Freight 101Public Education Partnership SeminarSeptember 1, 2015

Freight 101- Talking Points

• Freight Management• Types of Transportation• Shipping Glossary •Rates• Terms from a purchasing perspective•Claims• Selecting a Carrier

Freight Management

Definition

• To handle or direct with a degree of skill, to exercise executive, administrative and supervisory direction of the loading and transporting of goods that need to be shipped or transported from one destination to another resulting in compensation.

Importance

• Ability to analyze True Cost• Effective management

can mean BIG savings

Types of Transportation• Parcel: Small package, Good transit times, multiple levels of

service standards. • Air Freight: Shipments less than 2,000 lbs, fastest transit

available. Premium rates.• Intermodal: Containers moved via rail, ship or truck

Types of Transportation

TL: Truckload• Large loads• picks up in one location and delivers to the final

location. • No additional labor requirements to support what the

driver is doing.• Economical way to move large amounts of freight• Good transit time

Types or Transportation

LTL: Less than Truckload• Smaller Shipment (less

than 10,000 lbs)• Consolidate Single Pick

ups to destination• Additional services

available• Competitive Transit

Times including overnight service

Shipping Glossary• Bill of Lading (BOL)• A binding contract that

serves two main purposes. 1: a receipt for the goods delivered to the transportation provider for shipment. 2. a definition or description of the goods and services required

Shipping Glossary• Deliver Receipt (DR)• Document a consignee

or its agent dates and signs at delivery, stating the condition of the goods at delivery.

• COD (Collect on Delivery).

A shipment for which the transportation provider is responsible for collecting the sale price of the goods shipped before delivery

Shipping Glossary

• Common Carrier: Company that provides transportation services to the public in return for compensation• Contract Carrier: Company that provides a

dedicated fleet to a customer in return for a contractual rate. • Tariff: A document setting forth applicable rules,

rates and charges to move goods• NMFC: National Motor Freight Classification

Shipping Glossary

• Trailers: Pup (28’), 40’, 45’, 48’, 53’• Combinations of the above

• Dolly/ Convertor Gear: Provides and extra axle used to connect multiple trailers• Hazardous Materials: Defined by the US DOT as

being a substance that if transported poses an unreasonable risk to the health and safety of property.• Pro: Number used by carrier for tracking

shipment

Rates

Truckload (TL)Truckload

• Rates are determined using a per mileage rate.• Rates can vary based on

capacity in a certain lane

Info needed for accurate quote

• Origin zip code• Destination zip code• Special services.• Refrigerated • Delay time

Rates

LTL: Less than truckloadLTL: Less than truckload

• Rates are based on factors including weight, density, classification of freight, distance, base rates, freight all kinds, minimums, tariff, discount, accessorial/surcharges

Info needed for accurate quote

• Origin and Destination zip codes• Class• Accurate weight• Additional services

required• Oversized or capacity

Rates

Accessorial Charges• Fuel Surcharge: Every carrier has their own

fuel chart that will show a fluctuating rate based on the national average supplied by the DOE. This amount is added to the freight charge only portion of the bill

• Liftgate, Inside, Non-Commercial Delivery: With increased time, liability or special equipment needs at an all time high, Shippers must protect themselves by knowing the needs of their customers.

Freight Terms

•What does F.O.B. mean? • Free on Board refers to when the title of the shipment

transfers from buyer to seller.

F.O.B Origin: means that the title to the merchandise passes at the time of pick up

F.O.B. Destination: means that the title of the merchandise passes at time and place of delivery

Importance of Freight Terms• Terms must be stated

at the time of purchase as either FOB Origin or FOB Destination. Additionally the method of payment for freight charges should be designated as Collect, Prepaid and added or Prepaid and allowed.

• These two items clarify the following:• Determines who

claims freight loss or damage• Determines when the

buyer accounts for the assets. (applicable tax)• Determines who pays

freight

Freight Terms

Importance of analysis• Request a bid from vendors including the price of

goods based on both F.O.B. Origin/ freight collect and F.O.B. Destination/ freight prepaid and allowed• The difference between prices is the vendors

freight allowance• Compare with state freight rates• Proper analysis ensures the bid is awarded

utilizing the optimal carrier rates with no change in transit times or service

Claims• Shipper, Consignee, or

third party who has the title to the goods may file a claim

• Claim should be filed within 9 months of the date delivered and should include a copy of the original invoice, inspection report, BOL or DR as well as any supporting material. Ie. photos, description, exact notation of damage or loss

• Goods must be retained along with all packaging material.

Freight Savings

• Additional tariff options.• Volume Rate: large loads, shipper load/consignee

unload, pay for linear ft. used of a trailer• Pallet Rate: 48*40 pallet, flat rate, works well with

heavy pallet shipments• Backhaul lanes• Draw backs; Alternative/ Reduced liability; Transit

limitations

• Proper packaging• Claims are time consuming and costly. Work with your

carrier for advice on proper packaging that will reduce damage.

Selecting a carrier

• Consider the factors necessary to make a good decision.• Transit time: direct service, guaranteed delivery• Service/ History• Rates• Relationship: Freight is a service based trade.

It is important to get familiar with your freight vendors. Establish a good relationship that allows your carrier to provide input and search for a win/win solution.