LTL vs. Partial Truckload Pricing

Partial Truckload Quotations           

Many times shippers will ask their freight brokers for a pricing matrix for shipments consisting of more than 5 pallet spaces - but less than truckload quantities.  While many accurately refer to this freight as “LTL”, many of us in the industry refer to these quantities “partial” truckloads. 

The distinction between the two terms actually means quite a bit when it comes to freight pricing systems.  “LTL” or “Less than truckload” freight is generally reserved for freight "under" 5 Pallets where shipment pricing is generally handled a “Cube/Density pricing model.  In this case this freight quotes are generally consistent and would generally move with a large national carrier such as Yellow or Old Dominion.  Companies specializing in LTL aren’t interested in partials or truckload quantities because such quantities would compromise their pricing methodology and reduce their margin.  LTL carriers also typically cross-dock freight through multiple terminals which results in longer transit times.

Partial truckload carriers, on the other hand, are companies (usually smaller than LTL carriers) who travel longer distances and often deliver on the same truck they picked up on.  These carriers may only handle larger quantities of freight and usually price freight out based on pallet spacing rather than density.  Partial carriers also have to adjust their shipping rates based on what portion of the truck you occupy.  For example, because a partial carrier doesn’t know if he will fill the truck out completely before a run he usually tries to get 45% of the truck’s revenue from the first ¼ of the truck used.  A savvy shipper or freight broker understands that the “last” ¼ of the truck usually only has to account for 15-20% of the truck’s revenue.

This realty causes an interesting dilemma for shippers.  Naturally, shippers who move partials would like to have the same pricing consistency as shippers who move LTL, however, to achieve this the fixed pricing model has to be at the higher end of the spectrum – just in case the shipper finds himself on the nose of the trailer as opposed to the tail. (think 45% vs. 15-20%).  Not all trucks are actively completing a load when the shipper says “go”.

The best protection against inflated pricing is to work with a brokerage that moves enough partial volumes to ensure that the shipper is priced out based on efficient load matching.  Since most lanes usually have multiple partial truckload carriers operating in them, a good broker will have the ability (more often than not) find the carrier who is completing the load rather than starting it.  

Different kind of cloud approaches logistics.

Different kind of cloud approaches logistics.

Anybody remotely connected to the transportation industry is well aware that our industry has made significant progress in the last few years when it comes to technology.  As our normal business cycles seem to be getting shorter (In as little as ten years we have experienced a major driver shortage, a huge economic recession, more regulatory bewilderment and back to a driver shortage) we are starting to leverage technology in ways that make things easier for our customer and at the same time  streamline the way we deploy our human capital.

As we emerge from the recent recession, there is talk of cloud looming over the industry – but this one is not as ominous as the dark clouds of the economic downturn.  I am talking about cloud server technology.  Simply put, cloud technology is where applications and data that we are accustomed to seeing on our “local” computer, are know being hosted remotely so that all you need to access them is an internet connection.  An example of this is where instead of accessing a dispatch program on your computer or server, you can now access this same program just by having a WIFI connection – the program is being run effectively off site or “in the cloud”. 

While companies in all industries can benefit from this new “asset-light” approach to data organization, the transportation industry should be very excited.  Here are a few reasons why:

1. There are many technology platforms that the logistics professional may access on a daily basis to get their job done. These include, dispatch, transportation management software, tracking technology, and various communication platforms.  All of these platforms are constantly evolving and improving.   When these platforms are hosted in the “cloud” the end-user immediately benefits from the upgrades in real-time without having to manage the upgrades locally.

2. Today companies are collaborating at every stage of the business process from production to delivery.  When critical data is hosted in the cloud, people access the specified information from anywhere and if desired customers and suppliers can access that same data to make more informed decisions based on real-time information.

3. Today employees are more mobile than ever.  Most people are accustomed to doing some part of their job while away from the office or via their Smart-phone or other similar device.  Additionally, these “smart devices” usually do not have the power to run application software, so accessing the programs online is the only option.

With this evolution in mind ShipCanada.ca has made significant strides in improving it’s cloud enterprise system.  By logging online each customer can access freight quotes or other trucking company information from a regular computer or smart phone. Additionally, the platform is designed to be accessed by various employees in the organization so that tasks from shipping to freight bill auditing can be easily completed through one account.

The faster our industry moves critical information and processes into secure online platforms, the faster we can start enjoying the benefits of global access and business mobility.

Bills Of Lading - A Brief History

Bills of Lading  - A brief history.

For hundreds of years merchants and traders have relied upon the expertise of others to transport their wares from one place to another.  It can be argued the wealth of entire countries has always depended upon the efficiency with which imported and exported goods have found new owners.

It can also be argued that the methods we use to document the legal transfer of goods has been just as important to global economies as the evolving ways in which we physically move the goods. 

Long before there was phone service connecting people on opposite sides of the world, there were ships and crews conveying everything from people seeking a better life in a new land to precious cargos being sent home from the new world.

Whether the product was valuable tea emerging from Chinese harbors or tobacco making its way from the American east coast to Europe, the cost of production was great and a proper accounting for every pound shipped was important.

The captains of these cargo ships were charged with the duty of conveying certain quantities of certain quality to consignees who would take title to the goods once the freight was delivered in apparent good order.

Shippers and carriers eventually developed an informal method of tracking cargo through a written register that would document such details pertaining a load.  Eventually strict protocols were developed to protect the integrity of such registers maintained by the carriers.  One provision stated that the register was deemed totally unreliable if found in the possession of anyone other than the ship’s clerk.   Other measures provided for the severing of one’s hand if caught falsifying information in the ships register.  Some of these policies eventually made their way into statute law and trade flourished in countries where established laws were enforced by government.   

Once this documentation became more formalized resembling the now familiar “bill of lading” we are accustomed to working with, people began to use these paper records as freely transferrable instruments which could be used as collateral or security.

The bill of lading increasingly became a document also relied upon by the carriers to establish their claim of payment for services rendered.  A bill of lading is generally looked upon by shippers and consignees as documented proof of receipt, however today’s trucking company utilizes the document almost exclusively as is proof that work has been completed and payment warranted.

The next phase of the bill of lading’s evolution will be the convergence new technologies affecting transportation and instant electronic document transmittal. 

CAD dollar great for vacations – Not so great for freight!

Once again we are seeing a strong run by the Canadian dollar vs. the Greenback.  Just yesterday, we reached a six-week high as the world anticipates rising Canadian interest rates with the federal reserve staying the course.

While this may signal buying power for Canadian companies sourcing product in the U.S.; anyone in the freight business knows that a weak U.S. dollar will eventually bring imbalance to the southbound freight trade as our U.S. commercial customers wait for more favorable currency levels.

Bank of Canada chief Mark Carney stated recently that the economic recovery in Canada will be “slightly more gradual than expected” earlier this year and the central bank will be focusing on the “magnitude of the weakness in the U.S.” with regard to its monetary policy decisions.

What are logistics professionals to think?  It’s hard to say.  Higher inbound “spot market” freight rates may eventually offset any increased buying power companies find south of the border.  This reality sets in when Canadian customers find that the availability of Back-haul trucks from the US to Canada diminishes substantially with a weak U.S. dollar - which, in turn, inflates inbound freight spend. 

But what about all that stimulus money?  With the U.S. government contemplating another injection of stimulus money into the US economy it will be a wait-and-see story with respect to how financial markets balance increased U.S. debt and short term spending incentives.

Since we won’t be returning to the days of the 30% currency adjustment, Canadian exporters must focus on more efficient shipment consolidations to save money on every piece of outbound freight.   After you’ve mastered this then go and take a vacation – You’ve earned it…

ShipCanada.ca announces new Customs Clearance Service

Toronto, ON 2010 ShipCanada.ca, a leading online transportation management company based in Newmarket, Ontario, has just announced it’s new customs clearance service for North American shippers.

According to executives at ShipCanada, a div. of Equitrans Global Logistics, one of Canada’s 50 fastest growing companies  in 2007 according to Profit magazine; the integration of a customs service was inevitable.

The online brokerage, known for its proprietary freight quote technology, traditionally only offered trucking company services for shippers moving freight throughout North America.   The customs offering, which will be rolled out in the fall, will be facilitated by Livingston International at the major U.S., Canadian and Mexican commercial border crossings.  

The service, which is intended to streamline the shipping and customs compliance functions that is traditionally handled by two separate companies will be of immediate benefit to shippers according to ShipCanada’s VP Brandon Rowland:

“Most shippers that move Cross-border freight dread reconciling freight invoices with customs clearance paperwork at the end of the month.  With this new program all applicable charges will be on one simple to read invoice.”

The Livingston / ShipCanada partnership was also a strategic move with long-term growth implications says Brandon: “When we started looking at brokerages to represent us on the front-line we knew we needed a company with a physical presence at all major border crossings as well the latest technology to facilitate online commerce.”

Shipping Canada from the U.S. will be handled in the same fashion as U.S. bound freight.  As ShipCanada eyes an increasing market for importing U.S. vehicles to Canada it remains to be seen how much of the new Customs service will be marketed to include non-commercial shippers who require the services of trucking companies with customs capabilities. 

ShipCanada.ca Advises U.S. & Canadian Shippers Ahead of G-20 Summit

ShipCanada.ca prepares U.S. and Canadian customers for the “unexpected” as Canada prepares to host leaders from around the world in what is expected to be the highest security G-20 summit on record.
Toronto, ON June 24, 2010 -- ShipCanada.ca, a leading 3rd party logistics company based in Ontario, Canada, is preparing U.S. and Canadian customers for what may become a logistical challenge as Toronto prepares to host the upcoming G-20 summit.
The G20 (short for Group of Twenty) was established in 1999 where leaders from the G20 countries meet regularly to discuss key issues in the global economy. This year, Canadian Prime Minister Stephen Harper will host the high profile event, which will see unprecedented security measures in place for the world leaders.

“While road closures and increased security represent a challenge, we hope the event ultimately enhances Canada’s international trade profile.”

In preparation for the summit, the city of Toronto, Ontario, has already initiated city wide security measures with parts of the city divided by security barriers. As a result many businesses, including banks, have elected to keep workers home. ShipCanada.ca, is also planning alternate routes for freight shipping to western Canada as the G-8 (another high profile forum), which takes place on June 25-26 in Hunstsville, ON, may see road closures which will impact northern and westbound trucking routes. The meetings which will take place at the Deerhurst Resort in Hunstville, ON will be the fifth G8 Summit hosted by Canada since 1976.
ShipCanada.ca, a division of Equitrans Express International Inc., (one of Canada’s 50 fastest growing companies according to Profit Magazine’s 2007 annual ranking), is a full service logistics company which focuses on cross-border trucking services for U.S. and Canadian companies. There are some positive aspects to hosting the summit according to Brandon Rowland, Shipcanada.ca Vice President: “While road closures and increased security represent a challenge, we hope the event ultimately enhances Canada’s international trade profile.”
ShipCanada.ca has also advised trucking companies in its network that all inbound Canadian shipments should be customs cleared well in advance before arrival at the border as customs staff may also be dealing with increased workloads.