Freight 101 – How To Ship With Zip!
September 25, 2014
Agenda
• Transportation Modes
• Understanding Freight Costs
• Freight Claims
• Management Options
• Q&A
Transportation Modes – Small Parcel
Transportation Modes – Small Parcel
• Loose package shipments
• Shipments under 150 lbs.
• Length + 2x height + 2x
width less than 165 in.
• Hub and spoke distribution
• Standard $100 per package insurance
• Very few competitors
• UPS, FedEx, DHL
Transportation Modes – Less than Truckload (LTL)
Transportation Modes – Less than Truckload (LTL)
• Palletized or crated shipments (generally)
• Shipments between 150 lbs. and 5000 lbs.
• Typical shipments are from 1-6 pallets
• Terminal/Breakbulk network, shipment will travel
on multiple trucks
• Insurance coverage is generally $5 -$25 per lb.
• Lots of local, regional and national competitors
• YRC, Conway, FedEx Freight, R&L, Central
Transportation Modes –Truckload & Partials
Transportation Modes –Truckload & Partials
• Lots of equipment types – vans, flatbeds, intermodal, reefers
• Full truckload implies that you are using the entire trailer up to 45,000 lbs or approx. 24 pallets
• Partial truckload encompasses shipments over 6 pallets up
to a ½ truckload
• Shipment stays on same trailer for entire journey
• Insurance coverage is generally $100,000 per load
• Thousands of local, regional & national competitors
• Schneider, JB Hunt, Swift, Mercer, Werner
Transportation Modes – Expedite
Transportation Modes – Expedite
• Expedite – make an action or process happen sooner or be
accomplished more quickly
• Terms – “guaranteed”, “hot shot”, “time definite”
• Any size shipment from parcel to full truckload
• Can be via truck or air
• Guarantees only cover freight charges – not down time, crew
costs, client penalties etc.
• Fragmented competition – lots of carriers offer expedite
options
• FedEx Custom Critical, Panther, Conway Now
Transportation Modes – International
Transportation Modes – International
• Shipments originating or destined
to countries outside of North
America
• Full container and less-thancontainerload options
• Can be via ocean or air
• Lots of insurance and pricing (incoterms) options
• Most shippers use a broker or freight forwarder
Understanding Freight Costs
Basic Freight Cost Elements
• Distance – zones, zip to zip, mileage
• Size and weight (dimensions & freight class)
• Transit time requirements
• Equipment requirements
• Additional services – liftgate, inside delivery,
residential
• Capacity – carrier specific and market driven
• Fuel costs
LTL Costs – Freight Classes!!!
• Freight classes are used by LTL carriers to categorize
different types of freight for costing and pricing.
• There are 17 classes: 50 -500.
• Classes are published by NMFC (National Motor Freight
Classifications).
• Freight class is determined by multiple factors:
 Density
 Value
 Ease of Handling
 Fragility
 Special considerations – hazardous, used or new, “dirty” items
Common Accessorial Charges
• Liftgate – Free to $100 per occurrence
• Inside Delivery - $25 to $150 depending on complexity
• Notification – Free to $25 per occurrence
• Non-Commercial or Residential - $50 to $100
 Service is defined by each carrier – not consistent
 Schools and colleges
 Farms
 Military bases and government facilities
 Churches
Cost Differences by Service Level
Strategies to Reduce Freight Costs
• Conduct a formal review at least annually.
• Identify metrics that measure freight costs.
• Incent customers to order in larger quantities.
• Consolidate purchasing of materials.
• Eliminate vendor “best way” shipments.
• Negotiate an FAK with LTL carriers.
• Negotiate fuel and other accessorials.
• Utilize a broker/3PL/consultant with expertise.
• Utilize economy carriers (lower service expectations).
Freight Claims
Types of Freight Claims
• Shortages – portion of the shipment is
missing or the entire shipment is gone.
• Visible Damage – shipment is obviously
damaged and notated on the delivery
paperwork.
• Concealed Damage – damage is not obvious
and discovered after the delivery has
occurred. Carrier will pay a max of 33% of
the claim when concealed.
• Service Failure – applicable on certain
“guaranteed” shipments. Only covers the
cost of the freight, not any incidental costs.
Freight Claim Tips
• Inspect shipments immediately, there is a limited window to
notify the carrier that a damage has occurred.
• Document as much as possible, take pictures. You will need
copies of the bill of lading, delivery receipt, vendor invoices
and details of your costs.
• Expressly list both pieces and pallets on the bill of lading.
• Use proper packaging, pallet sizes, corner protectors etc.
• Don’t waste time on claims under $200.
• Be Persistent! Do not accept the carrier’s first denial – you
need a “bulldog” mentality to get resolution.
Freight Management Options
Customer and Vendor Routed
• Hands off approach to freight – puts the responsibility on
your vendors and customers to choose and pay the carrier.
• Liability for charges and claims falls on vendors & clients.
• Don’t have to negotiate freight rates, pay trucking invoices.
• Zero control / leverage when problems do occur.
• Dock congestion for larger shippers, too many different
carriers / drivers.
• There is really no such thing as “Free freight” .
Carrier Direct Model
• Shipper responsible for managing carrier contracts,
selecting carriers and paying carrier freight bills.
• Allows for complete control over the process, carrier choices.
• Best possible freight rates for shippers with high volume
(over $1M)
• Must have staff to perform traffic management and freight
payment functions.
• Hidden cost increases in carrier rates and tariffs.
Outsourcing – Forwarders, Brokers & 3PLs
• Hiring a company to perform traffic and freight payment
services on behalf of your company.
• Access to better freight rates for smaller shippers.
• Reduces time involved in dealing with freight administration
and problems that occur with shipments.
• “Must have” option for international shipping
• Lose some control over carrier selection.
• Start-up and implementation can be a difficult process.
• May feel threatening to existing employees.
Questions and Answers
Thank You!