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How to Calculate LTL Freight Rates

by John Rediehs on December 23, 2016 No comments

If you want the best LTL freight rates for your business, there are numerous factors that you need to consider. The more you understand about what is included in the rate, the more you’ll be able to manage expectations and freight shipping processes to save money in the long term on resources and transportation costs.

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The many factors that make up freight rates will give you many options while making LTL shipping an appealing method of transportation for shippers. Ultimately, LTL shipping can provide more flexibility, visibility, and control over logistics.

Factors That Influence LTL Freight Rates

Normally, LTL shipments weigh anywhere between 151 and 20,000 lbs, and LTL carriers can provide discounts as the weight increases, equating to different levels of discounts depending on the weight class.

Unlike truckload rates, which are typically easy to determine based on per-mile or price per-hundred weight and fuel charge, LTL freights include many different factors that can impact the final cost in a number of ways.

LTL carriers collect freight from multiple shippers and consolidate that freight onto LTL trailers for line-haul to hub or delivering terminals, where the freight will undergo more sorting and consolidation.

The many factors that impact LTL freight rates are as follows:

1. Weight

One of the biggest factors in LTL freight rates is the weight of the shipment. Carriers will normally charge less per-hundred pounds as the weight increases.

2. Freight Classification

Each piece of freight has a specific classification, which plays a large role in freight rates. You can view the various classes in the National Motor Traffic Association’s National Motor Freight Classification (NMFC) book. The NMFTA has listed 18 different classes that range from 50 to 500. Factors that determine class include value, stow-ability, liability, product density, and handling. Lower class freight is dense to the point where it is easy to handle and difficult to damage. Higher classes mean higher rates.

3. Density

Another important factor is density, which not only determines freight classification, but also the freight rate itself. Shippers should understand how to calculate density so they can accurately describe the freight on bills of lading. You can determine freight density by dividing the total weight by the total cubic feet. Palletized freight will include the weight and cubic feet of the pallet, along with the combined height of the pallet and carton.

4. Base Rates

All LTL shippers determine their own base rates, which are quoted per-hundred pounds (CWT). CWT is based on freight classification, and carriers will alter base rates based on their volume needs.

5. Distance

Normally, the longer the transportation distance, the higher the cost. Many LTL shippers only provide services in a specific region, so you should understand the zones that your carrier usually targets. If deliveries fall outside of the carrier’s normal service area, the trucking company will have to practice interlining, which involves transferring shipments to other LTL carriers. Interlining can incur higher costs.

6. Minimums

The aspect of LTL freight rates that is increasing in price the most is the absolute minimum charge (AMC), which is the charge that a carrier will not go below. Carriers constantly request 2-3% increases of contract rates, with $5 increases in minimum charges. This can be a much larger increase than 3% depending on the original minimum charge, and carriers are doing this because the costs on their side for minimum charge shipments are far greater than the costs of heavier shipments.

7. Negotiated Rate Tariffs

Companies can negotiate rate tariffs with LTL carriers rather than simply settling for a base rate. With the right amount of understanding of your freight data and lane activity, you can work with carriers to negotiate various lanes and tariffs, which can help ensure that you get the best deal possible on LTL freight rates.

8. Freight All Kinds

Freight all kinds (FAK) is an agreement between LTL carriers and their clients that allows for multiple products of various classes to be shipped and billed at the same class. This can help companies further save on shipping costs.

9. Accessorial Charges and Surcharges

Accessorial charges come from extra services that the carrier performs that extend past the traditional pickup and deliveries. Examples of these charges include lift gate service, limited access locations such as storage units or schools, inside deliver, and residential pickup or delivery.

10. Negotiated Discounts

If a company wants a way to further lower their shipping costs, working with other freight carriers and routinely making shipments over several locations can save up to 18-25%. They can also negotiate discounts depending on a 3PL company or shipper’s reputation, volume, and relationship.

All of these factors will drastically affect your final LTL freight rates, and missing any of these specifics can result in a 25-40% increase in expenses. However, acknowledging and understanding each of these aspects can help ensure you save as much as possible.

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If you would like to get started on shipping today and get the best freight rates, get an instant rate quote at Red Dog Logistics today.

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John RediehsHow to Calculate LTL Freight Rates

Why Use a 3PL Provider?

by John Rediehs on December 16, 2016 No comments

Third party logistics (3PL) involves the outsourcing of multiple components of a supply chain to a 3PL company that is capable of managing customs, distribution, inbound freight, warehousing, order fulfillment, and outbound freight to clients’ customers.

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Some companies will provide an all-encompassing service to customers, which others may offer one or more logistics services. Depending on your needs, you may benefit from these services from a trusted 3PL provider.

What Can a 3PL Company Provide?

A full-service 3PL provider can provide a wide range of services for your company. You can take advantage of outsourced operations in nearly every aspect of storage, transportation, and delivery to maintain efficiency.

Warehousing for Physical Goods

Many merchants don’t necessarily have a physical shop to store their products, requiring the use of a warehouse to store them. Normally, 3PL companies will be able to provide warehousing services that include either a shared or dedicated warehouse for storage, along with all of the required technology to handle and transport products throughout the warehouse. Because of the many companies that might use the same warehouse for storage, you can save money with a split overhead cost.

Order Fulfillment

Businesses need to be able to fulfill orders effectively, or they can’t survive. Unfortunately, many e-commerce companies often suffer from invalid order fulfillment, but a 3PL service provider can make sure that customers receive the right goods on time and in good condition with every order.

Consolidation

Another service that most 3PL companies offer is consolidation, wherein e-commerce suppliers send small goods to the same location, consolidating these goods into a single shipment to lower prices.

Supply Chain Management Services

To make each order a success, companies need to effectively maintain their supply chain. A 3PL company can help manage all or part of your supply chain, taking care of your inbound freight delivery specifications.

Main Reasons to Use a 3PL Service Provider

There are many reasons to turn to a reliable third-party logistics provider, including:

  • You can get comprehensive supply chain support when testing new markets or countries
  • 3PL providers enable you to scale your labor, warehousing space, and transportation for full support during busy periods
  • A provider can help you identify inefficient areas of operation and management of inventory to improve upon them
  • You can take advantage of lower transportation costs that third-party logistics companies provide
  • Lower risk means that you can quickly build a multi-location distribution network.

Benefits of Working with a 3PL Provider

The upsides of choosing a 3PL provider to manage certain aspects of your company can make it incredibly worthwhile. You’ll be able to see a variety of improvements in various areas of your business, including:

  • Improved customer service, with a better relationship with your customers resulting from fast and efficient service
  • Increased flexibility and scalability, with the ability to scale back operations over varied time frames.
  • More resources through a larger resource network compared to in-house supply chains, further increasing efficiency and effectiveness
  • Saved time and money without the need to invest in multiple areas of your business while experiencing higher returns
  • Professional services that keep your business consistently updated to stay in line with current trends and new technologies in logistics
  • Improved responsiveness thanks to increased flexibility, enabling you to respond quickly to varying business environments and changing market trends

The Different Types of 3PL Providers

If you decide to use a 3PL company, there are three main types of providers to keep in mind, including:

  • Asset based – These providers utilize their own warehouses, personnel and equipment to operate
  • Management based – These companies offer management and technology to operate logistics functions of clients, using the assets of other companies without actually owning them
  • Integrated providers – These providers tend to be either asset or management based, supplementing services with others based on clients’ individual needs.

Selecting the Right 3PL Company

It isn’t always easy to choose a third-party logistics provider because of the many different aspects revolving around them. The first thing you should do when considering 3PL services is to determine exactly what types of services your company needs, as this can affect the type of provider that’s ideal for your business.

Before beginning your search for the perfect 3PL provider, analyze your accounts and determine how well your company is performing. Then you should outline your current supply chain costs and examine existing relationships with your carriers, along with any advances or allowances that might be made in the future. You should then ask the 3PL provider for a request for information (RFI), which provides you with a detailed plan that the provider has for your company.

RFIs should cover a wide variety of aspects, including:

  • The overall scope of the contract such as locations, departments, and amenities
  • The required performance level
  • Information on volumes such as warehouse sizes, number of items, and number of deliveries
  • The total number of logistics tasks that will occur

If a plan seems like it will work for your company, the provider in question may be the right choice.

Questions You Should Ask a Third-Party Logistics Provider

Prior to making your final decision on a 3PL company, you should ask certain questions that provide you with all of the information you need.

Some of these questions may include:

  • Is the company located near your business?
  • Does the company support customers’ demands and priorities?
  • Is the provider capable of scaling operations as the client changes and expands?
  • Are both direct-to-retail and direct-to-consumer fulfillment and distribution services available?
  • Does the company have multiple warehousing and transportation options available?
  • Is the provider financially stable?
  • Is it possible to view a list of previous partners?
  • What type of history does the company have with past partners?
  • Is there a track record of providing top-quality services?
  • Are there many long-term clients?
  • Does the provider have reliable industry references?
  • Does the company have the required expertise to help your company’s logistics succeed?

reddog-instant-freight-quote

Once you have chosen the best option for your business, you’ll be able to experience the many benefits such as lowered costs and higher returns, with more efficient warehousing and transportation of products.

If you would like to get an instant rate quote for logistics services and benefit from a reliable 3PL provider today, use our instant freight rate engine.

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John RediehsWhy Use a 3PL Provider?

How to Ship HAZMAT Materials

by John Rediehs on December 9, 2016 No comments

The U.S. Department of Transportation and the International Air Transport Association (IATA) both heavily regulate the shipping of hazardous materials. Their regulations are equally stringent, with the IATA regulating all shipments worldwide.

Hazardous materials can potentially cause serious harm to anyone who comes into contact with shipments that contain them, which is why strict regulations are required for these types of materials to minimize the possibility of unsafe conditions. If shipments fail to adhere to regulations at any time during transportation, the D.O.T. will impose severe penalties in the form of expensive fines and possible jail time.

Here are some ways to classify your shipments as hazardous materials for HAZMAT freight shipping, and prepare them for transportation without violating regulations.

Hazardous Materials Freight Classes

When determining the class of your shipment, there are ways to find out whether your shipment is considered to be hazardous. First, you should consult Title 49 of the Code of Federal Regulations, in which Section 172.101 lists all of the types of hazardous chemicals.

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Chemicals not listed in Title 49 are considered non-hazardous unless they are synthesized new materials, which the researcher must be able to characterize as hazardous, assign a hazard class, and provide a Proper Shipping Name. Staff at the D.O.T. headquarters in Washington DC can assist with classification of synthesized materials.

What Are the Provisions for HAZMAT Freight Shipping?

If a shipment contains materials considered to be hazardous, further investigation is required. In some cases, a large shipment may be required to have a “Reportable Quantity,” while smaller shipments may be labeled a “Small Quantity” which allows for certain exceptions. Shippers should also be aware of any “Special Provisions” associated with shipping these materials. Each of these terms has a specific meaning that shippers should fully understand prior to shipping.

Selecting Packing Groups and Packaging for Hazardous Materials

After you have determined that your shipment is hazardous and understand the provisions, you must properly package your materials.

There are three packaging groups with varying criteria:

  • Packing Group I indicates a high level of danger associated with the chemical
  • Packing Group II indicates a moderate level of danger
  • Packing Group III indicates the least amount of danger, but the chemical will still be considered hazardous

General packaging requirements are listed in Section 178 of CFR 49, but shippers can also turn to the IATA packaging instructions, which are simpler to follow. Keep in mind that IATA regulations will be equal to D.O.T. regulations or even stricter. If you’re only shipping hazardous materials by ground, you won’t find any IATA packaging instructions for these shipments, as they cover air transport.

Labeling HAZMAT Freight Shipments

In most cases, packages that contain hazardous materials require proper labeling prior to shipping. The label specifies the type of hazard the material presents.

In this list, you’ll find the following categories:

  • 1 – EXPLOSIVES
  • 2 – EXPLOSIVES
  • 3 – EXPLOSIVES
  • 4 – EXPLOSIVES
  • 5 – EXPLOSIVES
  • 6 – EXPLOSIVES
  • 1 – FLAMMABLE GAS
  • 2 – NONFLAMMABLE GAS
  • 3 – POISON GAS
  • 3 – FLAMMABLE LIQUID
  • 1 – FLAMMABLE SOLID
  • 2 – SPONTANEOUSLY COMBUSTIBLE
  • 3 – DANGEROUS WHEN WET
  • 1 – OXIDIZER
  • 2 – ORGANIC PEROXIDE
  • 1 – POISON INHALATION HAZARD (zone A or B)
  • 1 – POISON (other than inhalation hazard)
  • 2 – INFECTIOUS SUBSTANCE
  • 7 – RADIOACTIVE WHITE-I
  • 7 – RADIOACTIVE YELLOW-II
  • 7 – RADIOACTIVE YELLOW-III
  • 7 – EMPTY (empty packages of radioactives)
  • 8 – CORROSIVE
  • 9 – CLASS 9

You can find definitions for each of these categories in Section 172.400 of CFR 49.

Labels must come from a printing distributor that has professionally manufactured them based on the D.O.T. specifications for shape, color, and size. In some cases, hazardous materials may have a primary hazard and one or more secondary hazards, which will require more specific labeling. For example, a chemical may primarily be flammable, while also being corrosive and poisonous.

Proper Markings

For most types of hazardous material shipments, minimum markings must include:

  • The proper shipping name
  • The consignee’s name and address
  • The consignor’s name and address
  • The UN number

In certain instances, shipments may require other markings such as Fragile, Do Not Wet, Do Not Tip, or Biohazard. You’ll find all of the rules in Section 172.300 of CFR 49.

Placards for Trucks

Both the shipper and trucking company are responsible for applying appropriate placards to trucks transporting hazardous materials. The requirements for placarding are discussed in Section 172.500 of CFR 49. To avoid potential issues during transportation, you should try to receive trucking services from a familiar transportation company.

Papers Required for HAZMAT Freight Shipping

In some cases, hazardous material shipments will require two sets of paperwork, including an airbill or waybill, or a Shipper’s Declaration of Hazardous Goods. However, shipments using Fedex and those under other circumstances will have both sets combined. Section 172.20 of CFR 49 provides the preparation instructions for this paperwork.

All paperwork must include a 24-hour emergency phone number in the event of a crisis, which can ensure that you are contacted if there is an accident that results in handling and cleanup of the material.

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With the help of this guideline and the specific instructions from the D.O.T. or IATA, you’ll be able to ship hazardous materials without violating any of the strict rules that apply to these shipments.

If you would like a quote for affordable trucking services, get an instant rate quote at Red Dog Logistics today.

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John RediehsHow to Ship HAZMAT Materials

Compare Online Freight Quotes & Save

by John Rediehs on October 25, 2016 4 comments

Logistics customers should know how much their shipping efforts will cost prior to settling on a trucking company. Online freight quote comparison tools such as Red Dog’s make it easy to figure out exact expenses pertaining to less-than-truckload (LTL), door-to-door intermodal, dry van, and flatbed shipments.

Determining the cost of a final shipment won’t take as much time as it normally would, and there is no guesswork involved that could hide true costs from customers.

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John RediehsCompare Online Freight Quotes & Save

How the FDA Food Safety Modernization Act Affects Product Shipping Requirements

by John Rediehs on October 24, 2016 No comments

The FDA Food Safety Modernization Act (FSMA) started on January 4, 2011 when President Obama signed it into law. This Act aims to make sure the U.S. food supply is consistently safe by focusing on the prevention of contamination instead of the response to it, requiring manufacturing companies and many other companies involved in food handling to maintain accurate records.

Many industries and operations that handle food products must adhere to this Act, and here are some of the ways the FSMA affects shipping.

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John RediehsHow the FDA Food Safety Modernization Act Affects Product Shipping Requirements

Reefer Trucking Shipping Company

by John Rediehs on October 18, 2016 No comments

You need to move produce, meat or some other temperature controlled products across the street or across the country.  It doesn’t matter how far the truck is going, it needs special handling to ensure that your product arrives fresh, safe and on time.  Who do you turn to ensure that your load gets where it is headed?  You need a quality reefer trucking company that is experienced in all of the nuances of shipping refrigerated freight.

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John RediehsReefer Trucking Shipping Company

Oversized and Specialty Steel Freight Shipping Tips

by John Rediehs on October 12, 2016 No comments

Shipping oversized steel loads is a specialized industry.  You cannot rely on just any shipping company to transport your large scale steel products where they need to be.  Oversized and overweight, specialty steel products must be shipped with multiple factors in mind.  From large bridge sections to smaller rods, plates and steel poles, it is vital that your shipping company understands the limitations of moving these oversized loads through urban streets and a cross rural roadways.

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John RediehsOversized and Specialty Steel Freight Shipping Tips

Freight Class Calculator for Shipping

by John Rediehs on October 8, 2016 7 comments

In the world of third-party logistics, the concept of freight class is one you hear about nearly constantly. When it comes to LTL shipments, the amount it will cost to ship something is largely dependent on what freight class the shipment belongs in, and calculating the freight class is done by analyzing a number of different factors.

If you’re not sure how to determine freight class, or are unfamiliar with the concept itself, here’s a brief guide to help you understand how to calculate and determine it.

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John RediehsFreight Class Calculator for Shipping

An Insider’s Guide to Intermodal Shipping

by John Rediehs on August 19, 2016 No comments

As you research the different types of shipping methods that are available for industrial shipping, you’ll probably see intermodal trucking show up more than a few times in your endeavors.

Intermodal freight transport is a method of shipping that utilizes an intermodal container or vehicle and uses multiple modes of transportation (ship, rail, and truck) to get the product to its end destination. During the shipments, there is no handling of the freight itself when it changes modes.

It’s an oft-chosen shipping method because it reduces cargo handling and in turn improves security. It also reduces damages and loss, and allows freight to be transported faster.

If you’re trying to compare it to other modes to see what the best choice is for your specific shipments, starting by learning about different shipping methods is the best way to do so.

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John RediehsAn Insider’s Guide to Intermodal Shipping

Truckload Freight Shipping: Pros and Cons to Consider

by John Rediehs on August 12, 2016 No comments

When you’re looking into the different methods for shipping cargo, one method you’ll learn about early on is truckload shipping. Truckload shipping is a method for moving large amounts of cargo—generally, amounts that fill an entire semi-trailer or intermodal container. This type of shipping is carried out by a truckload carrier that contracts an entire trailer-load to a single client. This type of shipping, naturally, is different than LTL, or less-than-truckload chipping. LTL companies will typically mix freight from several customers in each trailer for optimal efficiency. If you’re considering choosing between these two types of shipping, learning more about the pros and cons of truckload freight shipping.

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John RediehsTruckload Freight Shipping: Pros and Cons to Consider