Trending Now

Building a Resilient Supply Chain with Advanced Predictive…

New Articles

2024 Brings More Nearshoring and Freight Fraud

transfix fraud theft cargo global trade
3pls, Global Logistics, Global Trade Daily, Uncategorized

2024 Brings More Nearshoring and Freight Fraud

Leave a comment

Some market trends continue to take center stage over others as 2024 continues. We’ll see an uptick in fraud and theft as well as increased effects of nearshing on the Southern border. Industry experts need to stay knowledgeable in order to make well-informed decisions in advance of the new year. 

Nearshoring is moving some manufacturing into Mexico versus the Pacific region, and that is changing the way products flow into the U.S. in a great way. I don’t see that being reversed. We’ll continue to see more companies go into nearshoring. In Laredo, Texas, specifically, volume is up roughly 45% from a year and a half ago and capacity is being shifted to the border to meet demand. It’s important for shippers to have inbound capacity so you can properly source the outbound capacity that’s needed to import those goods. That is a challenge and the industry will have an adjustment period before settling in. 

However, the main trend that I want to focus on as we continue into 2024 is fraud and cargo theft in our industry. We’ve all recently heard about numerous fraud and cargo theft stories. We are looking into roughly 50-55% minimum increase of fraud from Q2 2022 to Q2 2023. And, in some lanes, activity is up well into a 200% fraud increase. 

What we’re seeing today seems to be a very sophisticated approach to fraudulent activity that is probably not U.S.-based. Not only does recent fraudulent activity in the industry include spoofing and tracking software, but also setting up fake domains for small and large carriers as well as fake domains for a third-party logistics company (3PL). Industry crimes are getting more and more complicated. Criminals create fake domains for email purposes that look almost identical to an actual 3PL’s domain and companies who do not take a second look will miss the small details and potentially fall victim to such crimes.

Bigger companies are getting better at spotting fraudulent activity but it’s the smaller mom and pop operators that need to be more vigilant. The small one to ten truck carriers may not have sophisticated cybersecurity practices in place to catch this kind of activity. That’s why they have to do their due diligence from where they’re getting a load. They need to always confirm it’s a 3PL that they’ve worked with or it’s a reputable 3PL with freight that’s actually being managed by that 3PL. The small 3PLs that may only cater to warehousing, receiving, and cross-docking, are the ones that need to stay current and educated on recent market developments and ensure there are standard operating procedures in place for every load. Small carriers and 3PLs need to have safeguards in place to prevent an erroneous load from shippers. In turn, shippers need to be involved and conduct due diligence on the personnel at a dock, warehouse or distribution center. Due diligence could be as simple as physically walking to the appropriate area to confirm the carrier picking up the load is the same as it appears on the bill of lading. It’s very easy to sign a rate confirmation and send it without paying attention but those extra few moments are the differentiators between being safe and falling victim to load scammers. Companies need to realize that it’s more beneficial and cost-effective to be proactive instead of reactive.

Industry movers need to keep these trends in mind as we move further into 2024. With a slower U.S. economy, nearshoring developments, and increase in fraud and cargo theft activity only shows that businesses have to be more vigilant and in-tune with market developments so that they can overcome incoming industry challenges head-on. 

Author Bio

Karl Fillhouer is the Vice President of Sales and Operations of Circle Logistics, a privately held third-party logistics company committed to delivering on three core promises to their customers: No Fail Service, Personalized Communication, and Innovative Solutions. Circle Logistics leverages its technology, industry experience, and employee ingenuity to develop industry-leading transportation solutions. For more information, visit https://circledelivers.com/. 

 

global trade shortage chain supply rose disruption identity
Global Logistics, Global Trade Daily

Overcoming Supply Chain Challenges: Navigating a Chassis Shortage

Leave a comment

When the COVID pandemic disrupted supply chains, its ripple effects were not immediate but have now presented new obstacles just as the industry was finding solutions. One pressing dilemma faced by the industry is the shortage of chassis, causing potential cost increases and inefficiencies.

One very serious example now facing the industry is a shortage of chassis, which is threatening to introduce a new round of cost increases and inefficiencies.

The pandemic slowed down the process of manufacturing new chassis. This could not have happened at a worse time. In the United States, each year, we now deliver approximately 35 million domestic and international containers from some sort of hub to a customer. Yet we currently have only 700,000 chassis available to facilitate those deliveries.

Many of those chassis should have been scrapped years ago, and the industry has been engaged in that process for the past five-to-eight years. But you can’t scrap chassis if you don’t get new ones, and chassis manufacturers are currently putting buyers on waiting lists that can require a wait of 18 months.

In lieu of a purchase, many carriers are looking to rent chassis, but supply is limited. Exacerbating the problem is the fact that other supply chain pressures at ports have turned too many chassis into long-term storage units, which is keeping them out of circulation for transport.

A supply chain without enough chassis is a nightmare scenario. Imagine the inefficiency of loading each container individually from an ocean carrier onto a flatbed trailer. Imagine the delays at ports – and the resulting demurrage fees – as carriers are forced to plod through such a process. It seems impossible that we could face such a situation, but the risk of it grows the longer the industry lacks the number of chassis the current volume demands.

The situation is presenting some real coordination challenges for 3PLs, carriers and shippers. Whether we’re talking about one-day or half-day moves within 100 miles of a hub, or longer moves of 300-to-500 miles from a hub, it is always difficult to coordinate getting the right number of chassis in the right location for the number of containers coming back.

Even the major carriers who own their own fleet of chassis to match their containers have to rely on available chassis to handle overflow during heavy-volume periods. Smaller carriers might have a pool of 10 or 20 chassis, but they will also do a lot of chassis leasing. Right now one company, an investment group known as Apollo, owns the majority of chassis that are available for lease in the U.S. 

Leasing can solve a problem in the moment, but any carrier is better off owning its own chassis. It’s critical for them to control the way their containers are being turned so chassis aren’t being turned into storage units. New chassis usually cost between $15,000 and $25,000, which is not a small investment but pales in comparison to the cost of not having them.

But when you have to wait 18 months to get the chassis you need, you do what you have to do. That is what far too many smaller carriers are facing right now.

And small carriers represent the bulk of the nation’s capacity right now, so they need solutions. Many of them who work with us are turning to what we call a power-only move, in which we get the driver and the tractor, then coordinate the equipment they need via rental or short-term lease. We spend considerable time making sure chassis are available, either from one of our pools or from one of the leasing companies we work with.

This problem is about to hit critical mass as peak season approaches. Most economists believe volume in August, September and October will be higher than in recent years. If it comes back as hard as the predictions we’re hearing, it’s going to suck up a lot of capacity and exacerbate the problems caused by the chassis shortage.

We’re already seeing the effects at the ports of Los Angeles and Long Beach, where growing volumes of cargo are being stored directly on the ground. Carriers hauling containers from the port of Chicago say they’re scrambling while providers search for enough mechanics to fix the chassis they have.

The only real solutions, until more chassis become available, are to tighten up protocols, use technology to maximize container visibility and take advantage of experts like 3PLs to eliminate as many inefficiencies as possible in the process.

Shippers and carriers cannot magically create more chassis, but they can safeguard themselves from the serious consequences of the shortage by improving their own operational efficiencies. The added benefit is that once the chassis shortage is resolved, these improved efficiencies will continue to benefit them.

Karl Fillhouer is the Vice President of Sales and Operations of Circle Logistics, a privately held third-party logistics company committed to delivering on three core promises to their customers: No Fail Service, Personalized Communication, and Innovative Solutions. Circle Logistics leverages its technology, industry experience, and employee ingenuity to develop industry-leading transportation solutions. For more information, visit https://circledelivers.com/. 

wwex iot market suppliers EMO logistics fuel warehouse
Global Logistics, Global Trade Daily, Trucking

Freight Cost Optimization: Reducing Deadheading, Factoring, and Fuel 

Leave a comment

Trucking industry market ebbs and flows are expected. Costs associated with operating a truck are also to be anticipated. During these times, partnering with a third-party logistics (3PL) provider can be very helpful for smaller fleet owners. 

How Carriers Can Easily Combat Frequent Obstacles in the Industry

Third-party logistics providers help carriers effectively reduce deadhead miles, accelerate their payment cycles, improve their factoring, and lower fuel expenses. Working with a 3PL that offers a wide range of loads can significantly reduce dead miles, thereby maximizing their earnings. Partnering with a reputable 3PL can provide carriers with access to a diverse pool of loads, enabling them to better manage their deadheading. 

1. Deadhead Miles

Truck drivers all understand this universal concept – driving without freight means losing money. This issue ranks high among the most frequent complaints from carriers in the supply chain field. Numerous factors that contribute to this problem are beyond the carriers’ control, such as labor, cost of the truck, and maintenance. However, one big factor carriers can control is dead miles.

Third-party logistics providers can help carriers minimize deadhead miles, which is key to maximizing profitability. To address this challenge effectively, small carriers can benefit greatly from partnering with a reliable 3PL that manages a vast network of available loads, which results in more volume and opportunities for closing the gap between where they made their last delivery and where they’ll pick up their next load.

According to a study conducted in 2021 by the American Transportation Research Institute, an average truck driver in the United States covers approximately 100,000 miles per year, of which around 20% are deadhead miles. This statistic emphasizes the financial impact of inefficient routing and underutilized truck capacity. 

Minimizing dead miles is crucial for truck drivers to optimize their financial returns. While various factors affecting carriers’ profitability are beyond their control, carriers do have options when it comes to finding ways to reduce deadheading, factoring, and fuel costs. 

2. Factoring

A small carrier can get into catastrophic trouble if they’re factoring their money, because they’re basically giving what would be profit away. Partnering with a 3PL with a carrier’s interest in mind means helping them to get the best loads and rates, especially when the market gets quiet.

Another crucial advantage of partnering with a 3PL is the ability to get paid quicker and enhance the factoring process. Third-party logistics providers often have established relationships with shippers, which enables them to negotiate faster payment terms for carriers. 

Carriers can benefit from quicker payment cycles that bring a steady cash flow to cover operational expenses, fuel costs, and driver wages. Some 3PLs even offer factoring services that are less expensive than a bank’s fees, allowing carriers to receive immediate payment for their delivered loads and eliminating the need to wait for payment from the shipper. This streamlined process not only helps carriers improve their financial stability but also reduces administrative tasks associated with invoicing and collections.

3. Fuel

Fuel costs continue to be a daunting pain point for carriers, especially with the unpredictable fluctuations in oil prices. But, partnering with a 3PL is an easy way to reduce fuel expenses through optimized routing and load consolidation. A reputable 3PL has access to advanced technology and data analytics, allowing them to plan efficient routes that minimize unnecessary detours and empty miles.

Through maximizing load utilization and minimizing deadhead miles, drivers can significantly reduce fuel consumption and, in turn, lower their overall fuel costs. This not only translates into financial savings but also contributes to a greener and more sustainable transportation industry.

Working with a trusted 3PL helps carriers increase profitability and operational efficiency by reducing deadhead miles, accelerating payment cycles, improving factoring options, and lowering fuel costs. 

With a straightforward approach and the right partnership, carriers can overcome hurdles, thrive in their business, and build a brighter future for themselves and their drivers.

Karl Fillhouer is the Vice President of Sales and Operations of Circle Logistics, a privately held third-party logistics company committed to delivering on three core promises to their customers: No Fail Service, Personalized Communication, and Innovative Solutions. Circle Logistics leverages its technology, industry experience, and employee ingenuity to develop industry-leading transportation solutions. For more information, visit https://circledelivers.com/. 

 

freight
3pls, Archives, Global Logistics, Global Shippers 101, Global Trade Daily

Logistics Providers Have a Higher Calling than Freight’s ‘Middleman’

Leave a comment

Since the domestic onset of the COVID-19 pandemic last March, logistics providers and freight brokers have had to deal with two extremes in the market — and in short succession.

In the initial economic fallout in the first few months of the pandemic, freight volumes sank, and so did per-mile rates. There simply weren’t enough loads to go around for all of us who make a living moving freight, and the slowdown happened so fast, we were all left searching for answers.

At least I know here at Circle Logistics, we weren’t immune to that sudden freight vacuum.

But then as the recovery gained steam, freight volumes hit a warp speed, seemingly making up for lost time last spring and due to consumers spending money on hard goods rather than services or entertainment.

Behind that pendulum swing, logistics providers this year have faced a tall task in keeping up with the demands of their shippers. There’s been a dearth of transportation capacity, and 3PLs have often had to book loads at a loss to make sure we take care of our shippers.

Between freight volumes slamming the brakes in spring of 2020 and then mashing the throttle this year, I’m sure we as an industry will glean many lessons from the trials we’ve weathered.

But there’s a fundamental lesson staring us in the face right now: We have to pivot our industry away from transactional deals and work to create real, trusted relationships with each other.

This involves all of us — shippers, brokers, and carriers. We’re at a precipice in the logistics industry, and it’s incumbent upon all of us to heed the requirements of this new world. That starts with ditching the old ways and forging a path in which mutually beneficial relationships rule, and in which we utilize those relationships to help manage the current crisis and any future events that occur.

For freight brokers and 3PLs, first and foremost, this starts with shedding the label of a freight  industry “middleman.” That might have been true of yesteryear’s freight broker. You know the type — the guy at a desk working a big landline phone with four or five different lines connected into it. But it absolutely cannot be true of a modern logistics provider.

We need to be viewed as a valued, trusted source of market information and trucking capacity by our shipper customers. And we must be viewed as a business partner of our carriers — a sales team working to find loads that fit their lanes and rates, a dispatcher trying to get them backhauls, and someone who they’d turn to for a load over taking a chance on a random broker from a loadboard, even if it pays a little better.

By building these relationships on both sides, you can ward off the situation where shippers try to pit 3PLs and brokers against each other in negotiations. Or the situation where you try to squeeze a carrier for a few pennies a mile on a one-and-done load and then find you need their service a few weeks or months later for a different load.

Will every freight transaction be this way? Of course not. Logistics providers still have to turn to loadboards to find carriers, and carriers will still have to utilize some one-time deals to reposition or simply keep the wheels turning.

Also, shippers’ procurement managers will still mostly be working to find transportation services at the best cost for their company. They still have a boss to answer to, too.

But what I hope has become a stark realization during these turbulent times is that we’re all in this business together, for better or worse. Shippers need their freight hauled. Carriers need loads to move to keep their operations afloat and their bills paid. And freight brokers and 3PLs, more than ever, are the conduit to bridge those two parties’ needs.

In an 18-month span which has seen both ends of the spectrum — carriers unable find loads at sustainable rates and shippers unable to find capacity — the new calling for freight brokers has been laid bare: We must work to build the relationships that keep goods moving and keep the supply chain chugging. Anything less is a step in the wrong direction.