Archive for the ‘outsourcing’ Category

YouTube Video Discusses Advantages of ISO Tanks to Transport Chemicals

Thursday, January 12th, 2012

Check out our first in a series of videos on important logistics topics of interest to chemical shippers.

Stephen Hamilton, Managing Director of ChemLogix Global, discusses how BulkTainer ISO tanks offer enhanced safety and security for shipping chemicals by taking chemicals off roadways and reducing the incidence of accidents. Click Here.

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 (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 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 http://www.clxlogistics.com/industry-solutions/chemical/.

Limited Truck Capacity Makes Intermodal An Attractive Transportation Alternative

Wednesday, May 25th, 2011

By Stephen Hamilton, Managing Director, ChemLogix Global

With the continuing competition to contract quality truckers to transport products across country, Intermodal freight shipping provides an attractive transportation alternative to OTR trucking for shipments over 750 miles. Offering economic and environment benefits, in addition to addressing the capacity crunch of available truckers, Intermodal combines the resources of different transportation modes, such as trucking and rail, to get products from the warehouse to their final destination.

As the seasonal increase in chemical shipments begins, the surge in freight volumes cannot be addressed by available fleets. In February, FTR Associates (an industry leader in logistics forecasting) lowered its shipper’s conditions to reflect tightening carrier capacity, particularly in the truckload sector. Noel Perry, FTR managing director and senior consultant, predicts a shortage of 215,000 drivers by the end of this year.

In the competition to retain carriers, shippers will most likely pay a premium for available truckers. They may also find themselves scrambling to find new resources to satisfy additional shipping requirement. Intermodal freight shipping can help alleviate the costs and problems associated with today’s limited capacity associated with OTR trucking.

Intermodal helps lower transportation costs by allowing each mode to be used for the portion of the trip to which it is best suited. An intermodal container makes it possible to change shipment methods, whether it is truck, rail or ship, without individual freight handling. Freight essentially can be efficiently shipped door to door.

Intermodal freight shipping also helps reduce traffic congestion and accidents as well as the burden on overstressed infrastructures. One intermodal train replaces 280 trucks while saving nearly 20% in shipping costs. Three times more fuel efficient than trucks, Intermodal also reduces energy consumption, contributing to improved air quality and environmental conditions. Nearly one billion gallons of fuel can be saved each year just by moving 10 percent of long-haul freight from truck to rail, according to a study by the Federal Railroad Administration.

Railroads also are the safest way to transport hazardous materials. While railroads and trucks carry roughly equal hazmat ton-mileage, trucks have nearly 16 times more hazmat releases than railroads, according to the Federal Railroad Administration.

Is Intermodal transportation right for your company? If you ship products over 750 miles, then you might be a prime candidate. Before you take on this new venture, contact an experienced third party logistics specialist that can evaluate your business situation and opportunities associated with Intermodal transportation. Find a 3PL, like ChemLogix, that offers specialized expertise in the chemical industry and knows how to cost-effectively use intermodal to ship both hazardous and non-hazardous chemicals on an international basis.

Have questions? Direct them to our comments section or contact CLX Logistics at (215) 461-3800. Published articles on Intermodal transportation also can be found on our new Blog.

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.

 

Logistics Outsourcing: Does it make sense for everyone?

Wednesday, June 2nd, 2010

Each company must look to its strengths to answer this question for itself. But the answer is likely to be yes ….to some extent.

Two questions help to begin to frame the answer are: 1) what expertise and capabilities should we have in-house based on our size and the criticality for each logistics function? And 2) what really are our strengths today for each function and each mode and are any gaps best filled by Outsourcing?

Smaller companies with less than 5-10,000 shipments per year will often Outsource the full logistics function to a 3rd party provider (3PL). It simply is not cost efficient to have experts across all functions like procurement, execution, payment, regulatory compliance, etc.  and across all modes from truck to rail to ocean. For medium size, and even large shippers the answer often comes down to looking at its operation mode-by-mode. Some very large domestic shippers who only do several thousand international shipments per year recognize that the complexities of those shipments require an understanding of markets, processes, regulations, etc. that is better handled by experts who do that for many shippers. Companies that may have large packaged truck operations but smaller bulk truck needs, or vice versa, will often carve out that mode for Outsource experts to manage. The same is true across all truck, rail, and intermodal operations.

An especially useful area of Outsourcing for companies of all sizes can be Freight Procurement.  Outsource providers bring: 1) purchasing power, 2) market expertise, and 3) systems and tools that a single shipper cannot hope to match. 3PLs have staff that is constantly in the market both for themselves and for their Freight Procurement customers. This allows them to see changing trends in price and capacity across regions. This valuable knowledge is coupled with the use of automated tools that create competition for the shipper and often allow carriers to see how their Bids are stacking up. This ensures the best matching of carrier capacities/strategies with the needs/strategies of the shippers.  These Outsource Procurement engagements often start with a Benchmarking exercise that highlights the potential of having an automated bid done in conjunction with the Outsource partner.

The logistics process with the most hassles, Freight Audit & Payment, is also often Outsourced to save internal staff resources. Especially coupled with a Transportation Management System the process can be automated and exceptions, the bane of the process, significantly reduced.

For processes/functions/expertise that makes sense to keep in-house for medium and especially large shippers there is still an Outsource decision to make…..where do we get the support systems needed by our staff for procurement, for shipment execution (Transportation Management Systems – TMS), for global trade management, etc.   Some 3PLs, such as CLX, use these systems as well as sell and implement them with larger shippers. The very good news here is that the seller/implementer is fully vested in ensuring a good product that is well maintained.

As with many questions in Logistics, the answer to “Should we Outsource?”  comes down to “it depends”.  But I think you will find that in most cases the decision will not be to Outsource or not, but rather, what functions, processes, and modes does it make sense to Outsource.