Archive for the ‘Transportation’ Category

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.

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/.

 

Are You Getting The Most From Your 3PL?

Wednesday, March 21st, 2012

Are you getting true value from your third party logistics (3PL) outsource in support of your international shipping operations?  Does your 3PL merely provide contracted services or truly work with you as a strategic partner, involved in your supply chain and assisting with sourcing and supply chain network decisions?

3PLs typically offer a range of important supply chain management services that support customers’ daily transportation operations including:

    • Shipment information tracking
    • Accurate billing
    • International shipment bookings
    • Warehouse and carrier coordination

But you should expect more! 

Through your 3PL, you should have access to the latest global trade management systems that automate supply chain processes while providing you with real-time visibility into transportation operations.  Going a step further, your 3PL should generate valuable reports using data available through the system that review details of supply chain performance for different department heads and, ultimately, support new strategic directives.

Understanding your transportation processes and goals, your 3PL should help analyze your current supply chain methodologies and recommend new strategies.  Perhaps it is time to consider more efficient carriers and routings.  Redefining existing transportation operations can make a difference in cost and delivery time frames.

On an international basis, your 3PL should possess the knowledge and experience to complete necessary documentation, provide competitive international rates and develop basic strategies related to transportation and distribution of chemical products to different countries.   Your outsource should understand compliance regulations pertaining to product importation/ exportation with different countries as well as the United States to assure a smooth transport of product into and out of countries. They should assist you in identifying your product category to ensure proper labeling and containment during shipment.  This is especially critical for products identified as hazardous.

Your 3PL also should advise you of current market conditions that may affect the import and export of your freight.  Is the U.S. restricting trade with specific countries?   And are you taking advantage of recent free-trade agreements?  You don’t want to miss any ideal opportunities that can support your international trade business.

In addition to ensuring compliance, you want a 3PL with the resources to identify the best carriers and rates for international transportation.  At ChemLogix, we benchmark customer’s shipping rates against ever-changing ocean freight market to ensure carrier rates remain competitive and our customers are getting the best value from their existing carriers.  Does your 3PL do that as part of your services?

Findings in the 2012 16th Annual Third-Party Logistics Study (http://www.3plstudy.com/about) noted that established 3PLs are adjusting their business models to provide greater value to shippers.  If not are you really getting shareholder value from your outsource logistics provider, perhaps its time to find another a new 3PL source that can work as your partner.

Contact ChemLogix for a free evaluation of your supply chain operations by contacting us at (215) 461-3805 or information@chemlogix.com.

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

Wednesday, February 22nd, 2012

Mike Skinner, VP, ChemLogix Technologies
m.skinner@chemlogix.com

ChemLogix, LLC. www.chemlogix.com

Online applications for mobile devices are emerging in ways that can finally close or reduce many of the information gaps in the supply chain between Transportation Planning, the Shipping/Receiving dock, customers, and even Accounts Payable.  These mobile applications are enabling shippers to: interface directly and more effectively with logistic partners; access logistics information in non-traditional business settings; and enhance communications where access to a computer is not readily available.

Transportation Management System (TMS) Carrier Mobile Applications, already available for the Apple iPhone/iPad, are giving carriers the ability to communicate directly with a shipper’s TMS, even from the cab of their truck, to respond to shipment tender requests and to report shipment status in real-time.

This remote interface capability is especially important to shippers needing to communicate with smaller carriers who do not have EDI systems, including for those owner/operators whose dispatch offices ride in the passenger seats of their tractors.  Once trained on the iPhone application, shippers can contact carriers online who can immediately respond to tender requests.

Once booked on a load, carriers can interface through the TMS application to provide pickup, delivery and ETA status updates. Tying this information onto their own networks, shippers can feed real-time data directly into their TMS systems.   In addition to finding out immediately if carriers can accept their loads, shippers gain greater visibility to in-transit inventory status from pickup to delivery.  It’s a win-win situation as carriers are able to respond to tender requests in real time, while on the other side shippers are able to provide enhanced communications to customers for improved service, and fewer surprise calls from customers asking where their shipments are.

Mobile Applications at the Plant/Warehouse

The iPad and other emerging tablet devices create additional opportunities to bring transportation information quickly and easily to its point of greatest impact.  TMS mobile applications currently in development will enable sales reps to retrieve real-time reports and updates on shipment delivery performance.  Rather than rely on last month’s performance reports, sales reps will be able to access the latest data on delivery stats for loads while buying a coffee at Starbucks on their way into a client meeting.  A week-old performance report showing 99% on-time delivery means nothing to the client if three shipments in the past two days were late or missed.  Nothing ruins a sales call faster than bad surprises.

At the plant, on the loading dock, at the guard shack, or in the cab of the pup-truck moving trailers to the dock for loading, iPad/tablet applications will provide real-time information and process feedback from workers regarding shipping and receiving appointments, trailer assignments, and guard shack-monitored in-gate/out-gate dates/times.

When it comes down to it, supply chain and transportation optimization and management systems are only as good as the timeliness and accuracy of information delivered to the right place at the right time.  Mobile apps for phones and tablet PC’s now available and in development offer supply chain management the next opportunity to leap forward.

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.

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 www.chemlogix.com