Third Party Logistics Keeps Haulage Trucking
INTRODUCTION Road haulage is once again thriving despite many companies having to face harsh economic conditions as well as stiff competition from railroads and airlines. The financial burdens of escalating fuel prices and shortages in qualified experienced drivers have of course had the effect of driving costs and subsequently customer prices higher. However, despite this inclement economic climate trucking companies are still proving to be the best way for companies to transport goods. This is primarily due to the fact that for most businesses shipping goods by road is still the quickest, cheapest and most direct form of transportation. This may not initially seem to be true as trains and certainly airlines can cover vast distances far quicker than trucks that are limited by traffic congestion, speed restrictions and commercial vehicle regulations that limit a driver to eleven consecutive hours with a ten hour rest. However trucks still have a major advantage in that they are not constrained by timetable schedules and can reach any city or town across the country. Furthermore, road haulage has remained popular with businesses because of the variety and cost efficient methods of transportation. This is typically something that most consumers and small businesses are unaware of as they are typically limited to using the services of local couriers. However there are significant differences between local couriers and trucking haulage companies which will become apparent through this article. Nonetheless, a good starting point is that road haulage trucking firms are dealing with companies rather than private consumers and are more focused on long haul of goods rather than local delivery. But having said that, by comparing trucking companies against local courier services is an ideal place to
TABLE OF CONTENTS Local Courier vs. Trucking Companies. How to Keep the Prices Down and Make Road Haulage Cost Effective. Selecting the Right Choice of Truck. Third Party Logistics (3PL). Getting Closer to the Customer.
LOCAL COURIER VS. TRUCKING COMPANIES Most individual traders and small businesses are frequent users of local couriers to deliver goods. This is simply because they have large local presence, knowledge and low competitive prices. Indeed many local couriers are benefitting from the crowdsourcing phenomenon whereby they are sub-contracting deliveries via the gig economy to freelancers or private individuals on their daily commute.This focus on local delivery means that couriers are cost effective and highly efficient for what is called last-mile deliveries. This term is used to describe the final stage of the delivery to the recipient’s door, which is typically fraught with problems and very time consuming and why companies such as Amazon and others are actively testing drones and robotic autonomous vehicles to ease the burden. However that is the area where local couriers presently excel. So for local deliveries most businesses will contract the services of a local courier for delivering goods in the shortest time, which are under a certain size and weight.
However for long distance haulage companies have to look towards the specialist trucking firms that have the capacity and range to operate nationally over long distances or even internationally. That is when a company will require the services of a trucking haulage business to transport their goods. However, it isn’t quite that simple for to be cost-effective for the company who is the sender of the goods they must plan their shipments so that they select the most efficient and cost effective method of haulage. Typically there are two distinct methods, 1) Less than truck load (LTL), 2) Full truck load (FTL). With LTL the benefits are that a company can ship small consignments of goods to a variety of destinations. Whereas FTL, is better suited to a company that is arranging the shipment of a large consignment to a single destination. For example a business operating an ecommerce site that covers the USA and needs to ship many small consignments across the whole region would be better using a LTL service as it would be far quicker and ultimately more cost effective. This is simply because when delivery time is a major factor in customer satisfaction it would be better to use the LTL service than wait until they had a sufficient amount of customer deliveries to a single area. On the other hand if the same business expands and builds distribution centers across the nation then transporting goods between distribution centers would be more cost effective to use a FTL service.
HOW TO KEEP THE PRICES DOWN AND MAKE ROAD HAULAGE COST EFFECTIVE The choice that we have seen is often between Less Than Truck Load and Full Truck Load and selecting the correct service is relatively straightforward. However there are still some important other considerations to take into account when saving haulage costs. In the case of LTL it is relatively straightforward as you are paying for a part load on a truck to a destination. Typically there is no restriction on how much or how little space you can take up that is for the trucking company to plan for and ensure sufficient capacity is available. However, that is not the same when dealing with a full truck load haulage service. In this case it is important that the company sending the goods does some planning and preparation. For example if using FTL it is important to use the space efficiently so goods should be packaged and shipped on standard pallets so that they can be easily loaded and unloaded as well as placed or stacked in the truck in the most space efficient pattern. Preparing the goods to be shipped in this manner also greatly reduces the loading and offloading times. After all the time taken to load the truck and offload at the destination may well be a significant surcharge on the invoice so by preparing the load beforehand can reduce unwelcome additional charges. These so called accessorial charges are not limited to just loading and unloading waiting time but can include things like transporting hazardous goods or weight changes but also layovers and the subsequent storage charges. Therefore it is best to plan FLT shipments carefully and prepare the shipments diligently if you want to avoid unwelcome surcharges.
SELECTING THE RIGHT CHOICE OF TRUCK As we have already seen trucking has received a boost from ecommerce and regional trade has expanded so that now even fragile or perishable goods need transported. These types of goods will require special environmental conditions to be maintained if they are not to be wasted on the journey. For example, vegetables, fruit, meat and dairy products will need to be transported under specific environmental conditions that meet regulatory requirements for temperature, humidity and the like. However it is not just foodstuffs as electronics and other fragile goods also require special handling that is not available under standard LTL or FTL services. Fortunately most trucking companies will have trailers that are temperature controlled, heated, refrigerated and humidity controlled. Indeed some are even monitoring not just the ambient temperature of the inside of the trailer but of the goods on the pallets. They are doing this using RFiD tags that monitor temperature, humidity, vibrator and shock to ensure that the goods are handled as required throughout the journey.
HANDLING SPECIAL REQUIREMENTS Despite the huge increase in overseas transported goods due to the recent ecommerce phenomenon and the globalization of world trade supply chains there is still a huge need for regional and international trucking services. In particular trucking companies still service the container ships coming into port and transport their goods to the final regional destination. However, due to the vast variety of goods being shipped overseas this often requires specialist modes of transport and equipment to efficiently load and unload these ocean going container ships. Shipping containers revolutionized global trade by making it highly efficient to load goods onto ships at the dockside in order to conserve space and reduce loading times. So efficient has the loading and unloading process become is it only requires one crane to load an entire container ship. However that also means that the haulage company must have flatbed trailers as the shipping container is lifted onto or off the trailer.Therefore it is important to plan ahead to recognize if the shipment that is to be collected from the docks is in a container or on traditional pallets. This is because containers just like trucks are offered in Less than Full Container (LFC) or in Full Container (FC) modes to accommodate shipments of any size. Making sure that transportation is planned and scheduled efficiently and cost effectively is the job of logistics and transportation functions within a company. However as these operations require time and a great deal of knowledge and skill they tend to be cost centres that eat into profits. As a result many companies try to offload these functions to a third party logistics company.
THIRD PARTY LOGISTICS (3PL) In recent years companies have tried to consolidate their rising operational costs by outsourcing non-core business activities to third party specialists. The reason for doing this is to not only save costs but to get improved performance that would be unfeasible to obtain themselves. This can be down to 3PL companies have specialized skills or simply through efficiencies of scale or both. Interestingly, trucking companies have found themselves in an ideal place for entering the burgeoning 3PL market. This is down to their inherent skills and deep knowledge of transportation and also their transport networks. For example for trucking companies to be successful they need to be efficient and have shortest paths to the destinations. Now if we consider the USA and Canada for example this requires that trucking companies have hub warehouses and co-docking facilities at strategic points along the main North-American continent’s road arteries. These locations can prove to be a god-send for companies that have only their own central distribution point.
GETTING CLOSER TO THE CUSTOMER One of the major problems that ecommerce companies and manufacturers have when they are restricted to only a local presence and a single distribution center is that they are often sub-optimally located. This means shipping goods to many customers will require long haulage and the resulting lag in delivery times. However, companies have become more aware of the critical nature of slow delivery and the importance of next day delivery, or even same day delivery. However for businesses with only a centralized distribution center these goals are not feasible. One solution however is to store popular and high turn-over goods closer to the customer in the trucking companies regional hubs that are local or close to the customers. Many trucking companies do often warehouse storing but companies also offering 3PL will be better placed to plan and manage the shipments and deliveries to the customer from their local warehouses. Trucking companies can also provide other 3PL services such as in planning and logistics for supply chain functions such as just-in-time inventory for manufacturers. As these businesses wish to minimize inventory stock held at their warehouse facilities it is often necessary to have extremely efficient deliveries and dispatches synchronized. This is when cross docking can prove to be a huge benefit in keeping the lag between delivery of goods from a supplier and dispatch to a customer to an absolute minimum. With cross-docking parts can be unloaded at the depot from one truck and loaded onto another with no delay or storage requirements.
However, there are rare occasions times were all the planning in the world doesn’t prevent a schedule going awry or an emergency contingency arising. In these cases a trucking company often has what are called expedited services. This service is am express service often with drivers doubling up to cover long distances without the legal need for rest breaks. As a result expedited service can be extremely fast and efficient but obviously at a cost premium so it’s not something you want to use on a regular basis. In North America (USA & Canada) one company RoadLINK can offer all these services as they have all the required trailers, trucks, containers and 3PL expertise to ship good nationally and internationally. By using the services of companies such as RoadLINK companies can save hundreds of thousands of pounds by outsourcing their logistics and transportation and creating business efficiency by getting closer to their customers in Canada and the USA.
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