Dan Bolger explains how you can save by paying attention to fuel surcharges, header rates, miscellaneous charges and freight charges added to merchandise invoices. Also discussed are how you can use the internet to find the best furniture freight rates.
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Checking your bills for specific charges and checking pricing on the internet can help you save!
With the start of the new year, do you have a clear understanding of what is happening to your freight costs? Are you using the Internet to increase your access to transportation information? Addressing these issues can be good for your bottom line and position the company for increased growth.
TRANSPORTATION: If you looked at any freight bills over the past several months, you noticed that fuel surcharges started last September when diesel prices skyrocketed. By December most LTL carriers were adding 2% to the freight bills and TL (TruckLoad) carriers were adding 3% surcharges.
Most trucking companies have made it very clear that the fuel surcharges are independent of the rates and will be rolled back (or increased) as the price of diesel fuel changes, but a few have rolled the surcharge into the 1997 rates.
Every major LTL trucking company has implemented January 1st general freight rate increases of 5 to 6% and adjustments in miscellaneous charges. The top four LTL carriers increased their rates as follows: Yellow-5.2%; ABF-5.5%; CF-5.65%; Roadway-5.7%. Regional carriers participating in the rate bureaus have posted increases between 5.5% and 6.5%. Miscellaneous charges deserve scrutiny where some carrier's call before delivery charges are approaching $23 and new charges are being created. For instance CF (Consolidated Freightways), now has a $6 charge per hazardous materials shipment and Yellow is imposing a $10 fee when there is a reversal of freight charges or when the weight or classification increases the charges more than $20.
The rate increases appear to be holding as 1995's excess transportation capacity disappeared gradually in 1996. A stronger economy along with cutbacks in equipment purchasing means that the remaining trucks are running fuller. In addition, manufacturers have been scrutinizing their private fleets and downsizing those that weren't covering costs. So what are you going to do?
First, keep in mind that you want to compare actual shipment charges between carriers because each company's "list price" is independently set. They will be similar, but a recent study we conducted showed that a 50% discount with one carrier required discounts of 53 to 58% to match the cost and service by other carriers.
Second, if you are getting shipments that take from 10 to 28 feet of the trailer, some LTL carriers are now offering quotes on header rates. These shipments are loaded at the manufacturer and aren't handled again until they arrive at your warehouse. The carrier passes along a portion of the savings they get by eliminating intermediate handling costs.
Third, if there is an appointment charge on the invoice, check to make sure that your receiving department actually received a call. Many freight companies don't actually make the calls. A simple phone log is the best way to keep track of these so the freight bill can be checked against the list.
Fourth, check the charges for freight added to the merchandise invoice, regardless of whether the manufacturer ships by his private fleet or by commercial carrier. For example, a recent audit disclosed a situation where the manufacturer was charging more than twice as much as specialized furniture carriers with outstanding service.
For more details on getting good freight costs, fax a request for my previous Furniture World article on this topic to (614)653-5690 or Fax: Furniture World at 800-784-8488.
INTERNET AND THE FURNITURE RETAILER: The Internet is really becoming another management tool for all types of retailers. While I've seen a list of over 400 furniture manufacturers that now have Internet sites, my primary interest today is on the transportation side. Did you know that many trucking companies have Internet sites too? FEDEX and UPS were leaders in offering websites for shipment tracking and tracing but now well over 100 trucking companies are on the Internet. A comprehensive list is at www.truck.net/tcoline.html and is a great starting point. I suggest looking carefully at the sites of J.B. Hunt and Caliber as starting points. If you find other sites that you feel are great, please e-mail your thoughts to me at firstname.lastname@example.org.
Some retailers are getting bids on individual inbound truckloads by listing available loads on bulletin boards, disclosing the shipping information for anyone to see. Prospective carriers respond with availability of equipment and pricing, typically within an hour or less.
A word of caution! Some retailers will be stung (or already have been) by putting a load out for bid on a general bulletin board, getting a quote and then notifying the manufacturer that XYZ Trucking Company will pick up the merchandise. The end result is a scam where the high value truckload is stolen and sold elsewhere. The loss is the retailer's because the manufacturer is not responsible when customers select carriers. This happened numerous times with phony truck brokerage firms before the Internet existed. Now the same people are homing in on the net for fast bucks. Make sure you know who you are doing business with and confirm all arrangements. My clear preference is to only use carriers where I have a contract on file and a quote confirmation on the specific move.
Legitimate trucking companies are offering excellent Internet services that you may find useful. Starting with the ability to book loads, you can check rates, trace shipments and estimate delivery dates. You can also obtain proof of delivery and even file freight claims. For specific shipment data, the carrier will assign you a pin number as a security measure. It is a real time saver once you learn the routines of the net.
1.A recent study we conducted showed that a 50% discount with one carrier required
discounts of 53 to 58% to match the cost and service by
2.If you are getting shipments that take from 10 to 28 feet of the trailer, some LTL carriers are now offering quotes on header rates.
3.if there is an appoint-ment charge on the invoice check to make sure that your receiving department actually receive a call.
INTERNET TRANSPORTATION ADDRESSES
Con-Way Carriers www.con-way.com
Caliber System www.calibersys.com
Roadway Express www.roadway.com
United Parcel Service www.ups.com
US Postal Service www.usps.com
JB Hunt www.jbhunt.com
Daniel Bolger of The Bolger Group assists companies achieve improved transportation, warehousing and logistics. Questions about any aspect of these areas can be directed to Mr. Bolger care of FURNITURE WORLD at email@example.com.
Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at firstname.lastname@example.org or call him direct at 740-503-8875.
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