A freight carrier is an individual or a company that handles the transportation of freight shipments from one point to another. Sometimes, freight carriers not only handle loads but also act as the operators or even freight forwarders. Depending on the carrier type, there can be a significant difference in carrier accessibility, lanes, and freight rates. To understand more about various types of freight carriers, it’s important to know which role a carrier plays in the logistics and freight shipping industry.
What are the types of freight carriers in logistics?
Common Carriers and Contract Carriers
Common carriers are the carriers who service the freight shipping needs of the public. On the contrary, contract carriers work with selected shippers with whom they sign contracts. There is also a difference between freight rates since common carriers have limited ability to set a rate, while contract carriers arranged the rate with a shipper through the contract.
Local, Regional and National Carriers
Small or local carriers make up the majority of the U.S. trucking industry – almost 60 percent of all motor carriers. Local carriers serve limited areas, typically within an 80-100 mile zone which is defined by Surface Transportation Board. Regional carriers, on the other hand, have larger fleets, more trucks, and operate in a more extensive area. The largest carriers in the market are national carriers. They compete with shipping giants like UPS and FedEx and usually work with huge businesses.
Private Carriers and For-Hire Carriers
Private carriers haul freight on the shipper’s vehicle and don’t charge additional fees. For-hire carriers can move public freight and therefore take additional charges for the service.
How to choose the right carrier for you?
While large carriers have more capacity, better equipment, and invest in technology, smaller players provide a better, more personalized service to their shippers and offer flexibility. It’s important to consider your business needs, destination, freight volume, and type when choosing a freight carrier to work with. Essentially, you should check on the carrier’s reliability, compliance, experience, etc. Generally, answering these 3 main questions should help you identify if the carrier will match your needs:
Does the carrier provide the equipment for my freight?
Is the carrier licensed and compliant with the regulations?
Does the cost of the shipment fit my budget?
Working with a reliable 3PL can take the burden of intricate carrier selection off your shoulders. Usually, third-party logistics providers already have a wide network of trusted carriers and can provide logistics services of any type.
Historically, the connotation of freight management was changed and reshaped many times. In general, it refers to all the processes that cover preparing, shipping, storing and receiving freight. But in a more specific meaning, freight management is the service provided by freight forwarders or third-party logistics companies. It suggests matching loads to freight carriers, route planning, and the optimization of the transportation process.
Why do you need freight management?
Whether you are a large enterprise or a small business, cargo management can be complex. Even if you know the exact obstacles in your way, it may be challenging to put the overall picture together. Additionally, freight shipping involves numerous processes. To manage all of them efficiently, you need to pay attention to details and focus on everything simultaneously.
Attempting to handle all of this on your own won’t end well for your business productivity. More companies now realize the complexity and importance of logistics and transportation management and outsource it to external parties. Apart from peace of mind, delegating such a large branch of business can result in substantial cost savings and a much better operational efficiency.
How does freight management work?
If you consider outsourcing freight management, you would probably wonder: how does this process work? First, you need to understand freight forwarding and freight brokerage.
These are specific departments in the logistics company that are responsible for finding a carrier that can and wants to move your load. This is one of the key parts of the load management process because brokers can find the appropriate vehicles for your specific needs. They also negotiate freight rates for you, and these rates are lower than you would find on your own.
Third party companies have a significant advantage over in-house logistics departments, due to their relationships with carriers. Combined with industry expertise, third parties can provide efficient management and drive cost savings.
What does good cargo management include?
Apart from freight forwarding, cargo management actually includes many different aspects. If you are looking for a freight management company, here are the main things it should provide to you:
One of the main reasons why businesses start working with third-party logistics providers (3PLs) is for freight brokerage services.
What is a freight broker?
A freight broker is a person who contacts carriers and handles the load moving process. Ultimately, a good freight broker is one point of contact for all of your transportation needs. These professionals provide you with high-level customer service, letting you access their carrier network, and negotiate freight rates for you.
How can freight brokers help you?
Many shippers underestimate the role of freight brokers or have a skeptical attitude towards them. This misunderstanding is a result of not knowing how exactly brokerage services function, and how to work with them. Working with freight brokers can significantly reduce the time you spend on load arrangements and carrier search. You can eliminate transportation costs because of the reduced rates and more sufficient logistics processes. To fully understand the potential of freight brokerage services for your company, it is better to learn how freight brokers work and what piece of responsibility they handle.
What does a freight broker do?
This is the primary stage of the transportation process. A freight broker either calls or gets a call from a company with a request to schedule a load. At this point, you have to provide the 3PL with all the necessary information. Apart from address and contact information, the broker will ask you to mention handling conditions, commodity type, and other important data.
Once you’ve stated accurate information, freight brokers put it into their transportation management system (TMS). Working through a TMS lets them find reputable and experienced carriers who can move your shipment. Essentially, you can be sure that all the carriers are licensed, and have appropriate equipment. Once your load is booked, the broker schedules pick-up and delivery.
Loading is a crucial step in transportation. Brokers stay in touch with the carrier from the very start and make sure the driver is loaded with the right freight. At this point, the carrier signs a Bill of Lading, which means the driver is now liable for your freight.
During the entire transit, a 3PL stays in touch with you and your carrier. A good logistics provider has advanced tracking systems that give you complete visibility into your shipment’s location and the truck condition.
After unloading, the carrier notes the delivery time and the consignee signs the bill of lading. Normally, once the delivery is documented, the broker waits for the paperwork to invoice the shipper.
Finally, the broker gets all the documents and prepares everything for the payment.
Ultimately, freight brokers can help take a lot of burden and responsibilities off your shoulders. They handle the entire transportation process from A to Z, including payments. With a reliable 3PL, you are assured that all the information is correct and that transportation runs smoothly.
The key to a positive experience with freight brokers is being direct about your needs, and providing the correct information about your freight. The more details you tell your broker, the higher the chance is to find a suitable carrier and successfully move your shipment.
PLS Freight Brokerage
PLS Logistics is one of the US leading freight brokerage and logistics providers. Learn more about our Freight Brokerage Services!
Many businesses struggle to move freight efficiently, save on transportation and manage their supply chain to meet the delivery deadlines in the time of tightened capacity. Freight consolidation is one of the most promising options for companies who want to compete with giant retailers and are seeking solutions for a fast, convenient, cheaper option to ship their goods. Usually, the amount of freight from one shipper is too small for a full truckload, and it is expensive to regularly book full truck capacity to ship loads with different address destinations. One of the most efficient solutions to reduce costs and achieve shorter transit times is freight consolidation.
What is freight consolidation in logistics?
Cargo consolidation is when multiple small shipments are combined into one truckload and forwarded to the same location. Basically, it is a multi-stop truckload shipment with several shipments that are picked up in a consolidation warehouse or distribution center and remain in the same truck until it reaches the final destination.
There is a well-built rule in breaking shipping costs: the bigger the load volume is, the lower the cost per unit. This enables shippers to combine their loads and share transportation costs.
What are the benefits of freight consolidation?
Reduced rates. Since you share truck capacity with other shippers and the fuel usage is decreased, the overall price of transportation is split according to the weight and distance of the freight.
Faster transit times. Although shipment consolidation is slower compared to full truckload, the lower price and route without frequent stops reduce overall transit time, letting you meet the order delivery deadlines and save on transportation costs.
Fewer emissions. It is eco-friendly to combine several loads and transport them all at once instead of using separate trucks for the same amount of freight. Apart from the lower prices, solid route lets you utilize less fuel and reduces emissions.
Shipment safety. Cargo consolidation offers a safer shipping option since your freight’s handling is limited. The more shipments that are combined, the higher the probability is that all of them arrive undamaged because the large volume of freight puts a higher responsibility on the carriers.
Confidence in the service. It can be tricky to arrange consolidated shipping on your own. Logistics providers handle such orders every day and know what option will be the best fit for you. Supply chain technology, like a transportation management system (TMS), lets you gain full visibility into your shipment transit.
It can be hard to find a carrier that does consolidated shipping. However, a convenient shipping service provider can resolve this problem. Cargo consolidation is a good decision for shippers who regularly move goods headed in the same direction and is perfect for transporting fragile items since there is no extra handling of your product.
Whether you are deciding if the consolidated shipping matches your needs, partnering with an experienced 3PL will simplify the process for you. If you need any help with your shipment, contact our experts or get a free estimate on your load.
Almost 90 percent of goods and food are shipped to us on overseas journeys. Ocean freight shipping lets manufacturers and suppliers move an enormous amount of freight to opposite parts of the world.
10 Interesting Facts about Ocean Freight Shipping
All of the goods on an ocean shipment are moved in containers that usually are 20 – 40 feet tall in size.
Sea shipping is not the fastest option but can be one of the cheapest options for transporting large amounts of goods. For example, you will pay almost the same cost for 200 kg shipment and 2000 kg one.
As truck shipment types differ, ocean delivery options also differ and provide shippers with options. There are two main kinds of container fulfillment: full container load (FCL), which means your freight takes all the container capacity, and less-than-container load (LCL), which suggests partial load and therefore partial payment.
The largest ship can transfer up to 18,000 containers, and to put that into perspective, it would equal 745 million bananas. The ship carrying that number of containers could give every single European a banana, and there would still be some leftover.
Ocean shipping is one of the most sustainable types of transportation. A vessel from China to France emits less gas than a truck going from Houston to Oklahoma City.
Pirates are a real danger. On average, there are two ships stolen by pirates every day. Somalian pirates’ attacks occur more often than violence in South Africa, making there an extremely high level of crime.
98 percent of seafarers are male. One-third of them are Filipinos.
There are nearly 55,000 commercial ships covering the water surface.
The biggest fleet owners are Germany, Japan, and Greece. The industry is rather private and keeps information on the inside of associations. The official association of ship owners in Greece, for instance, does not even disclose the number of members in the organization.
Surprisingly, almost 33 percent of freight ships have no means of communication with the outer world while in the ocean.
Ocean shipping is one of the oldest and most convenient methods to move goods across the world. Despite its low cost, there is a lot of work to do when arranging pick up from the port or to the port for delivery.
In the logistics industry, no matter how hard you try to maintain the best service and utilize the most progressive technologies, problems can still happen to your freight during a shipment.
Companies may not be able to always control when accidents happen or prevent them from happening, but they can control how the accidents and problems are dealt with when they occur. A lot of things can happen to your freight while it is in transit: damage, stolen, lost, missing pieces, etc. Losing freight can be very frustrating and cause a lot of stress on both the shipper and shipping company, but don’t panic. Here is a brief guide on what to do when freight is lost:
1) Contact your shipping company. There is a slight chance that your cargo is delayed instead of completely lost. Unfortunately, delays can be common in the transportation business and occur due to many different reasons. The logistics provider is the first facility you should get in touch with. If you are working with third-party logistics service (3PLs), they will reach out to the carrier for you and help to solve a lot of additional issues.
2) Write down all the details about your shipment. For fast and efficient search, you have to provide the company with a detailed description of the transported goods, including size, color, labeling information, etc. You have to collect all the required paperwork as well. Documentation includes a bill of lading, freight bill, claim form and insurances. The more declarations you have, the higher the chance is to get a refund in the case when cargo is lost.
3) Fill a freight claim. If you are sure that freight is lost, the next round is to fill the cargo claim – a legal request to a carrier on the missing shipment. You will have to specify the list of missing items and their value, including invoices. The shipping company has 30 days to render a decision.
There are two possible outcomes after claiming the freight damage. Once a claim is filed, carriers can accept the claim, settle or deny it. In the case of a claim rejection, the shipping company will equip you with the declining reason and all of the pertinent information.
Life is not perfect – all of us know that. Accidents may happen during your shipments, and when those accidents do happen, you should be prepared and know the proper steps to take whenever your freight may get lost during transit.
Fall – a time where the weather gets cooler, leaves begin to fall and the shipping industry enters into its peak season. The peak season of freight ranges from August to October and consists of higher rates and overall freight volume. This year, the peak shipping season could be tougher than ever before.
This year, a strong economy can lead the peak season of shipping to be busier than ever. The unemployment rate is low and consumer confidence is high, making e-commerce and in-store sales frequency higher than normal. With more sales being made, businesses will have to keep products replenished and inventories monitored to make sure that they are entering into the holiday season fully prepared for a busy shopping season. Major companies, like UPS, have decided to hire hundreds of seasonal employees to help facilitate the Christmas and holiday season e-commerce surge. There are many different ways companies can prepare for the peak season to ensure that all shipping runs smoothly.
If your business is preparing for popular shopping days like Black Friday and Cyber Monday, it is important to ship items early to account for possible delays. Due to the high volume of shipments, there is the possibility of shipment delays in congested ports, docks and warehouses. Shipping as early as possible gives businesses enough time to ensure goods will arrive in a timely manner.
Consider All Shipping Options
Certain shipping options best fit different companies shipping needs. Small business, for example, can utilize less-than-truckload (LTL) shipping for their shipments to help ensure on-time delivery while helping lower shipping costs. Bigger companies with larger shipping volumes can consider different shipping modes, like intermodal, to help handle their shipments before the holiday season.
Work with a Third-Party Logistics Provider
Working with a third-party logistics provider can help businesses manage their supply chains more effectively during a time when shipments are up. 3PL’s can offer businesses shipping expertise, negotiated rates and a vast carrier network to make their shipping process organized and efficient.
Don’t let the peak season of freight catch your company off guard. Whether you are a small business, carrier or shipping service, it is important to be prepared for the peak season of freight.
Have you ever been denied on a claim settlement or paid significantly less than the value of your cargo?
Would you like to have your claims brought to resolution in a timelier manner?
All types of cargo are transported over-the-road. Shipping insurance provides protection against shipment damage or loss and a shippers’ exposure to financial loss.
In the United States, the most highly sought after freight are pharmaceuticals, consumer electronics, apparel, and food. The work of cargo thieves has a rippling effect on the economy.
When freight arrives, the consignee should always inspect the load before the driver leaves. A regulated carrier operating in interstate commerce is liable for freight loss, delays and damage with exceptions made under the Carmack Amendment, 49 USC 14706. The Carmack Amendment was adopted in order to establish a uniform nationwide standard of accountability for freight loss and damage.
An Inbound Logistics article details a theft incident:
What was stolen? A truckload of Nintendo Wii gaming stations that were headed to a Best Buy DC right before Christmas.
How does it affect Best Buy?Best Buy wasn’t able to receive a replacement shipment from the vendor in time to meet its customer’s demands. Those customers went to a competitor to buy the Nintendo Wii, and Best Buy lost sales plus any additional items the consumer would have bought while visiting the store.
What about the trucking company’s liability?The trucking company involved will most likely be held liable for the loss and have to pay Nintendo or Best Buy for the stolen product. Even if the trucking company has insurance, it might not cover the entire loss based on the policy deductible.
Does that affect shippers?Now, the trucking company might raise rates for future shipments of Nintendo Wii stations to cover its losses. The higher rates passed on to Best Buy, will then be passed on to customers.
Can shippers prevent cargo theft? To avoid theft and protect your cargo, shippers should utilize GPS shipment tracking technology, monitor carrier’s performance and requiring your workers and drivers hauling your freight to stay alert of suspicious activity.
What happens when you need to file a claim? When a claim is filed, an investigation begins following standard policies. For efficient claim handling, a shipper should have the BOL, a copy of the paid freight bill, a copy of the invoice, a copy of packaging slips and the standard claim form.
PLS partners with one of the largest global insurance providers with underwriting authority secured 100%. PLS’ shipping insurance insures the full value of your shipment at a very reasonable rate. We provide all risk coverage on domestic shipments. For more information, contact firstname.lastname@example.org.
As of June 2016, the U.S. economic outlook is uncertain. There are hopeful signs: employers are still hiring new workers, more jobs and cheaper gas have led to a small bump in consumer spending, and home builders are in full swing. MarketWatch predicts 2.5% GDP growth in the second quarter of 2016.
And, there are signs of an impending recession: consumer spending was severely hampered by education and healthcare costs despite cheap gas, overall inventory to sales ratios are high and continue to rise, and the Chinese economy is stumbling.
With conflicting signs, nobody can say with certainty where the U.S. economy is headed. But given the damage the 2008 recession did to the freight transportation industry, questions have to be asked – what happens if there’s another recession? How will this impact freight transport, and how can that impact be mitigated?
The Freight Shipper’s Recession
During a recession, when freight volumes are low, shippers have negotiation leverage and carriers must lower their prices. This is a favorable pricing condition, but when all other factors are accounted for, the freight market is far from favorable for a shipper.
Slow demand creates high inventory levels and subsequently high overall logistics costs for shippers, a hard pill to swallow during a recession. In difficult times, shippers typically downsize transportation and logistics departments, leaving just a few employees with the responsibility of finding freight savings.
During an economic recession, carriers try to shift as much business as possible to non-cyclical items such as food and beverage. This can leave shippers of durable and discretionary goods without reliable capacity or paying inflated freight costs. Consumer packaged goods (CPG) shippers and retailers are left shipping partial loads – a much slower and worse service than shipping full truckload or door-to-door service.
The impact of a recession depends heavily on the type of freight being shipped. On a general level, though, shippers are faced with worse service, sky-high inventory costs leading to lower priced products and understaffed logistics and transportation departments to manage the movement of goods.
Solutions for Freight Shippers
When times are really bad, just as when times are really good, shippers of all kinds turn to 3PLs for assistance with logistics management.
Typically, when a logistics provider is tasked with managing freight during a recession, the first step is to implement a TMS, which is almost always free with logistics management services. From there, previously hidden cost savings opportunities are found and applied immediately.
3PLs are of particular value during a recession because they can act like an in-house transportation department at a lower, scalable cost; but they can also serve a more asset-oriented option, taking direction from a transportation department. The transportation solutions can be custom made to help a specific business get through a tough time.
The Freight Carrier’s Recession
An economic recession is hard on carriers. Around 800 trucking companies went out of business in the Great Recession, while many more had to significantly downsize. Another recession, after the impact of the 2008 downturn, would be harmful. Lower freight volumes paired with necessarily lower freight rates are devastating to carriers’ profit margins.
Trucking employment closely follows the state of the economy – not many industries are hurt by swings in economic activity like freight transportation. When consumer demand is down, freight volume is down, carrier revenues are down, and less personnel is needed to move available freight, so carriers must let go of employees in large numbers. This complicates operations, hinders their ability to handle any fluctuations in freight volume and makes it more difficult to rebound after the recession is over.
On top of this, many truck drivers quit during down economic times. Since carriers are competing for freight to haul, it can often lead to unfriendly routes or lots of time away from home, but mostly, it means lower pay for the drivers.
A recession limits carriers’ ability to invest in new equipment and technology. This is a problem because the government constantly has new equipment mandates for carriers to comply with environmental and safety regulations. Carriers are forced to invest in new equipment all at once, again making it harder to ever properly bounce back from a recession.
Solutions for Freight Carriers
There are two things carriers can do to try and stay afloat during a recession. Which solution a carrier leans toward depends on their current business model and vision for the future of the company.
One solution is to integrate a TMS. In 2008, LaValley Transportation loaded up on assets in the worst part of the downturn. This might seem crazy, but it worked. By buying more trucks, they collected business from other carriers who were going bankrupt, and set themselves up for further success as soon as the economy started picking up again.
Another solution is to dump assets. A carrier can receive an initial lump sum for doing so, which can be helpful to get through unprofitable times. Also, many of the most profitable carriers are making moves towards being more like an asset-light transportation provider, as opposed to an asset-heavy trucking company. There’s less risk involved in an asset-light business model and it’s more scalable.
Shippers and carriers both will be hit hard if there’s another recession, especially due to the prolonged effects of the Great Recession. Transportation strategies will have to be altered to adapt to a drastically different freight market.
Transportation rates are near their lowest point and are expected to rise later this year. New forecasts predict rising contract and spot market rates caused by numerous economic and regulatory factors – which will create tough conditions for shippers to negotiate rates. Shippers who don’t lock down rates now could miss out on a great opportunity.
Pricing Conditions are Great for Shippers – For Now
Larry Gross, a partner at freight transportation consultancy FTR, says, “We are now experiencing the first sustained period of favorable shipping conditions since 2009.”
Right now, and the next couple of months, are the best time for shippers to lock in low transportation rates. FTR’s latest Shippers Conditions Index (SCI) reveals just how good things are for shippers today. The most recent score, 4.7, released in February, shows a favorable environment. When the SCI reports negative numbers, it represents an unfavorable environment. The index reported a 4.3 in January, which was up from 3.0 in December, -0.6 in November, and -3.1 in October.
Gross, after acknowledging the favorable pricing environment, admits that FTR expects a slow degradation of conditions for shippers in 2016 that will gain momentum in 2017. Regulations, the price of oil and economic uncertainty are the driving factors behind price increases.
The Reasons for Rate Increases
The HOS regulation and ELD mandate will greatly affect the trucking industry. As usual, the state of the Hours of Service (HOS) regulation is up in the air. Several studies are being conducted and it could be reinstated at any time. HOS rules would considerably impact carriers’ efficiency and operating costs. The ELD mandate has the potential to eliminate a large portion of available truck capacity in the industry. Smaller carriers and owner-operators will be burdened by the financial investment and adjustment period of ELD implementation and many are expected to exit the industry.
The price of oil, and subsequently diesel, is nearly impossible to predict. Currently, prices are extremely low. This is not sustainable for a long stretch of time and can be harmful to the transportation industry. Historically, the longer the price of oil stays low, the more dramatic and lengthened the rebound in prices will be. The oil and gas supply chain is so complex that nobody can say for sure when prices will rebind, but most economists agree it will happen within three years. When the price of diesel skyrockets, carriers’ operating costs will also skyrocket.
The unusual state of the economy plays a role in projected rate raises, too. Low gas prices are good for consumers but are a symptom of broader industrial level suffering. Loose capacity is great for shippers but caused by generally cautious consumers. This high degree of uncertainty has caused many shippers to start securing long-term contract rates in the past few months – slowly locking up future available capacity. When carriers feel safe with their level of guaranteed capacity, they will start to raise rates, and shippers will compete for what’s left.
At best, transportation rates will be neutral in 2016 and slightly negative through most of 2017. At worst, they could increase to 2008 levels if diesel prices rise, capacity dwindles and regulations cripple efficiency. Either way, it’s safe to say that right now is the best time to lock in contract rates for transportation before it’s too late.