Firstly we identify the costly mistakes that your company might be making right now.
• To not resource and task match – are you using the right modes of transport?
• Rate structure – do your rates match your consignment profile?
• Volume leveraging – are you effectively consolidating volume?
• Using a transport provider who is not aligned to your type of product you are transporting.
• Check the pricing method behind the charges; I have seen a business being charged by the pallet, so when the product overhangs 15% they charged 2 pallets.
• Not understanding your customers business, assuming you are giving your customers what they want by delivering daily, don’t lose sight of your customers business needs, meet with them, walk around their operations, observe and ask questions like:
o Do you really want or need daily deliveries?
o Are we over packaging therefore adding time to you process?
o What are the best pallet dimensions for your operation and racking heights?
• Fuel levy needs to be aligned to a regulated measure, not used as a way of bumping up prices without declaring you have just been given a rate increase.
• Receiving containers or product in one state, then road freight the product all around Australia. Yes this still happens even large companies make this mistake.
There are a range of methods of how transport companies charge depending on:
• Type of vehicle –
o Per pallet, parcel or full load.
o Per hour for a dedicated truck to your needs.
o Point to point.
• Profile of freight – box, pallet, full load, container
• Weight verse volume – Is the cubic size small but very heavy example metal products.
• Is the cubic size large but very light for example pillows
• These factors will determine if you will be charged weight based or cubic with an applies KG per cubic weight.
• Minimum charge – this the minimum charge per consignment.
• Consignment note– Document created for delivery instructions, has a fee associated per consignment.
• Break points – price per pallet or under 500k, and then next range maybe5 pallets to 10 pallets / 501kg to 1000kg are more attractive rates.
• First understand your profile of freight
• How it is packed, look closely at your internal process, a lot of air gaps,
• Don’t assume, take time to understand your customers’ needs in terms of frequency of delivery, delivery window times, locations, how they want it packaged.
• Look at carriers who are aligned to your profile of freight.
• If you have the knowledge look for transport companies who have back fill opportunities.
• Understand the pricing matrix of the offer in terms of the actual calculations, get them to create a range of examples based on your freight profile in excel so you can double check your understanding.
o Understand minimum charge
o Consignment fee
o Break points that push your rates into a more favorable charge
• Ensure fuel levy is linked to a regulated measure so as it can’t be used as means of creeping in a price rise on the actual transport.
• Cube conversions factor 1cubic = 250 to 333kg charge weight
• Delivery window – Time frame for delivery e.g. 3 hour window, 8am to 11pm
• Line haul – movement of freight between 2 major cities
• Dead space – air space = waste $$$
• Cross-dock – Transportation terminal in which received items transferred directly from inbound to the outbound shipping dock, with storage only occurring temporarily during unloading and loading. No long-term storage is provided. Usually used only for vehicle transfers. Often owned and operated by large shippers.
• LTL (Less-Than-Truckload)
• FCL (Full Container-Load)
• LCL (Less-than-Container-Load)
• Backhaul – A freight movement in a direction (or lane) of secondary importance or light demand. Backhauls are preferable to deadheads by transportation companies, since revenue is generated. In order to entice shippers to move goods in backhaul markets, carriers may offer lower rates.
• Intermodal – Transportation that uses a specialized container that can be transferred from the vehicle of one mode to the vehicle of another; a single freight bill is used for the shipment. Example: Ocean shipping containers which can be hauled by trucks on chassis, railcars, ocean vessels, and barges. Also: UPS line-haul vans (these vans can be stacked onto railcars for long distance moves).
• Reefer – A refrigerated container. For long storage in transit (or in ports) must be plugged into a ship’s power system (or ports). Temporary power units can be attached that last for 18-36 hours.
• Break-bulk Cargo – Cargo in-between bulk and containerized, that must be handled piece-by-piece by terminal workers (stevedores). Often stored in bags or boxes and stacked onto pallets. Smaller lift equipment (forklifts, small cranes) used than for containerized cargo, but more labor intensive.
• Pallet / Skid – A small platform, 40×48 inches usually, on which goods are placed for handling within a warehouse or a transportation vehicle such as a ship. Good for grouping break-bulk cargo for handling.
• Dunnage – Wood and packaging materials used to keep cargo in place inside a container or transportation vehicle.
• TEU – Twenty-foot equivalent unit. Method of measuring vessel load or capacity, in units of containers that are twenty feet long. A 40’ long container measures 2 TEUs.
• Balloon Freight – Cargo, which takes up a lot of space, but is very light.