Freight shippers of all kinds are well aware that their shipping rates are going through the roof.  Fuel surcharges are continually on the rise, and there seems to be no end in sight. Whether a person is shipping LTL, Truckload (TL), rail, or ocean freight, everybody is getting hit by higher fuel costs.  For a while, businesses tried to hold off passing on those costs to their customers, but they can’t do that any longer because the fuel costs are just too high.

And now, “official” confirmation that logistics and freight costs are out of hand.  According to a recent National Logistics Report, US companies spent over $1.3 trillion in freight and logistics spending during 2007. This accounted for over 10% of the US GDP.  This is a significant increase from 2006, where the figure was around 9.8%. 

Broken down into groupings, freight trucking (over the road motor carriage) constituted approximately $670 billion of this total, and almost 80% of the total transport costs. For typical freight shippers, LTL freight and Truckload freight company costs rose over 6% from 2006 to 2007. Other modes, such as intermodal, rail, and ocean freight saw increased costs of almost 7%.

The economic pressures affecting freight shipping do not appear to be changing over the near term. Fuel prices for diesel will likely continue to climb. What this means for freight shippers is that they need to discover new strategies to reduce freight rates and shipping costs. Optimum strategies include securing freight quotes from larger freight pools, such as those operated by Freightclick.com. 

Freight shippers need to be aware of what obligations they are assuming when they move freight using a freight bill of lading. Today, hundreds of shippers enter into contracts where they do not know the responsibilities and obligations they are taking on.

The main reason for this is because most of these loads involve only a bill of lading. Many times, this bill of lading comes from the carrier and the shipper just pulls one out and uses it when it comes time to ship. The freight shippers signs the bill of lading and the carrier hauls the freight.

Beware of these bills of ladings, because many times freight shippers can be caught agreeing to terms they don’t know about. For example, on freight shipping manager used a carriers bill of lading that referenced terms in another agreement which stated that, if freight bills were not paid in a timely manner, all the discounts would be waived for ALL SHIPMENTS with freight bills outstanding. This resulted in the shipper being charged an extra $26,000 for their shipments!

After deregulation, there is no government agency watching LTL and full truckload freight shipping. So make sure you know what you are agreeing to when you sign your carrier’s bill of lading.

FreightClick.com has joined the fight to help victims of the Myanmar cyclone.  For the next several weeks, the company is offering discounts off LTL (less-than-load) freight and Truckload freight services for customers shipping supplies destined for the victims of the Myanmar cyclone.

FreightClick’s customers can use the company’s on-line rating system to obtain freight quotes and rate shop between different leading LTL and Truckload freight companies and carriers. When notified that the shipment contains emergency relief supplies for Myanmar, customers will receive a reduced rate on their freight shipping.  The discounts apply to domestic shipments that are consigned to ports for ultimate transportation to Myanmar cyclone victims.

“We all need to try and help people in need,” explains FreightClick CEO Justin Lubin. “The discounts should help folks who are looking to do something positive.  Shippers simply need to contact us to get an LTL or Truckload freight quote. We will help them the best freight shipping solution for their load, and prepare all the required documentation. The ultimate goal is to help get critical supplies to the people in Myanmar who need them the most.”

FreightClick’s decision to help the victims of the Myanmar cyclone is just another example of American business working hard to help others.  Discounted freight shipping is especially helpful in light of the recent surge in shipping prices as a result of the record high oil prices. 

Unknown to most freight shippers is the freight futures market where companies can hedge against increases in freight rates. Analysts report that the activity on the Baltic Exchange’s Index (Dry) shows that investors and hedge funds are running to participate in these once obscure markets.

Ronald Willins, analyst of the FIS Freight Services, reports that “The freight futures derivatives market should continue to grow larger than the underlying freight market. Financial players want to exploit and profit from the growth of Asian markets, even in spite of America’s slowdown.”

The impact on domestic freight shippers could be felt as speculators on the freight futures derivatives markets could push pricing up for ocean freight, with a possible spillover into domestic LTL and Truckload freight rates.

Stock market analysts lowered revenue and profit expectations for major domestic LTL freight cariers, including freight companies YRC Worldwide and SAIA.  Carriers are being hurt by increasing fuel costs and lower demand resulting from the growing recession.

“Carriers have experienced a marked decline in freight tonnage than most of us who follow the market had thought would happen,” explains analyst George Hattron. “We predict other carriers like Old Dominion and Con-way to demonstrate some weakness as well.”

The market will be shaky for trucking and freight shipping stocks in the near future, as the economy proceeds through the looming recession. Demand for freight will likely continue to be weaker than it has been in past years.  Fuel price increases could spell further divergences in the freight rates that carriers demand the the freight quotes that shippers receive.

With demand for LTL freight falling in early 2008, Carriers are being a lot more competitive with rates. Freight shippers, especially larger shippers, should be able to have their rates hold for this year.  This is especially so because carriers are concerned about lesser volume.

“I believe larger shippers should have more leverage in this environment,” says Tim Hutson, a freight consultant. “But smaller shippers would be best to work with a freight pooling company, because the carriers are still not happy about giving good rates to lower-volume shippers. This is even more so because fuel surcharges are so high.”

There are at least 4000 comments received by the the Federal Motor Carrier Safety Administration and the National Highway Traffic Safety Administration — both DOT agencies – related to limiting truck engine speeds to 68 mph.

Not surprisingly, while there are safety advocates and ATA member fleets supporting this plan, many independent drivers and truckers are not for it. What about public opinion? 

One of the responses strongly supported the speed limiting on commercial trucks to minimize accidents because of speeding. The Owner-Operator Independent Drivers Association feels that the speed limiter will hardly have an effect on speeding, but will impact highway safety negatively. The benefits of limiting speeds are not convincing enough to be implemented.

Another issue is whether the FMCSA or NHTSA has the authority to create a rule that would effectively set speed limits on state highways, because effective 1995, highway speed is regulated by individual states. 

The Best Highway Safety Practices Institute in Portland feels that speed limiters will reduce the capacity of multi-lane roadways. The ATA fleet representatives feel that while variations in traffic speeds could have safety implications, cars are likelier to rear end a tractor trailer traveling at reduced speed. Imagine an 80000-pound tractor-trailer rear-ending an automobile! The speed limiters will shift the focus on such safety issues related to automobile operations around trucks. It is felt that increased variances in traffic speeds between cars and trucks will not create a greater safety problem.

The outcome of the speed limiter issue remains to be seen.

The pilot project that was to let Mexican trucks haul freight into the US has been stalled since the Senate panel voted for a delay.

The earlier decision was to allow hundred Mexican trucking companies to come beyond the present twenty-mile limit for a period of one year initially, provided they complied with on-site Department of Transportation audits and prescreening of Mexican drivers, along with drug tests and insurance checks. Similar to Canadian carriers, the Mexicans are not allowed to haul point to point within the US. At the present time Mexicans are allowed to travel twenty miles into the commercial zone, north of the US-Mexico border. But the Senate panel wants to delay the plan – and wants details of this pilot program published. They feel the public should have enough time to express its opinion before the program is executed. It is felt that the move to open the US border to Mexican trucks is compromising safety. In the meantime, the Transportation Department expressed its commitment to going ahead with the program, taking care of law enforcement concerns on the way. The Department feels that allowing the Mexican trucks into the US will benefit the US economically as well as maintain safety standards.

The Senate’s concern is that the US has opened the border to the Mexicans before Mexico opened the border to US trucks. The International Brotherhood Of Teamsters is happy with the delay. Though access to US highways to Mexico was to materialize in 2003, it was stalled due to disagreements between the US and Mexico.

Panther Expedited Services Inc., Seville has acquired Integres Global Logistics, a California based freight forwarding and logistics company. Integres offers shippers access to air and deferred air ground transportation networks. This acquisition will make Panther the largest full service premium logistics provider. Integres will also bring with it all its blue chip clients, giving Panther a much wider reach than before, especially on the West Coast. Seventy new people will join the 300-strong workforce at Panther. So in addition to ground expedite, Panther will now provide real time freight quoting, booking and shipment-tracking information from the time the shipment is picked up to delivery on all-important freight. The acquisition came about with Panther’s customers requesting Panther to handle more freight.

Panther is a portfolio company of Fenway Partners, New York, which is a middle market private equity firm. Fenway has extensive transportation and logistics experience and practice. In June last year, Panther filed documents with the Securities and Exchange Commission to make the company public.

Elsewhere, the Apollo Management Group, in its bid to buy transport company EGL Inc. has filed a suit against EGL. This is to stop the sale of EGL to a group of investors headed by its chief executive officer. Also, Apollo has upped its offer to $41 per share to buy EGL – this is a $1.9 billion offer. Last week, Apollo made a $ 40 per share offer to buy EGL. EGL CEO James Crane offered $ 38 per share at the same time. Now the problem is – the EGL board okayed the lower bid from Crane, which is why Apollo filed a suit against EGL.

The Ports of Long Beach ($ 3.3 million) and Los Angeles ($ 3 million) are funding the Gateway Cities Council of Governments for the maintenance of its Fleet modernization program, which replaces older diesel trucks with newer and environmentally safer vehicles.

Gateway Cities will replace older harbor trucks while the ports develop the truck fleet modernization initiative as per the San Pedro Bay Clean Air Action Plan (CAAP). Under this initiative more than 16000 harbor trucks will be retrofitted or replaced. These trucks make 80% of the calls on the marine terminals in the San Pedro Bay Ports. The objective is to either replace these trucks with newer cleaner diesel or other alternative fuel rigs or they will have devices that minimize emissions of diesel particulates and oxides of nitrogen.

This new strategy of replacing trucks is the biggest replacement program so far. The Ports are closely interacting with Gateway Cities to learn the best way to plan and implement the CAAP truck replacement program. They are also learning how to communicate efficiently with the stakeholders, including the independent trucker owner/operators, about the program.

Owner-operators qualifying for the funding by the Ports are required to demonstrate that they make hundreds of calls at San Pedro Bay Ports’ cargo terminals every year. When the trucks are replaced, the new trucks must be used in port service or container drayage as they are called so that the nearby communities can benefit from the emission free operation.