Chemical Transportation & Logistics Blog

By Edward R. Hildebrandt, Sr. VP, Operations

Limited truck driver and asset availability is shrinking shipping capacity for many chemical manufacturers.  Noel Perry, an FTR senior consultant, noted that the industry is several hundred thousand drivers short of raising capacity to meet demand.  Some chemical shippers simply take the route of least resistance and increase capacity by paying more for freight; others may find it nearly impossible to contract new carriers at any price as their competitors vie against them for available resources.

One tactic chemical shippers should consider in meeting freight requirements is identifying and adding volume to an existing carrier’s complementary or empty return lanes.  Load matching carrier’s or other shipper’s lanes in the opposite or complementary direction can add capacity where it doesn’t currently exist.

How can shippers determine where these lanes and volumes exist in the market?  Carriers do not readily provide information regarding their freight, either because they fear the information may wind up in the hands of a competitor who will take the business away or they don’t want shippers to force them to run backhaul lanes at backhaul prices. And many shippers do not have the technology or resources to obtain this market information themselves.

This is where a third-party logistics company adds value.  Knowledgeable about the freight market and supported by transportation management system (TMS) technology, third-party logistics companies can identify available trucking assets in different markets and pinpoint shipper’s freight fits, not just on a aggregate basis, but on a lane specific (original and destination) basis.  Then, the 3PL can electronically broadcast logistics requirements to the market to quickly match capacity to shippers’ needs.  Without a TMS, shippers would have to communicate to carriers through faxes and phone calls, searching for carrier capacity.  Available capacity is left to the chance call and probably would be gone.

Backed with market intelligence and the ability to quickly negotiate with carriers, shippers gain a competitive edge to gain load coverage over other shippers competing for the same available capacity.  To discuss how this strategy might meet your freight requirements, contact ChemLogix at (215) 461-3805 or information@chemlogix.com.

By Edward R. Hildebrandt, Senior VP, Operations

Next year, the market will still experience a shortage of carriers for freight transport.  While a modest 3 percent growth is forecasted for trucking this year and into 2012, Noel Perry, a FTR senior consultant, notes that capacity might be enough to maintain freight rates but not to replace business lost in the recession.  So, what can carriers do to make their business attractive to carriers?  Sometimes, money is not enough.

If you have a reputation of being a difficult shipper, carriers may avoid your freight.  For instance, do you delay carriers at the plant to load beyond normal loading times?  Or do you move appointments too frequently?  This could create problems for your carrier either meeting your required delivery or causing the carrier to miss their next customer pickup time. In both cases, the driver and carrier lose revenue and, worse yet, may refuse your next shipment.

Perhaps your freight is too dispersed across multiple plant sites to gain capacity and pricing leverage.  Have you thought about consolidating freight at one location prior to shipment or consolidating manufacturing to take advantage of scale? Another answer may be a logistics partner who can combine your freight with that of their other shippers gaining both price and capacity leverage.

How about your payment?  Are they on time and accurate?  Do carriers have to wait long periods until you reconcile your accounts?  Solving these issues and working with existing carriers may be the answer to get more capacity.

Don’t know where to start?  A third-party logistics company with a proven track record of resolving difficult capacity issues can address your particular issues.  As part of the solution, a logistics partner can assist you in making your freight more attractive to carriers.  If you have concerns about finding carrier capacity in the months ahead, contact Chemlogix at (215) 461-3805 or information@chemlogix.com to discuss possible solutions to make your freight more attractive to carriers.

As more and more business goes global, chemical shippers must ensure exported products are correctly registered in accordance with different country regulations.  In 2007, the European Union (EU) implemented a new REACH (Registration, Evaluation, Authorization of Chemicals) policy that requires chemical manufacturers and importers to present detailed data on product characteristics and potential risks to health and the environment.  As REACH places greater responsibility on chemical manufacturers to register products and provide safety information, chemical shippers conducting business with EU countries have a limited timeline to ensure their different products comply with regulations or be at risk to incur fines or even a loss of business as materials are rejected for importation.

Registering products under REACH can be a complicated and time-consuming process (REACH requires three different evaluation processes and compliance with different restrictions), especially for companies without an existing EU presence and those not familiar with country protocol.  Other manufacturers with trademark formulas probably are concerned about revealing confidential information during registration.

Using the technology of a qualified third-party consultant can help chemical companies with REACH compliance and reduce the need for in-house personnel to conduct the laborious task of manually reviewing every existing products. Experienced 3PLs, like ChemLogix, also can help specify landing costs and restrictions associated with exporting products to specific countries.

As you enter into new overseas markets or introduce new products into existing ones, ensure products are in compliance with country regulations before the sale.  Understand your profit margins and ensure you can ship to that country.    It’s all a part of a successful and profitable supply chain strategy.

Ocean freight rate management is a becoming ever more challenging for importers and exporters, especially smaller-sized shippers.  Frequent changes to ocean freight rates due to market conditions as well as bunker price changes make it more difficult for shippers to accurately price products to overseas customers or make sound sourcing decisions.

At the same time, capacity for ocean freight is unstable as liner carriers plan to lay up container vessels in hopes of increasing rates. The New World Alliance carriers already have announced plans to remove capacity from the Transpacific Trade effective later this month. Beginning during week 29 in Asia, the PSW string will be withdrawn by the VSA. The string is comprised of five vessels, each averaging 3,960 TEU.

Carriers also have different attitudes based on shippers size.  An investigation conducted by maritime analyst SeaIntel (www.SeaIntel.com) revealed that new, small shippers had difficulty getting freight rate quotes from liner carriers and large forwarders. When contacting 33 carriers and forwarders on the Transpacific and 27 on the Asia/Europe lane, the analyst found that a vast majority of liner carriers and large non-vessel-operating common carriers didn’t give rates.

Some carriers and NVOs explained that they needed more company details to provide rates while others just couldn’t provide competitive rates for such small shipments or because they worked in contract environments.  Other carriers didn’t even respond to requests or gave two rates to the same country from two different offices.  ChemLogix Global LLC also has found that carriers may be reluctant to carry hazardous chemical.

Finding a way to work with or even choosing reliable and reasonably-priced overseas carriers can be a major challenge for small- and mid-sized chemical shippers without the experience and resources to conduct negotiations.  Contracting a 3PL with the resources and established carrier contacts can reduce the perils of contract negotiation while ensuring a good rate and the best lanes.

The  ChemLogix Global LLC team has the experience and market knowledge to manage the complex ocean freight market with very competitive pricing.  As a licensed NVOCC and freight forwarder, ChemLogix Global offers competitive rates on international shipments to any port in the world. To find out more about our international logistic services and how we can help manage the ocean freight contracting process, refer to our web site at http://www.chemlogix.com/solutions/international-logistics or contact us at information@chemlogix.com.