freight and transportation

Freight and Transportation Part 2


In this second segment of our Freight and Transportation series we will take it mostly in an outline, definition of terms, cheat sheet approach to keep things easy.  So, here you go.

  1. Points of Confusion.
    • FOB Terms.
      • Free on Board (Not Frisbees and Bananas).
        • Old Teamsters/Mules and Wagons.
        • Beneficial Ownership.
          • Who owns it and where do they own it.
          • Liability and Ownership.
        • Who owns it and where do they own it OR who pays and when do they pay.
        • Cash on Delivery.
          • Collect Equals Send the Bill/we review/we cut a check …NOT COD!

  1. Various Modalities/Modes/Arrangements.
    • LTL Equals Less Than a Truckload.
      • Renting a portion of the space.
      • Roadway, Yellow, Estes/ Old Dominion/etc.
    • TL Equals a Truckload.
      • Renting the entire truckload.
      • JB Hunt/Scheider/Bowmans.
    • Hi/Wide/Heavy Equals Special Requirements/Riggers.
    • Small Parcels.
      • UPS/FedEx/DHL.
    • Air.
    • Expedited/Currier.
      • Purolator/Dedicated Truck.
    • Household Moving.
  2. Data Mining (Know Your Business).
    • Dig yourself in.
    • How many shipments.
    • How many parcels.
    • How much weight.
    • Types of materials.
    • Materials classification.
  3. 3PL Equals 3rd Party Logistics.
    • The purpose of a 3rd Party (3PL) is to provide services for which your organization is unprepared/unable to provide due to lack of resources or expertise.

If you competitively bid out all your material requirements, but allow the suppliers to ship any way they choose, you are negotiating pennies and leaving dollars on the table.  While its sound business sense to pursue your “core business competencies,” why not also take advantage of the freight savings available to you.  This can be done with no incremental costs!

Additionally, why not consider a 3rd Party Logistics company that would be paid a percentage from the savings they obtained?  In other words, if they don’t deliver they don’t make a dime.

A good 3rd Party Logistics company should be able to perform most (or all) of the following items for you.

  • Identify and list the best possible carriers (LTL, TL, Air, Rail, Small Parcel) to use.
  • Negotiate and/or obtain discounts of 50% to 70% on Less Than a Truckload (LTL).
  • Negotiate and/or obtain discounts of 30% to 50% on Small Parcel.
  • Negotiate and/or obtain discounts of 30% to 40% on Air Freight.
  • Negotiate and/or obtain discounts of 30% to 40% on Household Movers.
  • Provide more competitive special services (high, wide, heavy, crane, dedicated van with tandem drivers and expedited services).
  • Provide rail services of all kinds at the best possible pricing.
  • Provide pre and post payment audits on freight bills.
  • Pay all freight bills and generate a payment report.  Electronic Data Interchange (EDI) and the like are very important.
  • Create and supply periodical reports as required, such as LTL and TL savings reports, invoicing reports, and non-compliant suppliers reports.
  • Process all damaged/freight claims.
  • Reduce freight/damage claims.
  • Provide emergency and storm delivery services.
  • Reduce the volume of truck traffic at the receiving dock.

Well, there you have it.  We told you this one was going to be cheat sheet Cliff Notes style and we always mean what we say.  We try to give you the most important information as quickly as we can and sometimes it comes Cliff Notes style.

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