Picking the Right Service Provider for your Freight 101

Hello fellow readers

Picking the right service for your freight is very important and can make or break your customer’s delivery experience. Knowing how to select the right service for your freight is a great start in becoming more efficient and showing the boss you mean business, or at least that you know how to conduct it. Being a freight broker, I have the luxury of seeing the freight industry from every angle, the good and the bad, and I hope that whoever reads this will part a little wiser. This post will focus on inland ground freight for domestic/cross border shipments, from low value to high value and palletized vs. non-palletized. Let’s get started!

When shipping domestically, and cross border, there are a few things to note. First, determine whether or not you require a cross-docked or direct service. This topic of conversation arises daily when quoting freight due to the nature of cost. Cross docking refers to freight being picked up by a short haul / city truck that will bring it to a holding facility and transfer it to a long haul truck that may or may not do this same process multiple times before the freight reaches its desired location. This service will most likely be the cheapest route but comes with a few deterrents; no guarantee for delivery times, multiple people handling your freight and an increased susceptibility to loss and/or damage. Although loss can be an issue, it does not happen all that often so let’s focus on damage. Most of the cross-docking services offer a maximum of 2$/pound in insurance on new items (only .10c/pound for used items) and unless an extra insurance clause has been sanctioned, you will be subject to this ruling. The reason this is important is because if your freight only weighs 500 lbs but is worth $5000.00, in the case of damage, the math is simple, you lose. If your freight is floor on a full truckload loaded (without a pallet/crate) I always recommend going the direct route. Direct shipping refers to a truck picking up your goods, driving it to the destination and unloading it (please note that direct does not mean exclusive and there will be stops along the way but only to pick up other clients orders) which will provide more accurate timing and less of a chance that your freight will be lost or damaged. Insurance for this type of service goes under a blanket truck load insurance and as long as the value is declared and recognised by the carrier and on the bill of lading it will generally be covered under the pertaining trucking companies insurance.

To sum this up
  • • If your freight is fragile, without a pallet, or requires special handling, choose a direct option for maximum safety.
  • • If your freight has a high value that exceeds the 2$/pound ratio offered by most companies, be sure to ask for added insurance and deeply consider the direct route
  • • LTL delivery times cannot be guaranteed because of other factors and companies that are involved; a direct option increases your chances of scheduled delivery times met.
  • • If none of the above applies, cross docking is the option best chosen.

Cross border LTL shipping is virtually the same ruling as above except for a few underlying factors: Customs clearance and Freight Class. I am only going to scratch the surface on this topic because it requires an equal amount of literature to explain in detail. Basic rule to follow is this, EVERYTHING GOING OVER THE BORDER COMMERCIALLY MUST BE CLEARED BY A CUSTOMS BROKER!!!! I cannot tell you how many times I have had to bail companies out because they fail to adhere to the governing laws of cross border shipments. Always be sure that you have your paperwork lined up and in working order because if you do not, one of many things can happen. I will list a few:

  1. 1. If you use a cross dock option with a big box provider and your shipment does not clear customs at the border… they will leave it in detention and it will accumulate costs until the customs issue have been resolved… at the client’s expense.
  2. 2. If you use a direct option and your freight does not clear, you will have held the truck up and would be on the hook for the layover bill (I have seen then as high as 350$/day)
  3. 3. If your manifest is not properly filled out and is stopped for inspection, border patrol has the right to dismantle your freight to determine if it is what the paperwork says it is. These bills can be a hefty 300$ + not including layover.
  4. 4. And the list goes on……

Freight class is another factor that, if not done right, can cost you unexpected fees. Freight Class (FC) is a classification system that determines the cubic density vs the NMFC (http://www.nmfta.org/pages/nmfc). It is an ancient system that was meant to protect truckers and trucking companies from volume and size density issues. Ie. Steel has a freight class of 65-85 whereas aluminium has a freight class of 150-250 (as the freight class goes up, so does the value of the freight cost). When shipping cross border, I would always recommend contacting an expert to determine your freight class to avoid surprise costs due to a “re-classing” (Re-classing is when the freight is deemed to be of a different FC and is re-rated atusually a higher cost). Feel free to contact me if you need any advice in determining your product’s FC ( chris.lawrence@shipcanada.ca ) .

Determining your freight expenditure via picking the right options is always the way to go. If you skimp on the shipping costs for a product that requires a more specialised service, you can lose money and valuable time. Do not forget how many man hours a year go into the production/manufacturing and the shipping process. Although not an advertised overhead cost, not only the value of the freight is in jeopardy, it is also the process that leads to the conclusion of your final fiscal profit. Make good choices, find the right people that have your best interest in mind and you will prosper.

Chris Lawrence.