Each major freight and logistics transportation mode requires fuel to ship goods, whether by air, by sea, by rail or over the road. While gas prices and oil markets certainly impact everyday drivers, the cost of fuel also has a big impact on freight and logistics budgets. Fluctuating fuel costs can both directly and indirectly affect freight rates (and add fuel surcharges), which in turn affect prices for shippers to move goods and eventually, product prices for the end consumer. Getting back to fuel types, diesel predominates on land, with freight trains used for intermodal transport and semi-trucks both using the same type. Ocean freighters use the less refined marine fuel known as bunker fuel - either high sulfur fuel oil (HSFO) for ships with exhaust gas scrubbers or very low sulfur fuel oil (VLSFO) for those without. And finally, jet fuel is generally kerosene. These fuel types all differ from the unleaded gasoline used in most passenger vehicles.
Drayage is a logistics term that refers the transport of goods over a short distance. More specifically, drayage is the movement of a container or trailer to or from the railroad intermodal terminal - or sometimes a port - to or from the customer's facility for loading or unloading. This movement/transport occurs most commonly via truck. The key distinction between drayage and truckload transport is simply the distance. Dray trucks take goods typically take goods either to a starting point of a longer journey or across the finish line. Either way, they're needed when a different form of transport - like rail or container ship, doesn't have a method to reach a warehouse or other customer facility. Drayage is also shorthand for the fee charged for the service.
Everything you need to know about domestic intermodal and how to be successful implementing it into your logistics strategy. Gives tips, tricks and insights on intermodal and what to watch out for when converting from truckload to intermodal.
A freight hold refers to a pause placed on a shipment for a variety of potential reasons and by a number of possible parties. In many circumstances, the hold is instituted due to unpaid fees, but in some, it may relate to a customs inspection or document issue. A few top reasons for a freight hold include: Unpaid terminal fees Demurrage Incomplete or illegible documentation Statistical validation Customs commercial enforcement Customs vehicle and cargo inspection system (VACIS) The goal of every shipper and freight broker is to get loads to their destinations on time, so it's important to understand why freight holds can occur and address potential issues before a hold takes place.
Freight costs can take up a significant portion of a shipper's budget, especially as market and supply chain conditions cause them to rise. But that doesn't mean there's nothing a shipper can do to reduce them. Quite the contrary, there are several steps a company can take as they figure how to reduce freight costs each year. Lately here, we've discussed budgeting for shipping costs, preparing a freight and logistics rfp, freight rates, and more specifically, spot rates vs. contract rates. Budgeting for these sometimes predictable and sometimes quite unpredictable expenses is a rich tapestry, but some simple tips can help shippers manage and reduce freight costs.
As shippers plan out freight and logistics costs for the year (or more) ahead, a major part of the decision-making process involves spot rates vs. contract rates. These two most prominent freight rate options - and which one a shipper leans on the most - have a great impact on how much a company pays in shipping costs. Perhaps now more than ever, it's important to know the difference, and whether to use spot rates vs. contract rates more.
When setting up a freight and logistics budget for the year (or more) ahead, it's important to include the freight rates that dovetail with a shipper's needs. Freight rates that can affect a budget largely reflect the type of transport a company uses, whether it be truckload, LTL, intermodal, rail, ocean, air freight, or most likely a combination of methods. That of course would include whether international shipping is involved as well. We've gone over some other tips in this regard lately, including how to budget shipping costs and preparing a freight and logistics RFP, so now let's take a closer look at freight rates.
Requests for proposal - commonly referred to as RFPs - in freight and logistics are a key component in planning and budgeting for the year (or more) ahead. An RFP sets a shipper's expectations for the freight and logistics market, and in turn allows the shipper to see whether the market agrees. As mentioned previously when discussing budgeting shipping costs, it's vital to have contract agreements in place to provide a level of cost certainty in an era of fluctuating rates. Perhaps more important than cost certainty - a well-prepared RFP process can lead to significant freight and logistics savings as finance leadership trims budgets.
Setting a company's spending plan is a year-round process with a variety of areas to consider, including one partial to those in logistics - how to budget shipping costs. Budgeting how much a company is likely to spend on shipping and logistics is vital to be prepared for the ups and downs of a given year. And with the industry's rates tending more toward ups lately, ensuring a company has correctly budgeted shipping costs can prevent considerable pain down the road.
Ports are a major link on the supply chain which continue to account for a number of hangups - and corresponding port charges are a part of the issue. When all is said and done, a shipper - or someone - is responsible for paying a variety of port charges when moving product inland through the ports. There are no shortage of potential port fees to navigate when things are complication-free. But in an especially complication-full environment, it's important to factor in all areas, including traditional port dues, demurrage, detention, TMF, and more.
There are no two ways about it, freight and shipping costs are on the rise. With added expenses getting goods from Point A to Point B, shippers are feeling price pressure. But beyond the impacts to shippers, how does this jump in the cost of moving freight affect consumers? It can come in the form of higher consumer prices as these companies look to maintain their bottom lines. You've seen the stories and likely noticed it yourself, many consumer goods cost a bit more than they used to (if you can find them at all).