Shipping Services

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?

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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 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

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

Understanding Logistics & Freight Shipping of Beer, Wine & Alcohol

by John Rediehs on August 5, 2016 No comments

When you’re dealing with shipping goods like beer, wine, and alcohol, there are certain regulations that need to be followed in order for your shipment to reach its destination, and when you’re looking for a 3PL provider to take care of your LTL or truckload shipments, it’s important to find one that’s experienced. Beyond regulations, though, there are a number of other things to know about shipping beer, wine, and other alcohol. In order to maximize your efficiency and minimize loss, be sure to follow these tips to understand wine shipping logistics and liquor shipping.

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John RediehsUnderstanding Logistics & Freight Shipping of Beer, Wine & Alcohol

Need an Oversize Load Trucking Company?

by John Rediehs on June 24, 2016 No comments

If you’ve been looking for an oversized load trucking company and don’t know what to do next, we at Red Dog Logistics are here to help. We’ll help plan and coordinate any oversize load shipment you need. At Red Dog Logistics, we’re a full service, third party logistics firm, and our most important goal is to ensure your complete satisfaction. Learn more about our oversize load hauling options today.

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John RediehsNeed an Oversize Load Trucking Company?

Finding the Best Container Shipping Rates

by John Rediehs on May 31, 2016 No comments

grimaldiWhen you’re looking for the best provider for freight shipping and you’re working on a budget, it can be helpful to understand the different charges that contribute to container freight rates. Learning more about what these charges are can help you find an accurate container shipping rate estimate and optimize the way you ship your products. You’ll be able to find the best container shipping rates available to keep shipments both smooth and inexpensive.

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John RediehsFinding the Best Container Shipping Rates