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

September 28th, 2012 - by andrewh

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.

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

August 16th, 2012 - by andrewh

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.

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

July 26th, 2012 - by andrewh

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.

Logistic Challenges Arise As Fracking Industry Monopolizes Diminishing Transportation Resources

June 13th, 2012 - by andrewh

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

May 3rd, 2012 - by andrewh

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?

March 21st, 2012 - by andrewh

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

February 22nd, 2012 - by andrewh

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

January 12th, 2012 - by andrewh

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?

December 9th, 2011 - by andrewh

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?

October 4th, 2011 - by Francis Ezeuzoh

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.