Can we just say that 2018 will go down as a year that tested the patience of everyone and anyone shipping and receiving freight?

​As the year winds down, we're finally starting to see the pressure ease. Lower freight rates and improved capacities top the list of improvements. But, before we get our hopes up in a volatile freight industry, let’s look back to when things started to unravel.

Where did all the Trucks Go?

In 2017, we had two major hurricanes in the US (Harvey and Irma). The aftermath created a huge demand for trucking resources. FEMA, like a huge vacuum, sucked up all the available capacity they could. This drain created a massive shortfall for shippers. Add to this a robust retail market and the implementation of new DOT Regulations and you have the perfect storm.

We have all experienced the chaos created by these events. A big question on people’s minds is where do things stand today and moving forward?

The Industry's 3 Biggest Challenges

Obviously, we cannot predict the future. However, there are some things we can learn to better understand carrier challenges. Armed with this information, we can either help mitigate increased costs or face the reality that transportation rates have established a new baseline.

Certainly, a robust economy can have a positive effect but with higher haul rates and more opportunity, that economic boost also adds stress to the driver and equipment resources in the mix. For now, let's take a closer look at the challenges capable of having the greatest negative impact:

1. New DOT Drive Time Regulations
   New restrictions on driver hours and the introduction of the ELD electronic logging device have had a big impact on capacity. Without available driver time, the largest equipment fleets remain parked. The ELD has forced out many older drivers and operators who skirted the rules for years, giving them advantages. The new regs have caused carriers to alter how they approach many shipping lanes. The net result has led to higher transportation cost to shippers.
   
   
2. Driver Shortages
   There are many facets surrounding the current driver shortage. And, according to one industry source,  the shortage we're seeing today will continue into the foreseeable future due to:
    
   - Aging work force
   - Driver turnover (not mentioned much outside of the industry)
   - Regulations and restrictions put on drivers
   
   
3. Fuel
   The price of fuel is another big cost element in the freight industry. One way to keep up with fuel cost (where it has been or where it is is headed) is to monitor the US National Diesel Fuel Index. This site provides information to substantiate any change in FSC your carrier maybe charging.
     

Will 2019 see Freight Improvements?

There are still many challenges ahead. The industry has made many adjustments to offset some of the issues mentioned above. In addition, fuel prices have recently softened.

To combat the driver shortage, carriers are offering lucrative wage and benefit packages to lure new drivers into the industry. Hopefully, this strategy will pay off.

In many areas, capacity pressure has eased. As a result, you may be experiencing more available capacity and competitive pricing. How long it might last is unknown. Analysts in the investment world provided their outlook in a 2019 trucking rates forecast this past fall.

Is your company seeing lower freight rates and capacity improvements? Let us know in the comments below. Your response may help other customers plan their transportation strategies for 2019.

Post by: Aaron Pascarella, Customer Service Representative

When I wrote my original post, 6 Freight Terms Everyone Should Know, I had no idea it would become so popular.

Since that time, a lot of interesting freight questions from all over the world have come my way. I guess I shouldn't have been too surprised. Shipping stuff seems easy enough, but sometimes it feels like you have to learn a secret new language just to get a freight bill paid. That's why I've decided to expand on my first freight terms post.

Below are more terms you might see on shipping documents:
  

1. DE PPD or DSTNTN-PPD
   Destination Prepaid
   This means that the buyer is taking delivery of goods being shipped by a supplier. After the goods arrive at the buyer's receiving dock, the supplier pays the shipping costs.
     
2. ORG
   Origin
   This identifies the starting location for the freight or shipment.
     
3. PPA
   Prepaid and Add
   This means the shipper pays for the freight charges using their preferred carrier and then passes along full (or partial) charges by adding the charges to customer's invoice for payment.
     
4. FFA
   Free Freight Allowance or Forward Freight Agreement
   Both meanings here are associated with how much a customer will be charged for freight. Free Freight Allowance allows for discounted shipping charges (usually issued when a customer reaches a certain volume or dollar amount). A Forward Freight Agreement is used when both parties agree on freight charges for future delivery. Since freight rates are always changing, both sides are gambling on rates going up or down (in their favor) at the time of shipment.
     
5. PP-PRTL
   Prepaid Partial Truckload
   When a load is too big to meet LTL standards but is still shy of a full load, it's called a partial truckload. If you see PP-PRTL, it means the customer agrees to prepay the shipping charges for a partial truckload.

What other terms have you seen on freight paperwork? New terms seem to pop up all the time so keep them coming. Post your questions in the comments below (and don't forget to check my original freight terms post too).

Post by: Amber Potts, Customer Service Representative

Will brick and mortar stores decline, thus reducing the need for pallets?

Omni-Channel retailing takes the historical buying experience of the brick and mortar store to a level that offers consumers a multitude of methods for product research, buying and order fulfillment.

Omni-Channel Retailing
Omni-Channel Retailing offers consumers a variety of channels for their buying experience. This includes brick and mortar stores, online stores, mobile stores, mobile apps, telephone and multiple combinations of these channels.

• What does it mean?
  A consumer can make a purchase from their smart device and pick it up on their way home from work that evening. A consumer can find the best price on an item in a store, purchase it from their smart device and have it delivered directly to their home.
    
• What does it mean for pallets?
  Pallets have traditionally moved goods from manufacturer to distribution center and then to retail stores. E-commerce has changed the model such that DCs and other fulfillment centers are now processing and shipping goods directly to the consumer. In these scenarios, pallets are not needed to deliver goods in bulk from distribution to the retail stores. Instead these shipments are made through parcel channels.
   
• As omni-channel retailing continues to expand, what will be the role of the pallet?
  Pallets will still be needed to transport goods from manufacturing to regional distribution centers. If the brick and mortar stores then become a fulfillment option for e-commerce, pallets will still be needed for transport from distribution to retail stores. ​

Consumers are buying more and more goods online or through a mobile device to avoid the hassle and inconvenience of driving to a retail store(s). The role of the pallet will change, but the net impact to the number of pallets in use on any given day has yet to be determined. I can envision a system in which fewer pallets are needed for bulk shipments and more shipments are made in parcel form.

So how do you think Omni-Channel Retailing will affect the pallet?  Is this good for pallets overall or will fewer and fewer pallets be needed?

Post by: Rich Reiher, Vice President
Use of Woolworths Store Closing by Dave Croker licensed under the Creative Commons Attribution 3.0 Unported license.

Have you noticed a change in your LTL shipping charges?

The methodology that LTL carriers are using to determine their rates is changing. This is in follow up to what the major parcel shippers (UPS and FedEx) have already done.

Traditionally, LTL carriers based their rates on density and established different classes for different types of freight. LTL carriers also offer significant discounts from their base rate structures.

Going forward, LTL carriers are going to start charging based on dimensional weight, as this is a better representation of the volume that a shipper is using on a particular truck.

So, what does that mean for you?

• Dimensional weight is calculated differently than actual weight.
  Dimensional weight is figured by multiplying the length, width, and height of a unit load and then dividing that number by 166. 

• Using the right size packaging will become critical.  
  A pallet that is 5” tall instead of 6” tall could save a shipper in freight costs much more than the cost of the pallet.  Reducing the footprint (length & width) of the pallet will also reduce the dimensional weight of the unit load.

“Smart sized” packaging will become critical for all companies that ship LTL, especially for lighter weight unit loads. For example, a lightweight load that is being shipped via LTL – pillows, potato chips, ceiling tiles – may only weigh 500 pounds. If that unit load measures 48” x 40” x 94”, then its dimensional weight would be 1087 pounds (48 * 40 * 94 / 166). The shipper would then be paying LTL freight rates based on a dimensional weight of 1,087 pounds versus an actual weight of 500 pounds.

Work with your packaging professionals and freight providers to come up with the best ways to ship your products in an LTL environment.

Do you use LTL shipping? We want to know how. Let us know how this change going to affect you by commenting below. 

Post by: Rich Reiher, Vice President

“One-Way shipping” aka “Single Trip” aka “Send and Forget”.

Why would anyone ship goods on a plastic pallet if they can’t get that pallet back? Not so long ago, this was the thinking when it came to “One-Way Shipping” or “Single Trip” logistics. This logic was based on the fact that plastic pallets were expensive and it took several weeks to get them due to slow and infrequent production schedules. 

Today, it’s a new frontier. There are many affordable, readily available plastic pallets that are fulfilling a demographic for single use, plastic pallets. 

There are many reasons for sending products on a plastic pallet. The most common is the need to comply with ISPM-15 Export Regulations. Other benefits include absence of mold and ease of use in wood-free production facilities.

If you need to send a plastic pallet on a single trip, consider these tips to ensure a successful one-way ship.

1. Maximize your unit load to optimize the pallet.
   Properly fit the pallet to the size and weight of the unit load so you can get the most out of both.
   
   
2. Once you know the details of the load, shop around for the best pallet.
   Consider a used plastic pallet. You may be able to get more pallets for less money!
   
   
3. Allow a few extra days for delivery.
   Even though many plastic pallet manufacturers are producing more export pallets on a regular basis, allow an extra 7-10 days for delivery time, just in case.
   
   
4. Explain the change to your drivers.
   If you are switching from wood to plastic, be sure to explain the change to your fork lift drivers. They need to understand that they may not be able to handle a “one-way” plastic pallet the same way they handle a wood pallet.
   
   
5. Utilize a supplier with several locations.
   If you are using LTL quantities and you don’t have the space for a lot of pallet storage, utilize a supplier with several locations. The Nelson Company can deliver plastic pallets from at least 10 locations around the US.
   
   
6. Don’t go TOO cheap!
   Everyone is looking for a good deal, but you should be careful not to automatically buy the cheapest plastic pallet that you find. Why? Just because it’s the CHEAPEST plastic pallet out there doesn’t mean it’s the correct pallet for your unit load. An incorrectly specified pallet may break and compromise your valuable cargo. Consult with a pallet expert for help in choosing the correct pallet for your needs and always test a sample before buying.

Here’s something else to think about as you send plastic pallets out the door for a single trip:  

Always consider if there is a way to get them back or - at the very least - get them into the hands of somebody who can use them. A closed loop isn’t always possible. Tell Nelson Company where your one-way pallets will end up. It’s possible that we may have someone on the other end that is willing to pay to send those plastic pallets on another trip!

Post by: Mike Cunneen, Director of Sales and Marketing

Do you ever feel confused or overwhelmed when it comes to air freight shipping?

Don’t worry, you are not alone. Understanding air freight shipping can be a daunting task. We have a few pointers that should help take the guesswork out of air freight shipping.

When shipping by air freight, your air freight providers will be charging their rates based on either dimensional weight or actual weight.  

Did we lose you already?

Let’s start with explaining the difference between dimensional weight and actual weight. 

• Dimensional weight is a calculation of a theoretical weight of a package that takes into account the length, width and height. It is the product of multiplying these measurements by each other (L x W x H).
• Actual weight is the true weight of a package. When you place a package on a scale, you see the actual weight of that package.

How do you know if you will be billed by dimensional weight or actual weight?

Generally speaking, the decisive factor for calculating the price is whether the dimensional weight exceeds the actual weight. You should check with your air freight provider to get their specific criteria.

A quick way to check your shipment is to measure the length, width and height of your unit load in inches. Multiply these three dimensions and then divide by 166 (or 139 for international shipments). If this amount exceeds the actual weight of your unit load then you may be paying air freight charges based on dimensional weight.  

For example, a lightweight load that is being exported – pillows, potato chips, ceiling tiles – may only weigh 500 pounds. If that unit load measures 48” x 40” x 50”, then its dimensional weight would be 690 pounds (48 * 40 * 50 / 139). The shipper would then be paying higher air freight rates based on dimensional weight and not actual weight.

This is very important because many companies tend to focus on actual weight when shipping by air freight. Rather, companies should be looking at both actual weight and dimensional weight. Instead of making their unit loads lighter, it may be more beneficial for companies to make their unit loads smaller in size, therefore increasing the density of their goods being shipped.  

Recently, the Nelson Company was able to show one of its customers that they could save $40 for every inch that their unit load height was reduced!

Still confused? Don’t worry we are here to help. Leave your questions about air freight shipping below in the comments section and we will get back to you with an answer.

Post by: Rich Reiher, Vice President

Trying to save money on inbound freight? Regardless of the supplies or commodities that are coming into your plant, the prudent business person is always trying to minimize the cost incurred in shipping them. Specific to pallets, there are many ways to save money on inbound freight.

Here are 5 specific ways to manage and possibly reduce the cost of shipping empty pallets.

1. Use Nestable Pallets
   When it comes to shipping plastic pallets, the term “Nestable” = “Savings”.  Pallets are labeled nestable when the legs or blocks are able to “nest” inside each other. Using nestable plastic pallets, you can fit 50 or more pallets per stack or “skid spot” when shipping empty pallets. If a nestable plastic pallet is not an option because bottom runners are needed, ship the pallets unassembled and then assemble them at your plant. Generally speaking you can fit about 800 unassembled pallets on a truck vs 540 assembled. The more pallets per load, the less shipping cost per pallet.
   
   
2. Maximize your Stacks
   This may seem obvious, but you would be amazed at how many companies waste money by ordering a set amount of pallets without giving consideration to how many fit into a stack. For example, a purchase order comes in for 100 stackable, plastic pallets. Most of our designs fit about 18 pallets per stack. 100/18= 5.5 stacks. You are already paying full price for the space holding the half stack, so why not maximize the height? They should have ordered 108 to make 6 full stacks, 18 pallets high. Every little bit helps.
   
   
3. Invert the Stacks
   If purchasing a 3-runner style pallet, don’t just stack empty ones on top of the other. Invert them so you can get more in each column. Using the 18 pallets per stack example, if the pallets are 3-runner and you invert them, you can get 25-28 pallets per stack depending on the actual height of the pallet design. That’s almost 10 more pallets per pallet spot on the truck… $$$.
   
   
4. Push Pallets all the Way Back
   Make sure the pallets get shoved all the way into the truck. Many times we see space at the end of the truck when we first open the door. Usually, it’s just short of a pallet space so the assumption is that they left the last two columns off the truck because they couldn’t fit. If the person loading the truck had pushed each individual stack all the way back, they would have been able to fit the last two stacks on the back. It may be worth a reminder to your truck loaders.
   
   
5. Shop, Shop, Shop
   Finally, make sure you are staying current on your freight estimates. Without giving up quality of service, you should always have a few options on how you can move your freight. Not every carrier has the same prices for the same lanes, so it’s good to check around every now and then. Most companies, including the Nelson Company, develop strong relationships with specific carriers who keep an eye on better lanes. This can be effective when looking to save money. 

With so much going on, sometimes it’s hard to keep your eye on everything. Hopefully, these 5 reminders will help you better manage inbound freight costs. When placing your next order for pallets, take a moment to see if you can maximize your truckload. We would be happy to help so please don’t hesitate to ask.

Do you use other methods to help get the most out of your truckload? Share your tips by commenting below.

Post by: Mike Cunneen, Director of Sales and Marketing

It’s inevitable. Recent trends show your freight costs are going to increase through 2014.

Pallets and freight can be a major expense for your company. If you do ignore current trends, the costs of shipping your product will increase!

The Nelson Tech Center can help you keep these expenses in line with Transportation Cost Modeling.

How do we lower your costs with Transportation Cost Modeling?

1. Review and Analyze
2. Modeling
3. Field Trials and Lab Testing

Review and Analyze
We analyze your current pallet designs, verify that they are not only acceptable for product protection but are also optimized for transportation. Our opportunity analysis includes:

• Review LTL. Will another pallet lower the LTL Class?
• Review trailer cube options to maximize usable product volumes.
• Analyze if a lighter pallet would allow more products when weighing out a trailer.
• Analyze the best unit load and pallet when dimming out a trailer.

Modeling
We run the analysis and identify best opportunities for cost savings. Modeling allows us to document your current state and compare it to available options. Modeling allows us to better evaluate these potential options and determine how to save you the most money!

Field Trials and Lab Testing
We prove out the results with lab testing at one of our regional labs or set up field trials at your location. Following testing, we will provide you with a cost savings end result that you can use to start improving your bottom line.

I recently spoke at ISTA TransPack Forum in Orlando, Florida and published a more detailed summary of Nelson's system-based approach for saving transportation costs for the Modern Materials Handling Blog. Here you'll see there are smarter ways to lower your transportation costs than negotiating a savings of pennies on your pallet designs.

What is your plan for reducing the impact of rising freight costs on your business? Start your plan with an Opportunity Analysis from Nelson Technical Center - typical first-time analysis savings is 10%!  

Post by: John Clarke, Technical Director

What’s the big deal with intermodal?
You can save money, a lot of it. 

So how does intermodal work?
Intermodal involves more than one mode of transit. Typically the modes include truck, rail, ship and or barge.  For purposes of freight movement within North America we will use truck, rail and ship. 

• First… a container, much like any other trailer that comes to your facility, is loaded with the goods to be transported.  Extra securement of the freight may be necessary as Intermodal containers are handled and travel differently than a typical truck traveling over the road.  
  
• Second… once the truck is loaded, the container is taken to the rail depot.  
  
• Third… the container is lifted off the chassis and placed onto a flatcar.  
  
• Fourth… when the container reaches its destination, the process is reversed and the container is delivered on a truck to the consignee.
  

Intermodal trucking reduces two of the largest cost centers associated with freight spends.

1. Fuel
2. Drivers’ wages
   

Expenses are reduced by using the efficiencies of truck and railroads combined. 
According to CSX Railroad, “moving freight by rail is 3 times more fuel efficient than moving freight on the highway. Trains can move a ton of freight nearly 450 miles on a single gallon of fuel.”  In comparison, a truck can move 22 tons of freight 7 miles on one gallon of fuel. 

Drivers’ wages are reduced as drivers are used more efficiently to pick up and deliver freight to and from rail yards rather than hauling freight across the state or country.  Reductions in two of the major cost drivers for freight allow for the intermodal provider to pass the savings on to the customer by reducing the amount of money spent moving the product through the supply chain. 

In addition, using intermodal to move your freight, allows you to:

• reduce the greenhouse gas emissions
• avoid issues related to government regulations of truck drivers
• add to your bottom line by saving you money
  

Have you thought about using intermodal? Let us provide you with a quote.

Post by: Patrick Shea, Vice President, CAM Logistics
CAM Logistics: www.camlogisticsllc.com | solutions@camlogisticsllc.com.