Archive for the ‘Financial’ Category

Do Your Carriers Find Your Freight Attractive?

Friday, December 9th, 2011

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 CLX at (215) 461-3800 to discuss possible solutions to make your freight more attractive to carriers.

Are Your Products Compliant with the European Union’s new REACH Policies?

Tuesday, October 4th, 2011

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.

Importers and Exporters Face Difficult Challenges with Ocean Freight

Thursday, July 28th, 2011

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 ( 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 Annual SOC 2 Type II Audit Reports verify our qualification to handle enterprise-class recoveries and support those customers who must maintain compliance with privacy and security regulations such as DriveSavers – which is the only  recovery service provider in the industry to post proof of annual, company-wide SOC Type II Audit Reports. 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

Shorter Cash-To Cash-Cycles Will Ensure Chemical Shippers Have Money On Hand as Economy Improves

Monday, April 25th, 2011

As the economy rebounds and business normalizes, companies with healthy cash flows will be in a good position to address corporate expenditures and investments put on hold due to the recession. Those with long cash to cash cycles, however, may find themselves short on cash to fund future operations.

Even with strong sales marked on the books, companies may be cash poor due to long cycles associated with converting resources into cash flow. Inventory management, accounts receivable cycles and accounts payable times are all factors effecting cash to cash cycle times. Today, managing these components has become complex as business goes more global.

For example, when purchasing products from international sources, a chemical company may face a variety of new overseas procurement situations such as expensive letter of credits, logistics problems, and reliability. And when shipping overseas, long payment cycles, often just starting at product receipt, can extend cash payments to more than six months.

Strain on cash can adversely affect companies without adequate supply chain management processes. Chemical companies may need the support of a third-party logistics outsource that has the international experience and technology in implementing supply chain management strategies that may include developing free trade zones, consignment warehouses, customs automated clearinghouses and freight on board destinations.

A 3PL can also offer web-based transportation management system (TMS) technology that automates financial processes and provides visibility into the financial flow, reducing accounts payable times, ensuring greater accuracy and maintaining established accounts receivable time frames. Through better management of the supply chain – from inventory management through to accounts payable – chemical companies can improve cash cycles.

By Francis Ezeuzoh — Chief Financial Officer, ChemLogix, LLC

Did you know the Fuel Surcharge you pay on every load doesn’t cover the out-of -pocket costs of higher fuel cost to your carriers?

Thursday, March 24th, 2011

Why? Fuel surcharge formulas are based on a loaded mile formula. All empty miles run between the terminal and your loading site, such as miles from the carrier’s last delivery to you or miles to the terminal for equipment repairs or tank cleaning, are not included in the fuel surcharge calculation.  As a result, the carrier has added fuel costs for those empty miles. Sure, when you contracted with the carriers, they built in some fuel recovery number for empty miles.  However, recent fuel cost increases (the time from when you negotiated your contracts until now) are not included in those calculations.

What does this mean to you? Let’s review a few examples. Say, during the time of your last contract negotiation, fuel costs increased by $1.50/gallon.  What added cost does that represent?   The average truckload carrier – either dry van or bulk – wants a minimum per-truck revenue of $200K to $225K.   Assuming a modest 10% empty mile to loaded mile ratio for TL van freight and 20% for bulk freight, unrecovered fuel costs is $2,769 for dry van carriers and $5,538 for bulk truck carriers. (Click View Graph below for more)

How do you effectively negotiate during any price increase discussion? Know your carriers empty mile ratio and average truck miles per gallon before you meet. Also, look back at your current contract effective date. Knowing what the fuel price was during your last contract renewal, along with your carrier’s empty mile ratio and average MPG/truck, will enable you to calculate your fuel cost impact on your carriers. You can also be a good partner to your carriers by putting actions in place to minimize empty miles and fuel waste.   As example, initiate a no idle rule at your plant during wait time to load.


3PLs – Not Banks – Offer Seamless, Paperless Solutions for Freight Audit and Payment

Monday, November 8th, 2010

TMS Mobile Applications Get Us Closer to Meeting the Rubber on the Road

Sunday, May 23rd, 2010


If it ain’t broke, don’t touch it

Tuesday, September 15th, 2009


Looking for Cash? Think About Categories

Friday, May 15th, 2009

The recent global financial crisis has had a double impact on

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specialty chemical companies as revenues decline and credit tightens. Many companies are responding with the typical functional programs focused on specific line items in the budget or balance sheet. While offering some financial success, functional programs often drive conflict with customers, suppliers as well as internally. For example:

  • Cost initiatives focus on cost savings without a viewpoint about the cost associated with service levels.
  • Departmental cost reductions often leave managers with the same tasks, but with fewer resources.
  • Aggressive AR collection policies and longer AP times put a greater strain on customer and supplier relations.
  • Inventory reductions pose the risk of stock outs, often with the highest turnover products purchased by the largest customers.

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Category Cash Management or C2M is a proven alternative to the functional approach to cash management that offers high gains without adding risk to business operations. Based on over a decade of work with the unique sourcing, production and distribution characteristics of the chemicals supply chain, C2M offers an integrated view of cash generation and utilization, both of which are driven by specific measures of service.

In C2M, cash management is segmented by categories or segments of business with similar cash utilization related service requirements.
All categories have financial measures, like the business as a whole, including Contribution and Current Asset Return. However, each category has unique values for the measures of it service cycle – a critical driver of costs in the supply chain. These costs range from to 20 to 25% of sales (all costs with the exception of raw materials and plant direct conversion) in the business unit. Understanding trade offs between service and the financial measures is where business insights begin. Win – win break points between service and cash can be the focus of discussions with both customers and suppliers.

Performance can be dramatically improved via management of categories. Cost savings of 1% of sales and working capital reductions of over 20% are common. There is a lot of opportunity for using this methodology as most business units have 4 to 6 of 10 possible business categories.

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Chemical Transportation and the Banking Crisis

Thursday, March 19th, 2009

When was the last time you went to a bank to address your transportation needs? It may sound like a silly question, but in reality, banks are playing an increasing role in transportation and logistics.

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Swordfish on dvd You wouldn’t go to a 3PL 007 Casino Royale divx to open up a savings account, yet chemical companies trust their freight payment needs to banks like JP Morgan, Cass and US Bank.  Banks may be good at paying invoices but their focus is primarily on transactions, hence they lack the experience and domain knowledge necessary to help companies maximize savings on their transportation expenditures. This problem is compounded in the chemical industry where transportation in many cases involves multiple modes.

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If there is one thing the current banking crisis should have taught us is that banks should stick to what they do best. Sooner or later, the banks will unceremoniously exit these services without regard to the impact to the businesses they serve.

Children Shouldnt Play with Dead Things full movie Remember, being a good dentist does not qualify one to be a dental surgeon. Processing chemical companies’ freight is not the same as processing a telephone bill, utilitiy or a truckload of tomatoes from the local farmer. Chemical companies should turn to qualified transportation and logistics partners with intermodal capabilities to handle their freight payment and associated needs. In doing so, they’ll realize maximum savings on their transportation expenditures and may just avoid being part of the next banking crisis.

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