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. 

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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.

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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. 

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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.

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The details show that much of this financial improvement came as a result of the company’s ability to collect an extra $275 million in fuel surcharges from freight shippers who use the railway.

The results show that the rail carrier was, really, benefiting from the rise in fuel prices. Commentators note that companies that engage in freight shipping, LTL, Truckload, or rail, should note that fuel surcharges are not merely “cost pass-throughs”, but may also be profit centers for carriers.

This is because methods of determining fuel surcharges factor in variables other than just the price of fuel.  This means that a small increase in the actual cost of fuel can end up as a significantly greater boost in the “fuel surcharges” tacked on by carriers.

When navigating the pricing maze, freight shippers need to be be sure the freight quote they receive is an all-in price, including any fuel surcharges.  This way, shippers can avoid nasty surprises when the bill comes.

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Current administration officials explain that freight haulers need to use the current infrastructure more wisely; for example, spacing out volume by providing incentives for hauling freight during the night. The bottom line, the jury is out on tax increases, and any potential electoral candidate who supports them is risking quite a bit.

Government agencies are also focusing on truck safety. In doing so, they are paying attention to using new technologies to make sure truckers comply with rules. This regulation could further lessen the supply of freight which could come back to haunt us as we pull out of the recession and find lots of demand and a shrunken freight supply.

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“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.

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“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.”

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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.

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Fleet managers, therefore, are not only accountable for keeping the fleet operational and running, but also for its financial management.

They must be conversant with budgeting fleet maintenance expenses, developing an operating expense plan and managing it.

Arsenault’s Dossier software helps track and report on actual fleet expenses vis-à-vis estimated expense budgets; tracks parts, labor, fuel, fluids, tires, and other related fleet operational and administrative expenses. 

Fleet managers face the key challenges of managing the high cost of fuel and executing safety programs that focus on reducing accidents that can be prevented. Added to this is the constant pressure from management to reduce costs. They have to continuously show more and more cost savings every year while managing a bigger workload with minimum resources. But fuel and safety are the top challenges that face commercial fleet managers. One of the reasons for safety being a major concern is the pressure from corporate risk departments in fleet management. So much so, fleet managers think twice about taking on vehicles that do not come with the recommendation of the risk department, in case there is a safety related issue, ending up in an injury or accident, where they may be blamed for not taking the safety issue seriously.

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