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Prepare Your Company To Work with a 3PL For Greatest Success and ROI

Thursday, December 5th, 2013

By Mike Challman, ChemLogix, LLC

Vice President, North American Operations

www.clxlogistics.com

So, you’ve made the decision to contract a third party logistics provider (3PL) to optimize your logistic operations.  While the resources and market intelligence offered by the 3PL promise to address your transportation challenges and help you better maintain a competitive edge, companies – and their staff – must be prepared to work with the 3PL and commit to the program.  Here are some keys to outsourcing success:

Upper Management Buy-in and Commitment to Program

Getting the funds and approval from executives to implement and/or expand transportation services and systems sometimes takes the assistance of 3PLs who can provide detailed explanations of the long-term benefits of specific supply chain strategies. Executive approval is necessary for supply chain programs to move forward. Experienced in providing transportation solutions to customers in the same industry but with varying scenarios, 3PLs can readily provide informed answers to the questions posed by executives and give examples of the successes and pitfalls associated with certain actions.  3PLs, essentially, become a part of the logistics team when presenting ideas and updates to the board room.

Successfully Managing Internal Rate of Change

Shippers must realize that with the promise of optimized supply chain operations, 3PLs bring with them new processes, techniques and efficiencies that must be deployed in varying departments.  As a result, supply chain solutions affect the way in-house personnel have operated in the past.  Companies must communicate and manage change activity so there is complete “buy in” at every level.   Employees of every level should understand the reasons for change, their role and the corporate implementation schedule.  Lack of visibility of new supply chain strategies throughout the company can result in key players not knowing what to do to affect change.  At the same time, lack of flexibility to change by employees can cause implementation delays and impend the overall success of the new supply chain strategy.  Changing the ways activities have been done in the past may be one of the hardest challenges faced by shippers.  Inability to make changes may results in loss of savings as the hard changes make the most effect in driving out cost.

Cross Functional Commitment

Personnel in varying departments at different management levels must accept the supply chain solutions presented by a 3PL for the company to succeed.  While corporate executives might be all for change, it is actually the department heads that must implement new processes and direct their staff in new activities.  Communication is key for “buy in” as everyone from the warehouse and dispatching to accounting and customer service is critical component in change.   Plants and business units may be upset with loss of control over specific activities that they managed for many years.  Open discussions on the reasons and methodologies for deploying a 3PL to optimize current logistic operations may be warranted with different groups to ensure a smooth transition.

Make Supply Chain Activities a Priority

Most companies are extremely busy and juggle a number of competing projects.  As a result, staffs often “multi-task” to the point that they have too many projects on their plate.  Lack of resources and over activity is often the reason some shippers elect to outsource their logistic functions.

While busy, shippers must make the 3PL and associated supply chain activities a priority to obtain the qualitative and cost improvements promised by contracted managed services.  Companies must fully commit to make appropriate in-house changes according to the implementation schedule.

On-going Commitment – Solution is Never Final, Always Evolving

In addition to satisfying the terms of a contract to manage specific freight activities on a monthly or cost-per-transaction basis, 3PLs should proactively present cost management ideas as part of their services. Rather than wait for problems to arise, a 3PL should lead a periodic review of supply chain processes with appropriate personnel to discuss new transportation solutions, specific cost reduction ideas, service levels, and any issues that the client may have with current operations.

On the client side, shippers must make a commitment to truly partner with a 3PL to inform them of their business strategy and competitive landscape.  Without in-depth information, a 3PL cannot create a well-defined process that meets corporate needs and requirements.  A non-disclosure agreement should be established so a 3PL and client feel comfortable exchanging information.  And as the supply chain evolves, companies must disclose new business strategies, threats and competitive information to 3PLs to constantly re-evaluate current supply chain strategies and make necessary adjustments.

Working together, the 3PL and shipper should continue to assess performance and set new goals that enhance supply chain performance.

 

 

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Your Supply Chain is Only as Strong as the Weakest Link: Leveraging the Talents of Your Internal Logistics Team

Wednesday, July 3rd, 2013

 

By Brian Hamilton, HR Manager and Mike Challman, VP Operations

As the economic recovery continues, companies are, again, looking toward growth and expansion.  The years of stagnation or retrenchment, however, forced many chemical shippers to reduce staff and limit investment in associate development.  As a result, a growing gap now exists between business requirements and the ability to meet those needs with existing resources.  While partnering with a third party logistics provider (3PL) can help fill this void, chemical companies must also refocus on developing internal resources to manage internal controls and processes associated with supply chain management. 

The most effective 3PLs employ a variety of approaches to leverage talent within their organizations.  Outlined below are some of the critical methodologies used by ChemLogix that can be used to develop and retain your own internal logistic resources  

Cross-train, cross-pollinate and provide development opportunities
Supply chain management is a complex endeavor, one in which the various elements are strongly linked throughout an organization.  An associate in one department who has knowledge or experience of other areas can provide invaluable insight and perspective.  The best 3PLs provide associates with opportunities to train in, or transfer into, other areas of the organization. 

Associates at all levels of a 3PL organization are also given professional development opportunities to remain current on market trends and further their understanding of the logistics world. Not only is the supply chain discipline complicated; it is incredibly dynamic and fast-moving.  Technologies, regulations, market pressures and best practices are constantly updating.  3PLs and chemical shippers alike must ensure staff remains knowledgeable on changes while developing their expertise in the field.

Utilize a documented career path process and post all job openings internally
3PLs that can show talented associates a career path create value for everyone: the 3PL organization, itself, by leveraging home-grown talent; customers who receive the benefit of knowledgeable and enthusiastic associates at all levels of the support structure; and the associates themselves, who remain motivated to advance within the 3PL organization for the long term future.  Unless a confidentiality issue exists, a healthy 3PL organization posts every open position for internal associate review and application.  External hiring costs 1.7 times more than an internal hire; and research shows that as few as 40%-60% of external hires are successful versus 75% for internal candidates.  The 3PL with a successful internal hiring program also provides its customers with greater cost efficiency and more dependable support.   Chemical shippers can consider doing the same for every type of associated within its organization, not just those involved in the supply chain.

Establish a referral program that taps into the talented acquaintances of your talented associates
When an internal posting doesn’t yield candidates, your associates can still help fill positions.  A referral program with a monetary incentive turns associates into instant logistics recruiters.  The best professionals have large networks of talented contacts.  Studies show that candidates recommended by associates are more likely to succeed as most associates only recommend qualified candidates.  After all, his/her reputation is on the line, too. Employee referral programs are especially effective in cases of highly specialized positions that might be difficult to fill through conventional channels – not an uncommon situation with logistics roles.  The 3PL with an effective referral program will have a greater success rate with external hires.

Actively engage the two most important human elements of the supply chain – customers and associates
Successful3PLs have an appetite for continuous improvement and actively seek feedback about associates’ effectiveness directly from customers.  Customers know what valuable support looks like and they know what they need from a 3PL.  An open line of communication between the 3PL and client helps immeasurably to determine associate strengths and areas for improvement – on both sides.  Using this feedback, a 3PL and chemical shipper can improve its associate development programs. 

Management, from the most senior levels on down, should also be genuinely interested in listening to their own associates’ input.  Associates appreciate the opportunity to be heard.  Interaction should be both structured and unstructured as some of the most valuable exchanges can occur in the break room.

While today’s shippers need exceptional support from 3PL partners to respond rapidly and effectively to the new business opportunities that are emerging as we exit the Great Recession, retaining and developing internal resources remain important issues to implement successful supply chain strategies.   The 3PL that has embraced the value of associate development will be ready to provide critical support and responsiveness to its clients.  The same is true for the shipper who needs talented staff to work with a 3PL to get the most out of the partnership.

Posted in 3pl, Financial, General, intermodal, International, outsourcing, Transportation | No Comments »

Lasting Values: What Every Professional Should Bring on the Job

Tuesday, April 23rd, 2013

By Mike Challman, Vice President, North American Operations, CLX Logistics, LLC

When I was a younger man, I developed and, then, refined over the years a simple list of tenets to guide my personal and professional life.  As I’ve grown as a leader, I’ve seen clearly how these principles yield a very high level of performance when embraced by a work team.  Applying these values, which include both things to do and things to avoid, will inevitably lead to success for both the team and its individual members.

BE COOPERATIVE –  Recognize the importance of working together.  Don’t worry about who gets the credit.

A high-performing team links individual effort to group results.  Individuals can still have specific goals and should certainly be acknowledged for their contributions.  It is essential to recognize and reward behavior that contributes to overall team success.  Do it consistently and members will become confident that they will be properly recognized for supporting team goals.  There is room enough for everyone to succeed, if they work together.

BE CREATIVE   –   Find new and better ways to do things.  Trust that your ideas are worthwhile. 

“It’s the way we’ve always done it” is a toxic attitude to a vibrant team environment.  If a team won’t adapt and improve, first-rate solutions can quickly become cut-rate.  And some of the best ideas can come from newer team members.  A fresh set of eyes may recognize an opportunity that is camouflaged to veterans.  The creative spirit thrives when team members think aloud, offer suggestions, ask questions and challenge the status quo.

BE COMPASSIONATE   –   Encourage one another.  Help others.

Many of us spend more waking hours during the week with our work team than our families.  We need to treat team members with the level of respect and support that we want for ourselves or the people for which we care.  That includes taking time to recognize a teammate who does something good.  A sincere ‘thank you’ from a colleague might mean more than a comment from a leader.  People want to be appreciated.  A sincere word of encouragement costs you nothing.

BE COURAGEOUS   –   Take a strong stand in support of your values and ideas.  Take a risk.

It can be scary to advocate for something that challenges prevailing sentiment or the team leader’s opinion.  It’s scarier still if you stand alone.  But if you’ve done your homework and strongly believe that your proposal is right for the team, take a deep breath and push ahead.  The most capable teams foster an environment that encourages open interactions and objective discussion.  If we’re not risking, then we’re not moving forward.

AVOID COMPLAINING   –   Focus on what you can do to make things better.  Control your own destiny.

It’s natural to need to vent sometimes.  But there is a fine line between blowing off steam and becoming a victim.  When team members are encouraged to focus more on resolution and less on the problem, the level of empowerment rises dramatically.  Recognizing a problem is usually relatively easy; expressing unhappiness about it is even easier.  Moving past that emotion and seeking answers is where real strength lies, and that is where a strong team will focus its collective power.

AVOID COMPLACENCY   –   ‘Good enough’ is almost never good enough.  Raise the bar.

An old colleague used to say, “Perfect is the Enemy of Good”.  More often it seems that “good enough” can become the enemy of “great”.  A high-performing team will have progressive goals.  When a set of clear, specific objectives are achieved, newer and higher targets must be set.  The achievement of goals should still be celebrated.  Every win, both big and small, is important.  The team can celebrate that success before getting down to the business of reaching the next level.

AVOID CRITICIZING   –   Believe that everyone is trying to do their best.  Help them to do better.

Constructive criticism and critical analysis are good things.  The negative, judgmental variety is destructive to the culture of a team.  We work with people from all sorts of backgrounds and many different life experiences.  One constant is true of virtually everyone; we want to do our best and we want to be successful.  Before you declare a struggling teammate to be a lost cause, ask yourself – would I want help if that was me?  If so, be that support.

AVOID CAPITULATING   –   Persevere in the face of challenges.  “Never, never, never give up.” – Churchill

High-performing teams demonstrate endurance, commitment and tenacity.  Sometimes it is easy and fun; other times, grim and demanding.  It is important to keep the long view, to expect some bumps in the road, to communicate openly and to focus on improvement.  The best teams foster an environment where members trust, challenge, encourage and support one another.  A high-performing, results-oriented team will foster the individual achievement of each of its members.  It won’t always be easy, but the rewards are worth it, guaranteed.

Posted in 3pl, Financial, General, intermodal, International, outsourcing, Transportation, Uncategorized | No Comments »

Navigating Europe’s Logistics Labyrinth – An Expert’s Advice

Monday, February 25th, 2013

by Marc Huijgen, Managing Director, LHC Consulting (a CLX Logistics company)

Shipping freight across Europe can be an expensive and complex business for most U.S. companies. Composed of 2.3 million square miles and 50 separate countries with their own laws, border controls and language, transporting products across the continent of Europe by many U.S. companies can be a daunting task.  Add to that rising fuel costs, and it’s no wonder that domestic companies with operations in Europe question what happens to their bottom line when shipping through the continent.

To get a deeper understanding of the mysteries of European shipping, you must delve into the effects that gasoline prices, green initiatives, capacity shortages, and labor laws have on U.S. transportation requirements and costs when shipping products throughout Europe.

European Diversity on Gas Prices and Road Restrictions

Gasoline prices are obviously a key factor in overall freight rates, since fuel is typically responsible for around 25% of transportation costs. As in the rest of the world, Europe suffers from the impact of rising barrel costs and, depending on where you do business that impact has wide variations.

In the U.K., a key destination and customer base for U.S. companies, fuel costs are above the European average and fluctuate from country to country.  For example, gas costs more than $8 a gallon in Italy and closer to $7 in Luxemburg.  When you consider that it”s just over 550 miles from the center of Luxemburg to Milan, you start to see the scale of the maze of considerations when shipping across Europe.

Further considerations when shipping through Europe include weekend restrictions on road freight, with 12 countries (including France, Switzerland, Austria and Hungary) only allowing weekday shipping. In Switzerland and Austria, freight vehicles above a certain capacity are not allowed to transit, enter or leave the country at night. And there is clearly one other issue to add: road tax. Some European countries levy it; others are planning to introduce it soon.

A Green Europe Is a Costly Prospect for U.S. Companies

As if these issues weren”t complex enough, green initiatives increasingly focus on the type of fuel used by hauliers or carriers.  The EU administration in Brussels already decreed it will ban vehicles running on fossil fuels from entering European cities by 2050. Although this seems a long way off, it will, nonetheless, significantly impact any company with customers in the capital city or routes running through it.

The green logistics trend is widespread and will continue to grow as stakeholders and customers of multinationals put on the pressure to conform to “green” ideals. While current focus is on products and manufacturing processes, customers are increasingly demanding that companies initiate a green philosophy for their supply chain, from end to end. For hauliers, this means operating a “green fleet,” with lightweight vehicles and “Euro 6″ engines to reduce emissions.

This raises the prospect of a transportation mode shift in volume from roads onto train, short sea and intermodal transport. While this may seem like a simple and logical solution, these transport models vary vastly from country to country. It is often said that the only thing the rail infrastructure across European countries has as a common factor is the distance between the rails. Added to this the pertinent question:  will there be capacity in these alternative modes?  If there is a sudden shift away from the roads, will short sea, train and intermodal networks be ready to cope with demand?  At present, there is no definitive answer, but the consensus is that it”s a situation that could benefit from rapid and urgent improvement.

Capacity Shortage

The majority of the hauliers in Europe today are small and midsize companies; a substantial number are family owned. For these companies, there is a growing problem: succession. With no one available (or willing) to carry on the family business, a general shakeout is expected in the next two to five years, with large and financially stable hauliers acquiring some smaller family companies. This, in turn, will lead to a more dominant position for a small number of big European players. Compounding this position is the question of fleet finance – in such a small-margin industry, there is little capital available (and fewer willing lenders), which reduces the capacity of the smaller hauliers, further increasing the influence of the largest players.

What this means, of course, is that the negotiating power of these players will become bigger, making it increasingly challenging for shippers to secure beneficial rates.

Another concern is a shortage of drivers as a substantial portion of currently available drivers come from the post-WWII Baby Boom generation and will soon reach retirement. When these drivers started their careers, requirements were relatively low, with no minimum educational requirements for entry. Today, as in most jobs, drivers must meet a range of standards before suitably certified. For many young people, the prospect of becoming an international driver simply isn”t attractive enough, leading to declining numbers of people entering the trade, which will cause a capacity shortage within the next couple of years.

Labor Costs and Tightening Regulations

While labor laws in Europe are famously complicated, with differing legislation from country to country, labor cost has been a major influence in recent years on company profitability. Until as recently as 2005, a goldmine of cheap labor was available in Europe, with East European countries offering workers at a fraction of the cost of their Western counterparts. This disparity is almost gone, as Eastern countries raise their minimum wage to encourage a flourishing economy, minimize emigration and bring their residents” quality of life more in line with neighboring countries. Those companies employing or subcontracting East European drivers are already noticing a rise in costs and, in a few years, the days of low cost labor will be gone completely.

So What Does All This Mean for the U.S.?

Every U.S. company with operations in Europe will see an increase in transport costs as the transportation market overseas increasingly moves to a sellers” market, with a smaller number of hauliers gaining increasing influence as they expand. Even under normal conditions, with no global economic crisis to consider, shippers would face a hike in transportation spend.

Many of the clients I work with at LHC — leading blue-chip and Fortune 500 companies — are already preparing themselves for the imminent rise. They are securing transport capacity as far into the future as they can, while changing their procurement strategy towards cost avoidance. Above all, they are studying distribution changes. With smarter distribution (optimizing routes and consolidating shipments to locations in close proximity, increasing shipment volume, improving forecasting), annual logistics expenditure can be improved or maintained, actually offsetting the rise in transport rates.

U.S. companies are already questioning European transport rates, which rose by 7.9 percent in 2010. For many, the Continent is seen as a single unknown quantity in transport cost calculations and that will only continue as even minor changes in one territory can have an impact on overall transport network cost. For companies with existing dealings in Europe, or those expecting to launch on the Continent, it has never been more important to find out the real market trend, and to face the reality that those costs are about to rise for the unprepared.

CLX Logistics LLC, parent company of ChemLogix LLC, established international operations with the acquisition of Netherlands-based LHC Consulting, a consultancy firm offering supply chain management and logistics services to multiple industries throughout Europe.

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Having Shipping Capacity Issues? Consider Obtaining Volume Where Capacity Already Exists

Thursday, October 4th, 2012

Posted in 3pl, Financial, General, intermodal, International, outsourcing, Transportation, Uncategorized | No Comments »

Are you Paying Too Much for Your Shipments? Benchmark Your Carrier Activities to Find Out

Friday, September 28th, 2012

By Mike Challman, ChemLogix, LLC
Vice President, North American Operations
ChemLogix.com

When was the last time you analyzed your actual carrier costs?   If you haven’t reviewed your carrier activity in the past 12 to 18 months, there’s a good chance your costs are above what you’ve planned, above the rates listed in your routing guide and, quite possibly, above competitive market rates.

Over the past year or more, virtually every shipper has begun to feel the pinch of increasingly limited carrier capacity in the market, and all indications are that this scarcity may only get worse as the economy continues to improve.  Legislative actions and plans (CSA 2010, Hours of Service and other potential regulatory changes), a growing driver shortage and a reduction of fleet size by many carriers during the Great Recession are just a few of the issues that have led to a premium being placed on quality carrier capacity. As a result, many shippers are experiencing increased freight costs but may not realize its full extent.  It’s easy to see the impact of direct rate increases from a carrier, but not so easy to recognize the impact of a greater incidence of spot rates or having to reach deeper into your routing guide to find a carrier who will move your load at their contracted rate.  And to top it off, continued high fuel costs mean steep fuel surcharges from carriers.  As a result of all of this, you may be surprised to learn that your freight costs are much higher than you thought and represent a more significant percentage of the delivered price of your products.

Your procurement department is confident they negotiated good rates, and that may be entirely true, so why worry?   To remain competitive and understand actual transportation costs, shippers need to closely monitor the activity in their own networks to get an accurate picture of how they are buying in the market.  The transportation market is a constantly moving target, and much can change in very short periods.   As well, if your carrier selection decisions are made at the site level, even with a routing guide in hand, there is no guarantee that those decisions are consistently cost-effective.  By reviewing shipment history, carrier assignments and freight invoices, a benchmark study will reveal what you actually paid for your transportation activities.  But knowing what you spent is only half of the answer you need; you also need to compare your buying to that of other similar shippers.  By relating your shipment data to market rates for your specific modes, lanes and geographic regions, a benchmark study can determine if your rates are best in class, market competitive or above the market.

Through this analysis, the benchmark study can provide actionable insights on the competitiveness of your company’s actual freight rates.  It can also serve as a basis to negotiate significant improvements to your carrier agreements where they are most needed, while at the same time give you a view of good rates that you need to maintain at their current level.  Finally, the study can help you to control and standardize accessorial charges and fuel surcharges across your carrier base.

Sounds like a worthwhile exercise, can’t we do it ourselves?  Compiling and analyzing this type of study requires a significant investment of time and resources, as well as access to current and accurate market freight rates and related information to which most shippers simply don’t have ready access.  That’s where a knowledgeable third party logistics provider (3PL) such as Chemlogix becomes invaluable.  Possessing up-to-date market intelligence, an established carrier network and an experienced team of transportation professionals focused on this work, a 3PL that is familiar with your industry can perform a thorough benchmark study.  A non-asset 3PL offers the added advantage of being asset-neutral, meaning you get the best possible carrier solution and not one that favors the provider’s own trucks.  And all of this can be done faster and more cost effectively than most in-house logistic departments who don’t have the available time, resources or experience for this endeavor.

Using benchmark results, 3PLs can take you to the next step in negotiating rates with carriers for service in specific lanes and regions and identifying new sources to replace those that have priced themselves too high for your business. To find out more about how benchmarking can provide you with the tools and analysis to mitigate rising carrier costs, contact us at information@chemlogix.com or visit our web site at: http://www.chemlogix.com/solutions/freight-procurement.

Posted in 3pl, Financial, General, intermodal, outsourcing, Transportation | No Comments »

Trade Mission to Europe Provides Insights As ChemLogix Global Builds International Logistics Operations

Thursday, August 16th, 2012

By Steve Hamilton, President and CEO, CLX Logistics

Traveling with PA Governor Tom Corbett with a delegation of Pennsylvania business leaders on an International Trade Mission to Europe this past March provided insights into new business opportunities and cultural considerations as ChemLogix Global expands its international logistics business throughout Europe.

With the goal of making new alliances and scouting potential locations for ChemLogix Global to set up new facilities in Europe, I joined seven business leaders from a diverse range of Pennsylvania-based companies to meet with different corporations, business leaders and dignitaries in Leon, Paris, Stuttgart and Düsseldorf.

Visiting chemical companies throughout Germany and France confirmed their interest in shale gas produced in PA and corporate readiness for the type of robust transportation management technology and resources available from ChemLogix Global.

While strong nationalism still exists among businesses in Europe, globalization is growing within many logistics departments, with in-house personnel transplanted from different countries including the United States.  As chemical companies become more diverse and open to work with businesses outside their own country, ChemLogix Global wants to be positioned to support their supply chain management needs.

To strengthen our presence and readiness in Europe, we are looking to establish an overseas operation that will enable us to better work with international companies in their own time zones and within their own territories.  An international office will enable us to work with new and existing customers in their own backyard while building greater relationships and understanding of their unique supply chain challenges.

In the months ahead, we hope to announce our new European office locations.  To find out more about our international logistics business and how we can deliver value to your company, click here or call 215-461-3800.

Posted in 3pl, Financial, General, intermodal, International, outsourcing, Transportation | No Comments »

Do You Have the Resources to Address Today’s Transportation Shortages?

Thursday, July 26th, 2012

By Ed Hildebrandt, Senior Vice President of Business Development

Carrier capacity constraints ebb and flow with economic conditions. Right now, as capacity tightens in most markets, many shippers are being caught by lessening capacity without the resources to maintain their existing carriers and/or identify new transportation sources without paying more for shipments. Several factors are limiting truck driver and asset availability while increasing costs:

•    Truck drivers and assets have not rebounded to meet increased demand
•    New hours of service for truckers limit the amount of time that can be spent on the road, restricting driver availability
•    As truckers retire (average truck driver age is 50s), not enough younger drivers are available to fill vacant spots
•    Fuel surcharges don’t fully compensate drivers for higher fuel costs
•    Roller coaster effect of demand at fracking sites in central and southern Louisiana, Mississippi, Ohio, Wyoming, Texas, Pennsylvania, and North Dakota are taking Over The Road (OTR) drivers from the system

As shippers compete with other shippers – as well as third-party logistics providers – for available capacity, logistic departments must have the right tools to pick up new capacity and avoid losing existing carriers to competitors.   For example, companies with transportation management systems (TMS) can electronically broadcast logistics requirements to market, identify available trucking assets in the network and quickly match capacity to their needs.  In recent years, shippers had to engage as many as 15-20 additional carriers just to satisfy daily freight requirements.
Using TMS technology, shippers can also access granular information about transportation expenditures to pinpoint mode shifts, identify accessorial costs in real time and effect changes before costs escalate out of control. A TMS can gather freight accrual information on a per shipment basis in real time instead of waiting several weeks after the shipment when carriers send invoices for payment.  Today, most financial executives are very concerned about timely posting of freight costs and their ability to calculate profitability down to the SKU level for each client.
Small and mid-sized companies without the resources or budget to acquire and maintain in-house TMS can contract the services of third-party consultants (3PLs) that offer the technology, knowledge and networks to support chemical companies in meeting specific supply chain requirements.
In an oversold market, shippers needing to add volume may find it difficult to attract and find it without increasing costs.  Maintaining data on different freight markets and carriers, a 3PL can match your volume to a carrier’s complementary or empty return lanes.  A managed services partner can also identify reasons why freight may not be attractive to carriers – too many plant delays impacting loading times, too many cancelled or re-booked loads, too many consignees with unloading delays, poor treatment at plants, slow freight payment  – and help solve these issues in order to expand existing carrier capacity.  A 3PL can also suggest new modes of transportation, such as intermodal, to reduce the need for OTR assets.
If you decide to look for a managed services partner that can support you with the right tools and resources to become more competitive, find a resource that knows your market. While different outsource companies may offer similar capabilities and technology tools, many may not know how they apply to your business. Only third-party consultants experienced within your industry have the knowledge, networks and databases necessary to address your specific issues.
ChemLogix is a leading provider of managed services and technology to the chemical industry. An IBM Advanced Business Partner, we offer IBM’s TMS and network-design solutions along with comprehensive multi-modal transportation management services for all modes, enabling chemical shippers to drive economic value while improving performance.  To set up an appointment to discuss your requirements and access your business, please contact us at call 215-461-3805 or email information@chemlogix.com.

Posted in 3pl, Financial, General, intermodal, International, outsourcing, Transportation, Uncategorized | No Comments »

Logistic Challenges Arise As Fracking Industry Monopolizes Diminishing Transportation Resources

Wednesday, June 13th, 2012

By Jim Suber, Sales Director, ChemLogix

Hydraulic fracturing – fracking – has become a booming business throughout the United States.  The process of extracting oil and natural gas from shale rock layers deep within the earth, fracking is forecast to contribute $118 billion toward U.S. economic growth over the next four years, reports IHS Global Insight.  And as the fracking business soars, so does its transportation requirements.

The thousands of gallons of water and chemicals necessary for fracking must be regularly trucked to and from sites in addition to the frac sand that is initially shipped by rail car to somewhat distant rail stops from fracking sites.  To ensure adequate transportation resources are available to support increasing operations, the fracking industry is paying top dollar to lure truckers from other industries.

As more drivers, trucks and rail cars are monopolized by fracking and energy production businesses, fewer and fewer resources will become available for shippers of all industries to transport their own goods, both by rail and over the road.

While equipment shortages may be short lived and cyclical, driver shortages will remain.  New driving restrictions issued by the Federal Motor Carrier Safety Administration that limit driving (and earning) time are motivating many truckers to leave the business. Those drivers who remain on the job, especially those with good Safety Stat Scores, are commanding higher compensation from carriers.  The average age of US truck drivers, particularly in bulk, continues to rise.   The trucking industry struggles to attract younger drivers.  Add to that the lure of higher wages and less stringent driving requirements associated with the fracking industry and you have fewer drivers available to transport your goods.

Mid and small-sized companies often do not have the clout to attract consistent capacity in this capacity constrained market.  Nor do they have the technology to track resource availability.  That’s where a third-party logistics provider (3PL) like ChemLogix offers the tools and market intelligence to maintain a competitive edge.  While logistics personnel at a smaller company might have to make several calls to several carriers each day to secure driver availability, a 3PL can electronically broadcast logistics requirements to the market, identifying available trucking assets in the network and quickly matching capacity to needs.  By gaining a granular view of the carrier market and the ability to quickly correspond with carriers, shippers gain a competitive edge against tough competition from other shippers.  3PLs also have the ability to contract carriers as they can offer more business over a longer time frame than individual companies.

If you have concerns regarding the availability of transportation resources now and into the future, contact ChemLogix at (215) 461-3805 or information@chemlogix.com to discuss your freight requirements and possible logistics strategies.

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Getting Best Rates for Hazmat Shipments as New Hours of Service,Retiring Drivers Further Limit Capacity

Thursday, May 3rd, 2012

As chemical shippers compete for limited truck driver and asset availability to transport hazmat materials, new hours of service regulations issued by the Federal Motor Carrier Safety Administration restrict driver time behind the wheel in an effort to ensure greater safety on the roads.   Effective February (with a compliance date of July, 2013), the maximum number of hours a truck driver can work within a week is now 70 hours, a reduction of 15% from 82 hours.

These new driving restrictions further reduce transportation capacity for chemical shippers not only as truckers drive less, but many will leave the business as they make less money.  With the average age of a truck driver around 55, many also will retire within the next decade without a sufficient replacement of younger drivers.  As a result of truck driver shortages, available carriers for hazmat will start charging more for shipments.   But transportation costs are not totally out of your control.

Getting the best rates for hauling hazmat materials often depends on doing your homework and understanding your options when contracting rates.   While you can establish a hazmat fee as part of your line haul charges, shippers who transport both hazmat and non-hazmat products should obtain quotes shipping non-hazmat materials and then add on a hazmat accessorial charge.  Sometimes, a carrier may suggest a rate that allows you to move both hazmat  and non-hazmat product; but you end up paying too much as you are charged the same rate for non-hazmat loads.  Optimally, it makes more sense to ask for a non-hazmat rate and negotiate a hazmat accessorial fee when applicable.

When negotiating rates, contact at least five carriers and compare costs and contract requirements.  If you find a preferred carrier is more expensive than their competitors, use your market intelligence (competitor rates) to negotiate a better rate.

Don’t have the resources or time to identify and evaluate new potential carriers?  A third-party logistics provider (3PL) specialized in your industry can offers the contract expertise, market intelligence and carrier relationships to establish the best fees for your transportation requirements.  To find out more about Benchmarks and Freight Procurement, refer to the ChemLogix section of the CLX web site at http://www.clxlogistics.com/services/freight-procurement-bids-and-benchmark/.

 

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