the Pittsburgh Business Times. The Pittsburgh 100 ranks the fastest-growing private companies in Western Pennsylvania.
On Aug. 20, the Pittsburgh Business Times unveiled the Pittsburgh 100 Class of 2015, consisting of 100 firms that had the largest rate of growth over a three-year period from 2012 to 2014. PLS ranked 83rd on the list of the region’s fastest-growing companies.
An awards ceremony was held at the Duquesne Club in downtown Pittsburgh to highlight this year’s winners. Greg Burns, Chairman, President & CEO of PLS, said, “It’s an honor to be named to the Pittsburgh 100 list,” says Greg Burns, PLS’ Chairman, President and CEO. “Our success would not be possible without the support of our valued customers, carrier partners and the hard work and dedication of our employees. By providing initial and ongoing value to our customers through innovative transportation management and brokerage solutions, we are poised for even more growth in the future.”
With more than 600 employees nationwide, PLS Logistics Services provides transportation management and freight brokerage services across all industries using all major freight modes. The company’s carrier network consists of more than 20,000 trucking companies, major railroads and barge companies.
PLS Logistics Services is a leading provider of technology enabled transportation management, freight brokerage and outsourced transportation solutions for shippers across all industries. PLS handles millions of loads annually across all major freight modes: flatbed, van, LTL, rail, barge, air and ocean. The PLS carrier network consists of over 20,000 trucking companies, Class-1 railroads and major barge companies. To learn more, visit www.plslogistics.com or call (888) 814-8486.
Handling freight claims requires time and effort from a shipper. There are certain processes , rules and regulations that should be followed to ensure freight claims are resolved. A third party logistics (3PL) provider, like PLS Logistics, works on behalf of the shipper and processes a clients’ freight claim from beginning to end. A 3PL does not have liability for freight loss or damage; instead it works as a liaison with trucking companies and provides communication through the claims process. Shippers benefit from the expertise of freight claims’ management, when claims are properly filed and processed without any holdups.
If a PLS client finds that its freight is damaged or lost, it can follow these 6 simple steps. The PLS Logistics freight claim process looks like this:
1. Freight is Damaged or Lost
Time really works against the shipper here. The consignee should inspect the load as it arrives and before the driver leaves. A carrier is liable for all shipment loss and damage, with some exceptions (see Carmack Amendment).
2. Shipper Notates Bill of Lading
All visible and concealed damage or loss should be documented. A shipper should make specific notes of damage and shortage on the Bill of Lading. Keep all damaged freight and take photos if possible. A shipper’s “Golden Rule” for freight claims: Don’t sign the BOL before documenting damage/loss!
3. Consignee Contacts PLS
After notating the BOL, a shipper passes freight claim handling to PLS Claim Processing Department, and the investigation phase begins.
4. Inspection Request
PLS contacts the carrier, asks for inspection and ensures that all parties follow policies and regulations.
5. Carrier Schedules or Waives Inspection
Carrier may waive inspection, especially if freight value is under $500, but it reserves the right to inspect in all cases. Inspection is performed by a third party company.
6. Claim Handling
It usually takes 90 days to resolve a claim. PLS controls process, follows up on claim status and makes sure claim is paid in a timely manner.
For efficient freight claim handling, a shipper should keep all necessary documents:
Copy of Paid freight bill
Copy of invoice showing amount paid for goods
Copy of packaging slips
Standard claim form
An expert 3PL, whom shippers can outsource freight claim management, provides a hassle-free claim process and transparent communication through the entire process. Most importantly, a partner like PLS Logistics protects shippers from the frustration and expense of improper handling of freight claims.
According to the 26th Annual State of Logistics Report, the cost of logistics for U.S. businesses in 2014 rose 3.1 percent to just under $1.45 trillion. The total cost of logistics is equal to about 8.3 percent of the nation’s gross domestic product (GDP), a value that, by itself, is not alarming; however, all signs indicate that this number will rise significantly in the coming years.
There are a number of factors driving the rise of logistics costs: the ongoing driver shortage, limited capacity because of fewer trucks, a healthy economy and increasing interest rates. According to the ATA, the industry is currently short 25,000 drivers. There are just enough drivers to meet demand. But, this shortage is expected to get worse. The driver shortage is predicted to grow to a deficit of 239,000 drivers by 2022.
The driver shortage is a major issue facing shippers and carriers and is compounded by the fact that the economy is picking up. Since shipment volumes are increasing, it’s difficult for carriers to provide adequate capacity. Carriers will increase rates by 10% or more.
Interest rates will also encourage higher logistics costs. The Federal Reserve is anticipated to increase the benchmark interest rate for the first time since 2006, however, it is unclear when or by how much. If this occurs, it will also increase the costs of logistics operations.
Logistics costs will rise slowly in the next two years and then spike upward, according to Rosalyn Wilson, who has helped prepare the State of Logistics Report since 1994. The surge in prices will likely begin with one major carrier implementing huge rate increases, then the rest of the industry following suit.
What do Rising Costs Mean for Shippers?
In 2014, Wilson said shippers were able to negotiate rate increases from highs of 6 to 8 percent down to around 2 percent. This will not be possible any more. Transportation, due to the driver shortage and many other factors, will become expensive and difficult to manage.
The Boston Consulting Group (BCG) and the Grocery Manufacturers Association released a report about logistics challenges facing consumer packaged goods (CPG) companies. The results showed that more than 80 percent of respondents said transportation is their main obstacle. Other obstacles cited include capacity shortages, escalating costs and inconsistent service levels. Shippers who participated in the report said all recent efforts of cost-savings in the supply chain have been offset by transportation costs.
Everything from procurement to packaging is going to be more expensive for shippers, which means shippers have to react now to mitigate the oncoming rise in logistics costs.
Why are Shippers Outsourcing Transportation Management?
To ease the impact of existing challenges in the logistics industry, the two most valuable services a 3PL provides are reliable capacity and flexibility in service.
Most 3PLs offer scalable freight solutions, allowing a shipper to pay for the service they use. This means a more flexible pricing structure, letting shippers scale their volume of service up or down based on shipments, which is especially helpful in times of turmoil.
In addition, 3PLs offer custom solutions for moving freight. Many 3PLs will give shippers custom reports, supply chain consulting and TMS solutions. 3PLs utilize their carrier network to obtain lower rates. As experts, 3PLs leverage their wealth of industry knowledge to find the best carriers, routes and schedules. The level of service a 3PL is capable of providing is not possible through in-house transportation management.
Insufficient capacity is a scary reality for shippers – resulting in unsustainably high shipping prices or, worse, inability to move products out of distribution centers.
Some 3PLs have tens of thousands of carriers under contract that can move any type of freight, even at a moment’s notice, which can help a shipper avoid capacity problems. Also, 3PLs will help shippers improve their shipping facilities and procedures to help them become a preferred shipper of carriers. If a shipper is carrier-friendly and has good standing relationships with multiple carriers, finding capacity to ship freight won’t be difficult.
But, the question remains: how can a shipper establish and build a good working relationship with a 3PL?
These three areas will help shippers develop meaningful 3PL partnerships:
Communication – Improper communication is a common reason for failure in outsourcing. 3PLs should be viewed as a partner, not as a commodity.
Set a timeline and method of communication with a 3PL. It could be a daily email, weekly call or monthly meeting; whatever works best for both companies. Keeping an open line of communication is the first step in developing an effective partnership.
Once a line of communication is open, a shipper must dedicate resources to manage the entire relationship in general. The goal of managing communication is to ensure both companies are strategically collaborating on projects and are happy with the results.
Transparency – Transparency creates high quality, informative and effective decision making for both parties.
A 3PL should be knowledgeable of a shipper’s long term business strategies. Business intelligence and insight empowers a 3PL to plan for the future and provide the detailed, custom service a shipper needs.
In addition to long-term strategy, a 3PL should be involved in solutions across the entire supply chain. This doesn’t mean a shipper needs to consult a 3PL on every supply chain decision. However, if a 3PL understands how a shipper’s logistics processes fit into the puzzle of the larger supply chain, they will be able to apply more creative and more effective logistics solutions.
Trust – When a shipper takes a strategic approach to outsourcing, communicating and collaborating with a 3PL, they have to have trust that the 3PL will produce results.
A shipper must set realistic expectations when outsourcing logistics. Just because 3PLs are logistics experts does not mean they will be able to instantly fix every problem. It may take some time, working with carriers and analyzing shipping patterns, before a 3PL can come up with an impactful solution.
A shipper should try to work with a 3PL for a long period of time. This will give a 3PL time to come up with a unique, all-encompassing solution for logistics obstacles. Contractual agreements typically last 2 to 3 years. 3PLs need time to come up with innovative processes that fit a shipper’s specific needs.
Inbound transportation management is complex and requires a lot of attention. It often leaves shippers at a loss for proper strategy and tools. Inbound supply chain processes usually suffer because of a lack of control and poor visibility, compared to outbound transportation initiatives. According to an Aberdeen survey, 90% of shippers say they are not prepared to manage inbound freight. Deploying effective inbound management improves transportation efficiency, reduces cycle time and leads to cost reduction.
The most common mistakes in inbound vendor management are:
Leaving decision making to vendors
The first step to improve inbound freight management is to gain control over inbound freight. When vendors choose carriers and set up the shipping schedule, poor quality and timing can result in higher costs being passed down the supply chain.
Scattered inbound process
As the supply chain becomes more complicated, inbound freight purchases and control often lack collaboration among departments. Proper inbound management brings together data and process visibility to create inbound consistency.
Lack of planning
Relying on manual track and trace processes provides less predictability, which leads to shipping disruptions, excess inventory and supply chain dysfunction. It’s difficult to control inbound freight shipping without a clear and reliable plan.
Lack of control over inbound freight results in increased transportation costs, poor visibility of product flow and inadequate planning. To avoid these problems, shippers should recognize these 4 methods for efficient and controlled inbound freight management:
1) Use a TMS with detailed reporting capabilities for visibility. TMS software provides a collaborative space between shipper, vendors and suppliers where reliable data and performance analytics run through a single system and are shared by those with overlapping supply chains. A TMS helps automate manual tracking processes and paper work, and makes collaboration much more efficient.
2) Create a vendor compliance program. A vendor compliance program lets shippers find the right measurement methods and reporting on inbound freight performance. It proves to be the most effective method for consistency and reliability in vendor management.
3) Direct shipment control. E-commerce orders are often shipped directly from a vendor, which raises delivery quality issues for a company. The shipper must take control over delivery time and quality, since the vendor’s delivery quality represents the shipper’s brand.
4) Hire an expert partner. Using years of experience and proved solutions, a third party logistics provider will employ a custom inbound freight strategy, designed to improve performance and reduce costs.
Assessing inbound strategy creates better planning and effective use of technology, which help a shipper gain control over shipments and costs, and leads to substantial operational improvements and increased profitability.
In logistics, time is critical. A company’s cycle time is a significant, yet complex process that runs from the time a vendor ships materials to you through the point when you ship the final product to the customer. Cycle time is a measurement of how many units of product are received, produced and shipped in a certain period of time, and it indicates the general efficiency of the supply chain. A company’s cycle time consists of several linked parts:
production cycle time – total time producing a product
order processing – time of processing an order
cash-to-cash cycle time – time needed to regain financial investments
A long or extended cycle time tests a company’s ability to convert manufacturing costs to profits. A short cycle time maintains an efficient and agile supply chain. Productivity loss means wasted resources, extra costs, bad customer experiences and less success in the market.
Using cycle time as a performance metric can reveal insights into efficient and inefficient supply chain processes. Both internal and external factors contribute to the length of a cycle time. Some of the controllable factors for improving cycle time are: capacity constraints, labor, manufacturing congestion, inventory surplus, quality of product, and schedule flexibility and management.
Transportation management and processes effect the ability to reduce cycle time. By reducing the amount of time needed to transport an item from one link in the chain to another, a company will reduce the cycle time of the entire supply chain. The first step toward shortening cycle time is the measurement of present processes and identifying factors that add time to cycle.
Is your company missing delivery dates?
Are operators always backlogged?
Are rush orders ruining the schedule?
Can you sell the products you are making?
With a systematic approach, the cycle time can be reduced and a business can improve competitiveness and sustainability. Identifying the inefficiencies in production is important so that a business can get products into a customer’s hand as soon as possible.
Practices that provide more visibility and better process management include:
Simplifying inbound logistics. Collaborate with key suppliers to gain purchase order visibility on each step of the inbound process.
Coordinating effective relationships. Both product and information should flow, and organizational dysfunctions should be eliminated.
Integrating TMS software. Technology is a key to supply chain visibility and efficient collaboration between internal and external parties.
Creating schedules and reducing uncertainty. To avoid dead spots in cycle time, everyone should be working with the same information and data.
Best practices and optimum productivity comes from evaluating the entire process in order to reduce the cycle time. Cycle time impacts the bottom line, so evaluating the process and finding consistency in best practices will help improve overall business operations.
When shipping freight over-the-road, a shipper can choose from a variety of trailer options: dry van, flatbed, refrigerated and more. Each transportation mode has advantages and disadvantages to both the shipper and the carrier hauling the freight.
Carriers determine the pros and cons of the various trailer types based on wait times, freight availability and haul length. Continue reading to learn what carriers think about these 3 major truckload trailers.
Dry van trailers are versatile and used for all kinds of freight: from non-perishable food to building materials.
Cargo is secure and protected from bad weather, damage and theft. No need to use straps, chains or other cover.
“Drop and Hook” load mode will save drivers time and effort. Less time spent unloading and loading. (Drop an empty trailer, hook up to a loaded one.)
Many dry van trucking companies provide regional and short hauls in addition to long hauls.
Sometimes, a driver has to help handle freight during the unloading process.
Waiting at the dock for load/unload will consume a carrier’s time and money.
Retail stores set an appointment for loading/unloading, and this procedure may take a while.
Hardwood floors in most dry van trailers are vulnerable to moisture that can come from freight or through open doors, which limits the trailer’s life span.
Dry van drivers earn on average 20% less pay per hour compared to flatbed drivers, so turnover is high.
Flatbed drivers earn more per mile than most other trailer types, which helps driver turnover.
There are many opportunities for pick-up and delivery each week.
Flatbed drivers don’t need to back into docks and unload the freight.
The demand for flatbed driver’s special skills is high, which often leads to high rates.
Transporting oversized loads requires special hauling and maneuvering skills.
Flatbed driver has a responsibility to secure loads properly. Poorly secured freight is a threat to the driver and other motorists.
Climbing on top of oversized loads to attach chains and straps can be dangerous.
Hauling and securing oversized loads is extremely complicated during bad weather conditions.
There is always a demand for fresh products and the reefers that transport them.
Reefer trailers can easily haul both refrigerated and dry goods.
Refrigerated trailers tend to haul long, coast-to-coast distances. Long hauls mean more profit.
Freight is protected from weather conditions, theft, spoilage and damage.
Refrigerated truck drivers have additional responsibilities: cleaning trailer after every load, controlling thermometer and cooling equipment, and filling second gas tank with fuel.
There’s a constant noise from the motor.
A long wait time on shipping docks for loading or unloading is common.
The concept of collecting and studying data for business intelligence is nothing new – but today, there is more data available than ever before. It’s estimated that each day, we create 2.5 quintillion bytes of data. This data, “big data”, is able to be gathered, sorted and analyzed thanks to advanced, systematized technology.
Leveraging big data is extremely valuable in transportation and logistics planning. When managed properly, big data can be used to make better transportation decisions and can help enhance business operations.
How do some businesses keep pace with customer demands, while others fail? What logistics challenges do businesses face with same day delivery? Here, we answer these questions and examine lessons learned from companies like GAP and Starbucks.
Meeting customer expectations is more complicated than ever before: on-the-go, mobile shopping habits make consumers’ behavior unpredictable, while product variety and delivery options increase. Traditional supply chains with separate shopping channels and the standard “supplier, DC, store, client” product journey cannot compete in the innovative retail logistics environment. The main issues retail companies face today:
The above examples make supply chain management extremely complex. Big market players are setting high standards that might be hard for others to follow. But, the new generation of consumers is used to frequent improvements to the shopping experience and expect comparable experiences from all retailers. Customers expect flexible delivery options, mobile features and a clear return policy. 41% of consumers use their smartphone for research before shopping, while 30% make mobile purchases from their device, according to 2015 UPS research. Retailers should adopt technology, seek partnerships and provide seamless customer experiences to meet demand.
In his interview with SupplyChainBrain, Senior Vice President of Starbucks’ Global Supply Chain, Steve Lovejoy, shares 3 methods to meet demands of the new generation and how to create a sufficient supply chain:
– Provide convenience and quality to consumers. My Starbucks app is a good example – it shows nearby stores, allows a consumer to place an order from the smartphone and accepts payments. All of the consumer’s physical interaction with the store happens when they pick-up the pre-paid order from the counter.
– Innovative last mile delivery. Sending trucks several times a day to every store in big cities costs a lot of money and is complicated given unexpected disruptions. To resolve this issue, Starbucks is participating in next day solution development, like driverless cars and robotic vehicles.
– Work closely with universities, professionals and innovators to solve problems. Connect with potential suppliers and competitors – partnerships can help find solutions for future challenges. Benefit from all available resources and be smart about managing costs.
Starbucks saw the oncoming shift in consumers’ behavior and was able to adjust. Others, like GAP, weren’t so lucky; GAP is still catching up on shopping trends and market demands. The clothing company recently announced it eliminated 250 jobs, and plans to close 175 warehouses. Back in 2009, GAP’s sales decreased by 7.9%. According to retail experts, the main reason for GAP’s downturn was the inability to keep up with big data and new technologies, as well as the absence of a mobile commerce strategy.
Regularly following the latest market trends and new technologies and adjusting supply chain processes to new demands will help a company provide a better customer experience. Improving customer satisfaction is the key to business growth and success. It is crucial for planning product lifecycles, on-time delivery and fulfillment strategy; the very things that will keep your company afloat in these times of rapid change in ecommerce.