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Trucking Outlook 2020: Trade Deals, Tariffs and Tech (Oh, My!)

At this point, making predictions for the trucking market feels almost like playing roulette. In an industry that’s widely understood to be quickly cyclical and dependent on quite literally dozens of factors, it’s almost anyone’s guess how the market will fare even a few months from now. 2018 will be remembered for having two of the best quarters for revenue in trucking’s history, but 2019 was slower, due to tariff uncertainty, excess capacity in the market and many companies holding excess inventory.

As for 2020? The evidence is difficult to interpret.

“We typically look for clues from the past 12 months that offer insight into the next 12. Those clues are less obvious this year, though, because 2019 sent a flurry of mixed signals,” says a new DAT report. “There were the negative signs: Air and sea cargo were down, railroad volumes were subpar, and manufacturing slumped. On the positive side, truckload freight increased 4 percent year over year, and the spot market grew even faster. Dry van freight volumes were especially strong. 

“2020 is going to be a very, very tough year,” says Kenny Vieth, ACT Research President. But Agforce experts aren’t so sure about that … not all of them, anyway. 

“2020 should be a better year for logistics than 2019,” says Andy Tuley, Vice President of Business Development at Agforce. “Some of the bankruptcies that have happened recently should cause capacity to return close to equal and the market should tighten. This should push rates up to a level that should help carriers with cash flows. It will allow more even distribution in the marketplace.”

Michael Preisinger, Managing Director at Agforce, believes, based on his conversations with trucking companies and customers, that “the domestic transportation market will begin to tighten in the spring. Most of what I am reading is saying the same. By spring we should have clarity around the trade agreement with China which will give companies a better idea of how to invest in their business. Also, the large number of trucking companies that have gone out of business in the last year will leave the market with less capacity as transportation volume increases in the market.

China is on other experts’ minds, as well. “Market volatility will be a big player in the market next year, especially with some of the political issues across the world,” says Brian Phipps, Agforce Director of Carrier Sales. “Fuel prices will be a significant player as tensions in the region play out, while the trade deal with China will continue to have a real impact on volume at our ports.”

“Trucking companies will need to be aware of international trade deals and tariffs,” says Brett Eckinger, Director of Sales at Agforce. “They also need to prepare for the upcoming drug enforcement policies that will make it harder for drivers to fail a drug test and move on to another company. Those will be reported in ways that make it impossible for truck drivers to seek employment elsewhere.”

“Carriers with parked trucks that they aren’t able to fill due to the drug testing changes are likely to miss some of this upcoming tailwind,” says Tuley. 

For companies shipping product, the 2020 outlook is fairly positive, thanks to trends in technology and intermodal shipping. “We’ll see better tracking and tracing, and true AI load matching, says Director of Agribusiness John Kuhlmann.

“The digital marketplaces are actually starting to become digital,” says Tuley. “The idea has been there, but the back office part is really still pretty manual. Now that Convoy has announced they’ve become fully digital in select marketplaces, I expect that trend to continue at a quicker pace in 2020. I think we’ll see some consolidation among providers and a few ‘leaders of the pack’ emerge in this space.”

Intermodal, too, should be trending positively. “We’ll see intermodal getting healthier,” says Eckinger. “I think we’ll be able to utilize it a bit more in order to deliver customers’ goods more efficiently.” 

“The rails should see positive growth,” says Tuley, “as long as trucking rates rise to where business can shift back to intermodal. Volumes were very low there in 2019.” 

“Overall, there will be more situational opportunity in 2020 than there was in 2019,” says Kuhlmann. “With the carriers that have shut down and capacity utilization at almost 100%, supply isn’t meeting demand. There will be a lot of chances to fill that gap.” 

Want to understand the best ways to capitalize on the opportunity and volatility of 2020? Call Agforce at 877.367.2324 or email us at inquiry@agforcets.com.

It’s now tougher for truckers to get the all-clear, thanks to the Clearinghouse.

“We have a huge drug abuse problem in the trucking industry, and should actually purge an estimated 300,000 commercial drivers to clean it up,” says Lane Kidd, Managing Director of the Trucking Alliance. “No wonder truck accidents are on the rise.”

Sobering estimate, huh? 

Enter the US DOT Drug & Alcohol Clearinghouse

Earlier this month, the Federal Motor Carrier Safety Administration (FMCSA) officially rolled out the Drug & Alcohol Clearinghouse, a secure online database that standardizes and provides authorized users with the records of professional drivers.

With access to The Clearinghouse, employers, the FMCSA, State Driver Licensing Agencies (SDLAs), and State law enforcement personnel will have information about any drug or alcohol program violations on the records of commercial driver’s license (CDL) and commercial learner’s permit (CLP) holders.

This means it will no longer be possible for drivers who have committed a drug and alcohol program violation while working for one employer to get hired by another employer by failing to report the violation. Instead, the Clearinghouse will keep detailed records on each driver (including limo drivers, school bus drivers, construction equipment operators and sanitation drivers, too, not just truckers) that potential employers can access to improve hiring practices. It also makes it possible for prospective employers to obtain substance abuse history from companies that have gone out of business, or obtaining information from companies that do not cooperate timely with background check requests.

“The Clearinghouse will identify drivers who move frequently and obtain CDLs in different states and link those CDLs,” says the FMCSA, “in order to maintain complete and accurate information on such drivers.”

Its database will retain records of drivers with reported violations of the current regulations including:

  • Reporting for duty or remain on duty for safety-sensitive functions with an alcohol concentration of 0.04 or greater
  • Reporting for duty or remaining on duty for safety-sensitive functions while using any drug specified in Part 40 of the regulations, other than those prescribed by a licensed medical practitioner 
  • Using alcohol while performing, or within four hours of performing, a safety-sensitive function
  • Using alcohol within eight hours of an accident, or before submitting a post-accident test, whichever occurs first 
  • Testing positive for use of Clearinghouse-specified drugs 
  • Refusing to submit to a required alcohol or drug test (which automatically registers as a failure)

These driver consent records will be retained in the database for five years.The Clearinghouse was created by an act of Congress directive to the Secretary of Transportation, with the primary intent of improving highway safety. Once it’s fully operational, the Clearinghouse will:

  • Make it easier for employers to investigate and report on potential drivers
  • Make it harder for drivers to hide drug and alcohol violations from current or prospective employers
  • Provide roadside inspectors and other enforcement personnel with the means to ensure that drivers receive required evaluation and treatment before performing safety-sensitive functions
  • Make it easier for FMCSA to determine employer compliance with testing, investigation, and reporting requirements

“The Clearinghouse provides FMCSA and employers the necessary tools to identify drivers who are prohibited from operating a CMV based on U.S. Department of Transportation (DOT) drug and alcohol program violations,” the FMCSA says, “and ensures that such drivers receive the required evaluation and treatment before operating a CMV on public roads.”

When do Clearinghouse rules apply?

As of this month, “employers will be required to conduct both electronic queries and traditional manual inquiries with previous employers to meet the three-year timeframe … for checking CDL driver violation histories,” says the FMCSA. “Drivers may also view their own records for information recorded on or after January 6, 2020.”  Once three years of violation data are stored in the Clearinghouse, employers will no longer be required to obtain the traditional manual inquiries from previous employers.

However, the FMCSA recently extended the compliance date for state agencies by three years, to give state motor vehicle agencies more time to configure their IT systems to interact securely and accurately with the Clearinghouse. 

“The compliance date extension allows FMCSA the time needed to complete its work on a forthcoming rulemaking to address the states’ use of driver-specific information from the clearinghouse and time to develop the information technology platform through which states will electronically request and receive clearinghouse information,” the agency said.

The Clearinghouse regulations require FMCSA-regulated employers, Medical Review Officers, Substance Abuse Professionals, consortia/third party administrators, and other service agents to report violations of the substance abuse regulations for current and prospective employees. The Clearinghouse regulations also require employees to query the Clearinghouse for prospective employees’ drug and alcohol violations before permitting those employees to operate a commercial motor vehicle AND to annually query the Clearinghouse for each driver they currently employ.

What does this mean for the logistics industry? 

Cracking down on drug and alcohol program violations does mean that the shortage of truck drivers will become even more severe. And once upcoming federal regulations enforce hair testing of drivers rather than just urinalysis, the gap will continue to widen. 

Draft guidelines for government-wide hair testing “have been distributed to all federal agencies for a second round of comment and review, and the length of time for review will be determined by the Office of Management and Budget,” the U.S. Department of Health and Human Services confirmed in early December.

A recent study by the Trucking Alliance, based on 3.5 million commercial drivers and projecting a 99% confidence level, says that more than 300,000 truck drivers currently on the road would fail or refuse a hair analysis. 

“The test results indicated a major discrepancy between the number of drivers who failed a urinalysis drug screen and those who failed a hair test,” The Trucking Alliance said. “While 949 (0.6%) applicants failed the urine test, 12,824 (8.5%) either failed or refused to submit to a hair test. The US Department of Transportation classifies refusals to submit to a drug or alcohol screening as a failure. This yielded a hair test failure rate 14.2 times greater than urine.”

Not only will these enforcements cut down on the pool of truckers driving today, they may also affect the pool of new drivers willing to fill the resulting demand. 

“I think a 3% capacity reduction within the first six months of the year is realistic and will have a material impact on what the supply-demand dynamic looks like in 2020,” Derek Leathers, president and CEO of Werner Enterprises told FreightWaves.

Looking on the bright side

Sure, the Drug & Alcohol Clearinghouse is likely to result in some short-term demand for drivers, which may slow some of your shipments. But for Agforce, this means we’ll ultimately have even more confidence in the drivers we work with … and you can have more confidence in them, too. 

If you have any questions about the Clearinghouse, how it works, how it’s used, when it goes into effect or how it will affect your business, reach out. We’re happy to talk you through it. Call us at 877.367.2324 or email us at inquiry@agforcets.com.

Four Ways “the Amazon Effect” Changed Holiday Shopping and Year-Round Shipping

It wasn’t too long ago that shopping online seemed somehow untrustworthy … like the most likely outcome of an online purchase was a compromised credit card number and eventual delivery of a laughably sub-par product. Then along came Amazon. It went from used book reseller to retail giant with a monopoly over most everything we buy (from food to plants to music and movies, clothing and medicine and art and … yeah, still books) as consumers. This year, eMarketer predicts that almost half of U.S. online sales will go to Amazon (for a total of $282.52 billion, says Chain Store Age).

Somewhere along the way, we not only lost our distrust of buying online, we completely shifted our mindset toward shopping and shipping. As a society, the “Amazon Effect” has changed the way we think about how we buy. And as a 3PL, we need to be aware of just how much it has affected the way people think about freight. 

Here are four ways the Amazon Effect has changed people’s perceptions in ways they might not even be aware of:

  1. People have higher expectations around visibility and ease of booking. It used to be expected that you’d need to make a phone call … wait for a phone call back … coordinate calendars and cost centers … and then shake hands (figuratively). The Amazon Effect has made it so it’s easy to understand options and book services completely independently, all without ever talking to a real person. Now, we think that’s what we all want (is it really though? That’s a question for another day.)
  2. People want to buy in their jobs the way they can in their personal lives. The lines between B2C and B2B purchasing are getting blurrier and blurrier. The advent of two-day and next-day shipping means we’ve become increasingly impatient when the lead time on a product is longer. Due to the size of the product being moved, manufacturing schedules and more, though, it’s just not always possible to deliver B2B goods at the same speed as B2C goods. There’s room for more agility, of course (that’s one of our strong suits at Agforce), but the scale is different.
  3. People want complete transparency in their shipment tracking and tracing. Amazon made it possible to see when your items were scanned onto a truck, which state they’re in, and when they’re dropped on your doorstep (sometimes with photo evidence) all on mobile, all in real-time. This is one area where B2B transportation absolutely can match B2C, and should. It’s reassuring for customers to know where their freight is within the supply chain, and this type of transparency (backed by technology, but not dependent on it) helps keep logistics providers accountable. 
  4. People want an all-in-one shop. Once it became possible to buy your snacks, your movies, your pajamas and your pillows all in one express checkout, people started looking for that same experience everywhere else. It isn’t always possible in industries like agriculture; food and beverage; beer, wine and spirits or plastics and packaging, but it is possible to better integrate your shipments. When you partner with Agforce, for example, we’ll take care of consolidation, intermodal transport, delivery and more … and you’ll have just one point of contact for all of it.

As you do your holiday shopping this year, and as you work with your logistics provider to move your next load of freight, take a minute to consider just how much the Amazon Effect has increased your expectations. At Agforce, we think about it every day … and we’re honestly kind of grateful for it. When your expectations are higher, we learn to work with more agility, more transparency, and more customer service. 

Happy holiday shopping (and shipping!) from your friends at Agforce Transport Services. Looking for a 3PL that delivers the shipping experience you expect year-round? Call Agforce at 877.367.2324 or email us at inquiry@agforcets.com.

Case Study: Thurston, Inc.

The Client

“I didn’t realize how easy it could be. Night and day difference,” raved Amanda with Thurston, Inc., a leading hybrid seed brokerage, while speaking of the difference in their freight shipping from one year to the next. And she gives full credit for the change to Ingrid. 

You see, Ingrid is one of our logistics experts, and after she and Amanda met, Ingrid promised Amanda she would never have to worry about what was happening with her freight again. Ingrid has been making good on that promise ever since. 

Opportunity for Improvement

Before Agforce and Ingrid, Amanda was working with multiple sources to move her truckload and LTL freight. The general nature of Thurston’s business means there is sensitivity around blind shipping. So, they need good communication and affirmation for peace of mind. They need to know the shipper and consignee will stay unknown to each other. Their previous resources didn’t give them much reassurance around shipments being picked up, let alone confidence the paperwork would be handled correctly. 

Amanda wears a lot of different hats at Thurston. There is simply not enough time in the day for her to get everything done if she’s constantly checking on the state of their freight. Plus, she knew that if she didn’t receive communication from the 3PLs and carriers she tendered freight to, her customers weren’t receiving any updates either. They couldn’t allow their freight shipping to leave a sour taste in their client’s mouths. 

Solution Design

Ingrid’s goal: Give Amanda the confidence to know her freight is handled. Ingrid and the team laid out a communication plan that prioritized immediate response when Amanda submits a load for pickup, and they reach out with updates so she can know things are on track. Ingrid wanted to ensure Amanda could work on the other things that keep Thurston running, and doesn’t have to worry about follow up with her freight. 

Today’s Processes 

Amanda shared, “It’s been a big weight off my shoulders. Agforce just makes freight easier.” She went on to tell us the amount of time she has to spend dealing with freight has been cut down due to the good service and communication from Ingrid. During their heavy truckload season, they used to wait up to two and a half weeks between loads while their 3PL sourced equipment. Ingrid put processes in place and found carriers that appreciated the regularity of Thurston’s freight with multiple loads in the same lane to secure the best service. Thurston made it through their busy shipping season in record time! 

Amanda knows she’s not alone in her appreciation of Ingrid. Their customers even remark on how great Ingrid is to work with and appreciate the quality drivers she sends to their facilities. 

If your freight shipping could use someone like Ingrid, let’s talk. Wouldn’t you like some time back to focus on the other stuff? Together, we can move your business forward. Give us a call at 877.367.2324 or email us at inquiry@agforcets.com.

Predicting 2019 Trucking Spot Rates

Our experts weigh in on what you can expect for the rest of the year.

Last month, FreightWaves, the first organization to develop a futures market based on U.S. trucking spot rates, took four models forecasting trucking spot rates for the rest of the year, and compared them against each other to predict pricing for the second half of 2019. 

Based on historical and future data provided by various freight indexes, FreightWaves provided a comprehensive analysis of all the factors affecting spot rates. 

The analysis is so comprehensive, in fact, that it may be a little dense for those of you who don’t necessarily follow the futures market but just want to know how much you’re going to pay to get your product from Point A to Point B. 

Our experts wanted to analyze the analysis (that’s right) and give you an overview of which conclusions we think are the most important, what we believe the market is likely to do over the next six months (and why) and add our own insights into trucking rates in 2019. First, here are our takeaways of what we considered most important to note from the FreightWaves article:

  • “Positive movement depends on…even more capacity to leave the market as well as new truck orders to stay depressed for the remainder of 2019.”
  • “The market looks flat into the third quarter with a seasonal bounce again at year’s end.” (Tom Mallon, FreightWaves Vice President of Financial & Freight Futures Markets)
  • “Expect to see the supply side supportive of rates, especially with the recent sharp decline in new truck orders.” (Ravi Shanker, Morgan Stanley Analyst)
  • “June contracts are priced at $1.59 per mile, implying a significant bump up from [May] spot rates at $1.41/mile. That’s consistent with the traditional volume and price run-up seen most years in May and June.”
  • “At this point, the market expects a return to the relatively normal price conditions preceding the capacity-constrained environment of 2017-8.”

Since the piece was published, we haven’t seen any indication that these conclusions are off-base. “We saw a holiday at the end of May followed by DOT week. DOT week was not reported to be as big of an event this year as in years past, but it still had an impact on capacity. Spot rates then went up in June, which is normal,” says Justin Hathaway, Carrier Manager. 

But is “normal” actually…normal? Not recently. We think it’s most important to note is that while 2019 looks pretty steady, it’s coming on the heels of a 2018 that was decidedly unsteady. There’s pressure on spot rates to hold strong as the shipping industry as a whole normalizes after very strong rate growth (6.7% annually) in 2018 and a quick tumble downward at the beginning of 2019. 

Because the market couldn’t support the growth of 2018 and diesel fuel supplies tightened due to production cuts, spot rates bottomed out at the beginning of this year, as did the price of diesel. These factors, among others, have led to an extremely volatile recent history.

“After the downhill slide of the last six months, both carriers and brokers are positioning themselves to maintain their current volumes while getting aggressive to secure new business,” says John Kuhlmann, Director of Agribusiness. “From a pricing perspective, we have seen rates bottom out in several markets, but given the current business landscape, there will be pockets where they may climb back up with seasonality, etc.”

Overall, though, “we speculate that Q3 will be flat, but the market will support modest price increases through the end of the year,” Kuhlmann says. “We are not expecting any major market shake-ups before the holiday shipping season starts.”

“My gut tells me spot quote prices will continue to rise in certain regions, but won’t approach where the market was in the first half of 2018,” says Joe McDonald, Business Development. “Ultimately, I see pricing being flat to higher in areas than early 2019, and more in line with pre-2017-2018’s higher pricing.”

According to the Wells Fargo 2Q 2019 North American Truck Transportation Sector Update, these current levels of volume and pricing suggest that the U.S. economy is still growing, just not at the rate it was, and that it may have reached its short-term expansion limit. Of course, nobody can predict the future with complete accuracy. So what are the factors most likely to influence the moderate pricing increases we anticipate for the rest of 2019 and into 2020?

  • Economy and trade policy: “Moving to 2020, I believe that load volumes largely depend on the health of the US economy (and confidence in the US economy),” says McDonald. “Trade policy is definitely a deterrent to higher load volumes, so I’d expect load volumes to remain flat.”
  • Tariff rates: “Pending tariff rates for USMCA, we should see rates uptick slightly as we move into Q3 and Q4 if seasonal volumes remain consistent,” Kuhlmann says. “If volumes shift up drastically, we can expect intense volatility from both pricing and capacity.”
  • Driver availability: According to American Trucking Association estimates, the trucking sector had a driver shortage of 50,000 at the end of 2017. It predicts a longer-term driver shortage of 175,000 by 2026. New driver availability remains an issue and area of significant concern.

Truck capacity and demand: “As always, two major variables are truck capacity and demand/volume,” says Hathaway.

Here at Agforce, we don’t claim to be able to influence trucking spot rates or the futures market. We do, however, guarantee complete honesty and transparency into how and why we set our prices. Our customers are our partners and our friends, and that’s something we owe to them. We will continue watching the market so we have the best, most up-to-date information possible to pass along to you.

Questions? Reach out! Call us at 877.367.2324 or email us at inquiry@agforcets.com. Our experts would love to provide the answers.

Case Study: Major Brands

The Client

Major Brands is a leading Missouri distributor of premium spirits, wine, beer, and non-alcoholic beverages, and the largest distributor that remains Missouri-owned and operated.

With offices in St. Louis, Kansas City, Springfield, Columbia and Cape Girardeau, Major Brands employs more than 600 people and serves more than 9,000 retail customers throughout the state.

Opportunity for Improvement

We were moving Major Brands inbound freight through a system of multi-pickup truckloads. Their shipments consisted of a variation of wine, spirits and beer shipping from ports, distilleries and manufacturers across the U.S. But, it wasn’t perfect.   

The multi-pick solution started to create a hassle with missed pickups and late deliveries on Major Brands’ purchase orders. “We had planned ship dates and our sales people worked off of delivery targets. With the fluid market for spirits, slipups started to impact our pricing, bottom line and overall customer experience,” shared Erin Evans, Inventory and Transportation Manager.

They needed to consider different options for their freight in order to operate with more efficiency and dependable timelines.

Solution Design

Our team members Michelle and Chris were on it. The short-term goal was a solution we could implement to solve the inconsistency of Major Brands freight shipping. Long term, we wanted to create a relationship that would provide value to Major Brands.

To do so, Chris, Michelle and the rest of our team worked together to design a tailored plan. We developed a plan with a mixture of LTL and multi-pick loads that focused primarily on the per case cost to the customer. Not only did this provide a lower transportation cost to the customer, it also allowed us to work within the confines and time restraints of Major Brands wide array of vendors. The result is a cost effective, time sensitive and economical approach to moving orders of all sizes.

Today’s Processes

Fast forward to the present and Major Brands doesn’t give their freight a second thought. They put their deliverables in our hands. That’s the part they like best. They just know things are going to happen as planned — the way a true partnership should work.

The new processes have allowed Major Brands to evolve and we have been in lockstep with them the entire way. They now work with less quantity and more brands. It’s all possible because we listened and leaned in. Technology is great, but we gave them so much more: personal attention and the freedom to concentrate on their business.

Today, they generate a purchase order, indicate Agforce for routing and copy us on the email. From there, it is just handled. The vendor reaches out when the freight is ready for pickup and Major Brands doesn’t have to think about it again.

“It is truly amazing. Agforce has removed the burden of our freight shipping unknowns. We can confidently make purchasing projections, a key in the retention of our business, and know things will deliver the way they are supposed to,” stated Erin. “And if there is a hiccup, Michelle and Chris are on it. They are always looking out for our best interests. The partnership is invaluable to us.”

If your freight shipping could use a personal touch, let’s talk. As an extension of your business, your objectives are ours too. Together, we can customize the right plan for you. Give us a call at 877.367.2324 or email us at inquiry@agforcets.com.

The Experience Makes a Difference

Great customer experience. It’s a hot topic right now across many industries, including transportation. But, how do you know you are getting the best experience? It may be a gut feeling, intuition, but let’s see if we can pinpoint some checklist items for a strategic evaluation. And, while we’re at it, let’s tackle why experience matters. It can be impactful to your business with consistent deliverables that free up your time. A great experience also means you have a business partner that is engaged in your success — and that equals a boost to your bottom line.

Ok, that’s all well and good, but what is a great customer experience?

Well, at its core it is convenience. Nothing about your experience with a vendor should be hard. With a 3PL that has created an exceptional customer experience, you should be walking on Easy Street. They’re going to excel at three things.

1. Communication

They will be in touch with you for anything that needs your attention in a timely manner. Communication will be proactive, and when you reach out, they will respond. You shouldn’t feel like things are murky or information is being withheld. Transparency will be apparent. Here are a few other things you should look for:

  • Honesty: It’s the foundation of trust for a true partnership.
  • A relationship: Is your communication meaningful? Can you feel a growing connection?  Do they care about your success?
  • Reliability: They should take ownership of what you task them with. If they cause you stress, move on. A great 3PL experience will be consistent and provide peace of mind.
  • Vision: Do they seem to have a plan for improving your business? Look for a forward-thinking partner that helps you move the needle.

2. Technology

Enhanced performance comes from the right technology. Your 3PL should be able to spot trends and make recommendations to keep your shipping on track and on budget. In addition, they will provide you valuable, real-time data.

3. People

The royal treatment from a 3PL means they will have great technology, but they won’t hide behind it. They will invest in the right people. Beyond the right people, they will make sure you are working with the individual that best matches up with your business. How will you know they make their people a priority?

  • Everyone you talk to is engaged. They take their time to understand you.
  • The 3PL invests in their team’s growth with training and education.
  • It’s not just lip service. They have the right people to execute the plan.
  • Employees are all rowing in the same direction. They are like-minded, focused on the same outcome.
  • You will feel like the center of the universe because the customer is at the center of everything they do.
  • They will take a holistic approach. Not only will they know your shipping inside and out, they will understand your entire business model.
  • Your representative will be collaborative — a true partner — because that is how their own team thrives.  

Summary

With a great customer experience you will find an evolving relationship that focuses on your long term goals. The attention you receive will not stop after onboarding, but rather it will build into something meaningful for your business. A great experience with a 3PL will foster growth with consistent processes driven by communication, technology and the right people. Now you should experience this: Agforce. You’ll find a true partner that acts as an extension of your business and in your best interests. Together, we can free up your time, get you peace of mind and grow your bottom line. Give us a call at 877.367.2324 or email us at inquiry@agforcets.com.

Diversification: Optimize Your Supply Chain

Diversification [dih-vur-suh-fi-key-shuh] noun: the act or practice of manufacturing a variety of products, investing in a variety of securities, selling a variety of merchandise, etc., so that a failure in or an economic slump affecting one of them will not be disastrous.

The economic slump referred to in the definition of diversification translates to supply chain as tight capacity. If you are only using an asset-based freight service high demand means, inevitably, you are going to face a disruption to your supply chain, impacting your company’s profitability.

When you diversify your freight providers by adding the right 3PL to your mix, you are getting access to capacity in any lane at any time, making your supply chain agile and adaptable. The result will be increased performance and better cost control throughout your supply chain.

Summary

Keep your options open. When you partner with a 3PL, they can help you find capacity that an asset-based provider may not have access to. Service is their product. With that mindset, they can help you build the perfect mix of capacity and cost control to optimize your supply chain.

Agforce can help you maximize efficiency and avoid disruption to your business. Together, we can deliver the right mix for a nimble, agile and profitable supply chain. Give us a call at 877.367.2324 or email us at inquiry@agforcets.com.

Freight Claims: What You Need to Know

Safe. And on time. That’s how your freight should deliver. But we all know damage can happen and we need to know how to handle it. Let’s talk about the things you can do to help ensure your freight arrives safe, as well as the need-to-know information if indeed you find yourself staring at a freight claim.

Prepare for the Pickup

When a carrier signs your bill of lading (BOL) at pickup, they are confirming the freight loaded on their truck in good condition and matches the BOL details. The BOL is a binding, legal document that is never more critical than during a freight claim. Take the time to make sure it’s accurate up front and avoid some painful lessons-learned if you do have to file a freight damage claim later. Here are a few other things to think about during pickup:

  • Stacking: Load your heavier freight on bottom while your more fragile cargo is safely on top.
  • Protection: Block and brace your freight to lower risk of movement during transit.
  • Distribution: You will want even weight across your pallets, and a weight distribution board is needed between every third layer of freight.
  • Uniformity: Stack pallets in a consistent manner and keep a lookout for product overhang.
  • Photograph: Snap a quick pic just in case you would need to prove the condition of the freight at time of pickup.

Be Detailed at Delivery

This is important: Do not let the driver leave until you have inspected the freight. On the exterior, you’ll be looking for things like fork punctures or crushed packaging. Don’t stop there though, go ahead and open it up. If you do find damage, take pictures and note “DAMAGE” on the delivery receipt. Then both you and the driver will need to sign that document.

Once Damage is Found

The freight can be refused if there is damage. However, this may not be in your best interest. It could hold up the payment of a freight claim if neither the consignee nor the shipper are in possession of the freight and it is left with the carrier. If both the shipper and consignee refuse the freight, the carrier can claim ownership of the property. It is typically best to note all of the damage and accept the shipment.

The Claims Process

If a claim must be filed, despite all your efforts and planning, there are some documents you will need to gather and rules you must abide by. First thing you need to remember: Don’t put it off. The claim must be filed within nine months of the date on the BOL. Here are a few checklist items to help you prepare:

  • File the claim with written communication — the claim date must be traceable
  • Clearly identify and define the product damaged
  • Specify the dollar amount of the claim based on its commercial invoice and explain how you reached the number — you may include storage fees or other expenses
  • Keep a copy of the BOL to provide with the claim
  • Gather and send any supporting documents, those may include things like the following
    • Commercial invoice
    • Photographs
    • Temperature reports
    • Loading diagrams
    • Weight receipts
    • Witness statements

Once the claim is filed, you’ll be asked to prove three things:

  1. The carrier received the freight in good condition.
  2. The consignee received the freight short of original contents, there was damage, or it delivered unreasonably late.
  3. The dollar amount of your claim is valid.

The carrier has the burden to establish two items:

  1. To no extent were they negligent.
  2. The damage was due to a recognized carrier defense.
    • Act of God
    • Act of the public enemy
    • Act of the shipper
    • Act of the public authority
    • The inherent nature or vice of the goods themselves

Only when the carrier fails to meet their burden are you entitled to recover the loss. Remember, it is based on actual loss, if an item can be repaired or a part replaced, that may influence the compensation amount. Involve your insurance company, they may be able to assist you in further recuperation of loss.

Summary

Freight claims can be a large pain, and if you do not know the subtle nuances that go into the process, they are nothing short of overwhelming. Be diligent in your shipment preparation, thorough with your paperwork and mindful of inspection at delivery. Hopefully your freight always arrives safe and on time. However, if an accident does happen, you will be prepared to face it head on.

Don’t forget to lean on your freight service. Agforce can help you understand the claim process and serve as a go-between with the freight carrier. Together, we can better navigate the freight industry. Give us a call at 877.367.2324 or email us at inquiry@agforcets.com.

Agforce Vice President Andy Tuley’s 2019 Intermodal Outlook

Precision in an Imprecise Market

2018 was a big year for precision railroading, and that’s an understatement. Some might go so far to say it was a “make or break” year, and I would have to agree – as long as those people also agreed that by December 31, 2018, we could conclude precision railroading probably checked all the boxes on the “make” side of the equation. Of course, that growth did not necessarily come easy for any of us.

According to the Association of American Railroads, intermodal volume rose 5.5 percent in 2018 alone. At Agforce, we experienced that growth firsthand with our partners. By the end of the year, it had become clear that precision railroading is well positioned to go mainstream in 2019, but not without a few growing pains. Thanks in large part to a confluence of factors that included precision railroading and tight trucking capacity, CSX, for example, struggled with delays and the resultant frustrated shippers on the precision railroading side.

Thankfully, CSX adjusted to the “new normal” quickly, modifying and improving service to accommodate pared-down service routes and closed ramp facilities. The use of the word “quickly,” by the way, is highly relative. It did not take CSX long by railroad standards to make some high-impact, significant changes, but to our customers, it felt like an eternity. We were relieved in October 2018, when we started seeing glimmers of the positive angles of precision railroading strategy emerge not just for CSX, but for our intermodal partners as well.

Accept it: Precision Railroading is Here to Stay

The shifts and evolutions that came in 2018 created an intense need for not just data, but the best data and the best analytics to go with it. Agforce brought both last year and is prepared to do so again in the coming year.

Precision railroading can be difficult to deal with on the client side when a railroad first engages in this format. Done right, the strategy dramatically increases efficiency and optimizes use of assets across the board at a railroad, but the implementation period can be rough. CSX picked a rough time to implement precision railroading, in the middle of a tight truck market, since companies were already looking for options to get product off their docks and onto the road or, instead, the rails.

When engaged in successful precision railroading, a railroad like CSX may “shed” operations (including ramps and associated operations) while expanding profits all the while. This can complicate things for shippers to no small degree.

“CSX has more pricing power [now]…particularly in intermodal truck-rail business,” wrote WSJ business editor Paul Page this past October. Precision railroading provides more pricing power for the rails but also causes massive operational changes which makes having a solid strategic partner that much more imperative. The ensuing volatility certainly had a huge impact on our industry in 2018, but we expect things to calm down in the coming year.

What does this mean for Agforce customers? As precision railroading grows in popularity (and it will with results like CSX is posting), it will be imperative that every company have a highly optimized intermodal strategy. Whether you have had the same basic process for years and are in need of a “revamp” or you have only recently begun working with or considering intermodal shipping, rely on Agforce to help you develop and optimize the intermodal strategy right for you.

Rising Rates Likely to Slow in 2019

Fortunately for the entire industry, 2019 will probably not be quite as volatile as its predecessor. At Agforce, we do not expect the same volume of rate increases that we saw in 2018, which were caused by the coupling of a very tight truck market and the emergence of precision railroading as a dominant trend in railroading. Intermodal growth in 2018 was definitely fueled by tight capacity in the truck market, but now it is certainly here to stay.

The trucking industry appears to be taking a pause of its own as 2019 begins, another positive indicator for you that rates on this side could settle in the coming months. After a huge surge in fleet expansions, orders for heavy-duty trucks in North America were 43 percent lower in December 2018 than they were a year prior and down 24 percent month-over-month, ACT Research reported in early January.

However, ACT vice president Steve Tam observed, order volumes are not so low that the hot freight market could be heading for a downturn. “Freight demand is still growing. Freight demands are still increasing; it’s just that they are growing at a lower rate,” he told WSJ. This certainly correlates to our own outlook, with the caveat that this applies mainly to lanes that still “fit” railroads’ new operations. Be alert: precision railroading can create logistical issues if a railroad’s new ramp pairings do not fit with the network customers are used to. Agforce is dedicated to helping partners identify the best fits between providers and customers and also between rail and trucking providers as this evolution continues.

It is Time to Take a “Deep Dive” of Your Own

At Agforce, we have shifted historical business to rail in many cases due to pricing or capacity constraints. This service shift and the ability to meet demand has made rail a better fit for our customers in certain cases, and those instances are increasing in number as more railroads nail down precision railroading and the positive results it can bring.

It is imperative your logistics partner is doing constant, analytical due diligence for you. This is what Agforce does for its customers.

The good news is we don’t expect the spot market to stay up where it is right now. In fact, we’re predicting it will come down while contractual rates rise a modest 3-5 percent in lanes that continue to fit the railroads networks. Agforce continues to carefully and consistently monitor service provider, freight volumes, ramp pairings and schedules to help you optimize your shipping strategies. Untiring attention to detail in this will play a key role in your company’s successful shipping, regardless of mode or combination of transport methods, in 2019.

 

Together, we can leverage 2019 to your advantage. Let’s partner and create solutions for your business. Give us a call at 877.367.2324 or email us at inquiry@agforcets.com.

 

Andy Tuley is the Vice President of Business Development at Agforce Transport Services. Tuley’s long history of work in the logistics and supply chain industry coupled with skills in freight, sales forecasting and P&L management uniquely qualify him to provide Agforce customers with the strategic industry analysis they need each quarter and in the event of industry disruption.