2021 Q3Market Update

September 2021

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Q3 MARKET UPDATE

Stay informed about freight market conditions and other factors that can impact your supply chain. In this Market Update, we cover the following: Truckload, Less-Than-Truckload, Intermodal and International (Ocean & Air).

THIS ARTICLE COVERS

  • Tight capacity forecast through 2022
  • Upward pressure on pricing for all markets due to increase economy output

MARKET UPDATE OVERVIEW

As we continue to navigate the uncertainty that Coronavirus (COVID-19) has brought throughout the first half of 2021, we recognize the ongoing transportation industry constraints. From capacity to driver shortages to the rise in cost of products, the industry is still facing several challenges as we near the end of Q3. Although the industry continues to face these challenges, the service sector is beginning to normalize and we anticipate a continued rebound in Q4.

As we discussed in our Q2 Market Update, the overall common theme for 2021 as it relates to the transportation industry is capacity will remain tight and it will have an impact on cost constraints and cost increases. We are still facing the challenge of meeting demand as we end Q3. In the remainder of this blog, we will take a deeper dive into SUNTECKtts’ core services to gain a better understanding of the market impacts.

TRUCKLOAD UPDATE

As Truckload volumes continue to climb through Q3, the industry faces several challenges including port congestion, a significant rise in inflation costs, as well as demand spikes. Retailers across the country are beginning to raise prices on goods such as toilet paper and diapers to offset shortages and shipping costs. Due to the added demand for volume, we can expect to see increasing rates through the end of the year.

The Truckload market continues to struggle with capacity and one of the many reasons is driver shortages. To help combat driver shortages, many trucking companies offer huge wage increases to attract drivers to the industry. However, we have seen extremely competitive job markets, such as construction and warehousing struggling to fill positions. Couple that with the e-commerce boom which created an uptick in driver demand as several hundred thousand courier driver positions were filled, reducing the amount of  CDL candidates.

In addition to driver shortages, we are seeing semiconductor, parts and raw material shortages which crimped production schedules at equipment manufacturers. Many carriers are running multiple months behind in truck deliveries, directly impacting the supply chain. The combination of these supply chain challenges negatively impacts the ability for carriers to buy new tractors and obtain new equipment, much less finding drivers to seat them.

Q3 does not look to be settling down anytime soon as COVID-19 restrictions are lifting at a faster pace than most anticipated and the US is returning back to restaurants, bars and other dining establishments. The increase in demand causes additional strain on the food supply chain and the  effect is creating volatility within the industry and the rise in rates.

LESS-THAN-TRUCKLOAD UPDATE

Quite frequently, you will see the Truckload capacity correlating with the LTL market. When Truckload capacity is tight, shippers will utilize LTL more frequently, particularly on larger shipments. Larger Truckload shipments will likely be divided into two LTL shipments, which further congests LTL carriers, who are also competing for outsourced linehaul capacity. Due to LTL carriers currently being at or above capacity, many have embargoed certain areas, with some setting lower limits to weights or lineal feet they will pick up.

The lack of supply, with no end in sight to the increasing demand, has an obvious impact on pricing. LTL rates continue to rise faster than normal. National carrier rates are rising quickly and at higher levels than regional carrier rates, as national carriers rely on longer linehauls and purchased transportation.

Finally, these market conditions are impacting service levels. Much like with rates, shorter haul lanes tend to be faring better than longer haul lanes, where bottlenecks are more likely to delay shipments. Most carriers have suspended refunds on their guaranteed products, as they simply have too many shipments delivering after the standard service days.

INTERMODAL UPDATE

As we near the close of Q3, Intermodal demand has remained strong for both the Domestic and International product lines. Intermodal service components, both rail and drayage, remain at capacity utilization levels where demand dramatically exceeds service capabilities. As a result of many months of operations at extremely high-capacity utilization levels, many railroads have taken steps to improve network throughput prior to Peak Season.

On the Domestic product, rail services have been market-focused with the intention of maximizing network velocity, specifically car and container turn-times. Certain metro areas have had volumes metered inbound to avoid rail ramp congestion gridlock as chassis and parking constraints reached critical points.

On the International product, many US ports have experienced record Q3 levels of imported containers. In a similar fashion, inland international terminals reached gridlock due to vessel bunching and slower than anticipated container deliveries to end customers – exceeding parking and chassis capabilities. The congestion seen at Chicagoland terminals forced a weeklong embargo on inbound containers from the Port of Los Angeles/Long Beach.

While the current level of service is less than desirable, discussions with the railroad service providers is encouraging and points to efforts being made to streamline network operations that will, in turn, lead to a higher level of service consistency in the future.

We continue to see upward pressure on rates from all intermodal providers in the form of both linehaul and accessorial increases. Accessorial costs associated with terminal storage and equipment usage will continue to increase with the intent of driving higher utilization levels for chassis, container, and terminal parking. Surge pricing instituted in Q2 remains in effect and has been extended to many historically non-Peak Season markets.  Our expectation is that these charges will remain in place through year-end.

Shippers should evaluate inventory lead-times with the expectation that there exists the real possibility that transit times will be altered in Q4 to ensure greater consistency in on-time performance. The continuing levels of strong International and Domestic demand will present service challenges, but with planning and dialog, service issues can be minimized. Together, with all the service providers in the Intermodal supply chain committed to increasing velocity and levels of service, the Intermodal product will make the continuous improvements required to support long term volume growth.

INTERNATIONAL: OCEAN & AIR UPDATE

With a significant rise in COVID-19, especially with the Delta variant, the concern right now is that many countries have reported being worse off than they were in mid-2020. 

Several Southeast Asian countries are essentially on full lock-down quarantine. As a result, both manufacturing and marine operations are operating at a fraction of full capacity and some have shut down completely.  Because of the heightened focus on the Asia to US trade, particularly the return of empty containers to Asia, finding space for US exports is a significant challenge and rates are substantially higher than we’ve seen since 2019. Ocean carriers are prioritizing the return of empties over loaded US exports due to the high revenue potential of reloading the imports.  

Non-stop demand and scarce capacity made worse by delays are also keeping freight rates climbing. Since late July, prices from Asia to the US West Coast, including typical premium surcharges, increased more than seven times their level a year ago. Large volume importers are reporting they are receiving only 10-20% of their volume moving under their negotiated contract levels.  All other volumes are moving at FAK or Premium levels. Ocean carrier capacity levels are the highest they have ever been. The issue is not the number of vessels or the slot capacity but rather the effective utilization of those vessels. Transit times, including cargo staging at origin and the vessel voyage, from Shanghai to Chicago via the port of Los Angeles/Long Beach have more than doubled. Resulting in transit time taking approximately 146 days for a container to circulate back to the point of origin for reloading, effectively reducing “functional” container capacity by 50%.

IN CONCLUSION

As we move into Q4, MODE continues to work closely with carriers to ensure any embargoed areas have additional carrier options to provide consistent service through this large capacity crunch. Looking into Q4, we anticipate a continued rebound, and hope the uncertainty that the Coronavirus (COVID-19) continues to bring begins to settle.

For more detailed information regarding SUNTECKtts’ view on the transportation market, please reach out to marketing@modeglobal.com.

ABOUT SUNTECKTTS

With over 200 offices throughout North America, we solve a vast array of domestic, international, air, and ocean transportation challenges. Our shipping expertise encompasses small parcels, LTL, truckload, intermodal, air, ocean, and supply chain solutions to ensure every need is met. 

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MODE GlobalAnnounces Acquisition of RR&F Logistics

DALLAS, August 10, 2021 — MODE Global, LLC (“MODE Global” or the “Company”) announced it has completed the acquisition of RR&F Logistics (“RR&F”). RR&F, an agent of SUNTECKtts, is based out of Rochelle Park, NJ offering full-service transportation services throughout North America. Following the acquisition, MODE Global will now facilitate more than 1.5 million annual customer shipments and generate almost $3 billion of revenue.

The Company offers a broad range of capabilities across all major modes of transportation including truckload, less-than-truckload, rail intermodal, drayage, air, ocean, and parcel freight. The Company will leverage its increased scale and resources to continue investing in technology and innovation for the benefit of its agent, shipper, and carrier communities.

“We are excited to announce this transaction with RR&F Logistics, an agent of SUNTECKtts. RR&F’s knowledge in the transportation market will continue to enhance MODE Global’s service offerings,” commented Lance Malesh, MODE’s CEO & President. “The acquisition allows us to continue the build out of our operational capabilities to support our strong network of customers and agents.”

“We are truly excited to join the MODE Global team and look forward to continuing to grow our business and provide our clients with unmatched service,” said Gregg Romanzo, RR&F Logistics co-owner.

“In a highly competitive industry, having the right team to deliver excellent service is priority one. We couldn’t be happier to now have the MODE Global team and their expertise to help our continuing growth,” stated Norman Frigon, RR&F Logistics co-owner.

“We look forward to leveraging our customer-centric approach with the tremendous opportunities and resources MODE Global provides,” said Anthony Russo, RR&F Logistics co-owner.

About MODE Global

The MODE Global Network of Companies is one of the nation’s leading logistics and transportation providers. With over 30 years of experience, MODE Global provides efficient reliable service to more than 10,000 customers across a diverse set of end markets and modes of transportation. MODE has relationships with over 75,000 carriers and operates from over 230 offices throughout North America.

About SUNTECKtts

SUNTECKtts operates as a multi‐modal transportation solutions provider through a network of sales, operations, and capacity specialists. The company offers a business process outsource program through which independent agents represent SUNTECKtts in the freight transportation marketplace. This agent network services shippers throughout the United States and Canada.

About RR&F Logistics

RR&F Logistics (SUNTECKtts NYC) is one of America’s top Third-Party Logistics providers (3PL). RR&F Logistics, an agent of SUNTECKtts located in Rochelle Park, NJ, Acton, MA and HQ in Jacksonville, FL. RR&F is a full-service, transportation logistics provider that operates through a network of sales, operations, and capacity specialists.

Media Contact:
Amy Nash
Director of Marketing
amy.nash@modeglobal.com  
972.972.7334

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SUNTECKtts Q2Market Update

Stay informed about freight market conditions and other factors that can impact your supply chain. In this Market Update, we cover the following: Truckload, Less-Than-Truckload, Intermodal and International (Ocean & Air).

MARKET UPDATE OVERVIEW

The Coronavirus (COVID-19) threw a level of uncertainty into 2020 for the transportation industry with ongoing constraints into 2021.

Although our economy is poised for growth this year, the acceleration we have experienced over the last six months has impacted the timeline of capacity and the ability to meet demand is a continuous challenge across the transportation market.

We continue to see a decline in the service sector with growth in the durable goods sector. As the service sector begins to normalize, we anticipate a rebound for this sector within Q3 and Q4.

The overall common theme for 2021 as it relates to the transportation industry is capacity will remain tight and it will have an impact on cost constraints and cost increases.  In the remainder of this blog, we will take a deeper dive into the core services by SUNTECKtts to gain a better understanding of market impacts.

TRUCKLOAD UPDATE

Truckload volumes were strong at the start of the year with tight capacity. In mid-February, we had a significant weather event causing volumes to shoot up quickly and the demand has only increased throughout Q2.

As a reminder, carriers reject loads on contracted pricing for two reasons. They either truly do not have capacity, or the rates have climbed to a point where they are servicing other shippers at high spot market rates vs contracted rates. It would appear that things were starting to calm down until the weather event in February. Although tender rejections were trending down, carriers were still at an extremely high rejection rate of 20%.

What we have discussed thus far is what has already occurred, let us now review a few items to be aware of. It is clear weather has had a huge impact; however, the Truckload market was already struggling with capacity due to driver shortages and changes to insurance requirements.

One of the primary reasons we keep hearing about driver shortages not improving is The Drug and Alcohol clearinghouse rules. They are now preventing drivers from going to a new carrier to get hired immediately after being fired for drug and alcohol issues from their previous employer. Last year there were over 56,000 violations and of those violations 45,000 lost their jobs. The drivers are given an opportunity to complete a return-to-work program to begin driving again. The most concerning stat that we are seeing is 75% of drivers who lost their jobs have not completed the program. While we agree with the clearinghouse rules, it has resulted in a high number of drivers being removed from the market within the last year.

Another item to be aware of is insurance changes.  The cost of insurance for owner-operator and trucking companies is high and still rising. The minimum insurance requirements are being reviewed and could potentially increase from $750k to $2 Million.  If that passes, it could cause a number of trucking companies to shut down and rates to go up immediately.

LESS-THAN-TRUCKLOAD UPDATE

As you can imagine, the truckload market tends to impact what we see in the LTL market. When truckload costs spike, shippers will start to push the envelope on larger LTL shipments to avoid having to pay higher rates. Sometimes it is simply a capacity issue where they are unable to locate a truck in a given lane, so they look to LTL.  Additionally, LTL is directly impacted by purchased transportation. Carriers will look to the linehaul network for purchased transportation to keep from getting their equipment out of balance, or simply when volumes spike, they have additional options.

When we see service issues with LTL carriers it is important to keep in mind just how vastly different the amount of capacity is from Truckload to LTL.  Due to the barriers to entry, there are no new LTL carriers of size entering the market.  Occasionally you may see a startup with a consolidation model, however, most are brokering LTL freight to carriers with capacity.

LTL rates are currently on the rise.  The LTL blanket pricing programs are used by carriers as a dial to turn volume up in a given market when they want it and turn it down when they don’t.  One way they do this is by adjusting the pricing. This year we are expecting national carriers to take sizable price increases. This can vary by lane and depend on the carrier.  Some carriers are standardizing the base rates across all blanket programs. When this occurs, lane rates often double.

The other method to reduce volume would be to put embargos in place.  The hot spots are Southern California, Oregon, Oklahoma, Texas, Tennessee, Chicago, Pennsylvania, and New Jersey – and as discussed when one carrier makes a change it impacts others quickly.  One part of purchased transportation that many large LTL carriers have historically relied on is Intermodal for their linehaul capacity.

INTERMODAL UPDATE

As with other modes, intermodal demand has been very strong since early summer of 2020 and will continue well into 2022.  Intermodal services are experiencing challenges with a surge in domestic and international volume.  The large increase in volume has created an environment where majority of North American railroads are at capacity.  Within all rail networks, to allow trains to effectively move each week, it is critical to keep operations fluid.  To do so, many railroads have implemented changes to their intermodal operations. One change we have seen is precision railroading. Precision railroading allows longer trains to continue running from one origin to the next with limited stops.  This is an effort to streamline processes to ensure consistent transit. While the current service can be seen as less then desirable, these efforts will lead to much more consistent intermodal service in the future.

The job of intermodal marketing companies (IMC) has become much more complex over the past two years.  Railroads are now requiring the IMC to execute the following:

  • Reserving equipment
  • Reservations to bring a shipment into an origin rail ramp
  • Have a shipment depart a destination ramp within 24 hours of arrival (regardless of if the railroad was on time)
  • Manage a seamless product to customers

Because of these changes, it is taking a significant amount of time to execute a proficient intermodal shipment.

Throughout 2021, we have seen upward pressure on rates from all intermodal providers, in linehaul increases and accessorial increases. Additionally, we are seeing some carriers exit lanes altogether simply because the lanes do not match their network. As we move forward into Q2, we expect pricing will continue to increase. Price changes will have more of an effect on new users than long-term users of intermodal services. You can also expect accessorial costs to increase to assist the railroads in improving the utilization of containers and keeping the terminals operating fluidly. Some railroads have already instituted their Peak Season Surcharge and those charges will most likely remain in place throughout 2021.

Shippers should expect that there will conversations about potentially changing transit times to ensure more consistent on time performance and that the North American rail network will continue to see increased volume.  The high volume leads to challenges, but with planning and dialog, service issues can be minimized.

INTERNATIONAL: OCEAN & AIR UPDATE

When it comes to the current international market condition, there are two primary drivers – extremely high demand from US importers and the ocean carrier’s collective reaction to elevate rates to record high levels.

Fueled by consumers being at home more during quarantines and government stimulus money, the retail segment has seen incredible sustained volume demands starting in Q3 2020. Retail volume forecasts are expected to be up nearly 25% YoY in the first half of 2021. Some are predicting similar levels extending well into the second half of the year.  The vast majority of these high demand retail items (home furnishings, furniture outdoor items, fitness equipment, electronics, etc.) are sourced by US importers from Asia. This huge spike in demand has put a serious strain on the Trans-Pacific container trade.

The ocean container trade has struggled to handle this volume increase and has reacted by pushing ocean rate levels to record highs, which have remained high for several months. Although Trans-Pacific Ocean spot rates have stopped climbing, and in some cases pulled back slightly, the rates remain at record high levels.

As a result, three categories of ocean carrier rates have emerged in the market and are being offered by carriers to handle volumes. Contract rates, FAK (Freight All Kinds) spot rates and now “premium” rates. These “premium” rates which are thousands higher than FAK spot levels are essentially rates based entirely on shipper’s urgent need to move more volume and a willingness to pay whatever it takes.

Importers have shown no slowdown in their demand for more volume even in the face of these unprecedented rate levels. Available capacity is extremely tight on all Asia to US services. Booking delays and cargo rolls are significant. Empty equipment shortages in Asia are also a serious concern as many US importers are holding containers longer and carriers struggle to get empties loaded on vessels to get back to Asia.

One ongoing threat is port congestion and slower throughput at most major US ports to handle volumes coming in faster and with larger vessels. Ports of Southern California has suffered the worst congestion it has ever seen. Vessels waiting for a berth at port are being staged (at anchor) outside the port in record numbers. One key distinction compared to other congestion years is the larger size of vessels deployed now. The average size of vessels at anchor in February were ships that could hold 14-15,000 TEU (Twenty Foot Equivalent) containers. In 2015, the last major congestion, the largest vessels sailing was 10,000 TEU. The challenges we are facing are amplified by the larger vessels in the trade today.

The takeaway from this situation is loaded containers will be delayed coming into the US, but the larger challenge is vessels will quickly get out of rotation in their regular schedules, thus creating missed sailing opportunities back in Asia.

The long-term forecast for 2021, is that until demand for imports slows substantially, not much is going to change in ocean trade. Capacity will remain extremely tight into Q4 of 2021 and equipment imbalances could also add to that scenario. Contract ocean import rates for 2021 (established on May 1st) could be as much as 60-100% higher compared to 2020 rate levels. In conclusion, for much of 2021, most import customers are going to struggle to find capacity and they will be paying significantly higher rates compared previous years.

ABOUT SUNTECKtts

With over 200 offices throughout North America, we solve a vast array of domestic, international, air, and ocean transportation challenges. Our shipping expertise encompasses small parcels, LTL, truckload, intermodal, air, ocean, and supply chain solutions to ensure every need is met.

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MODE TransportationAnnounces Appointment of Lance Malesh as President & Chief Executive Officer and Jim Damman as Chairman

DALLAS, TX November 4, 2020 — MODE Transportation (“MODE” or the “Company”), a leading multimodal third-party transportation and logistics provider, announced today that Lance Malesh has been appointed President & Chief Executive Officer of the Company. Jim Damman, who has led the Company as President & CEO for over 15 years, has been appointed Chairman of the company.

These actions are the result of a carefully planned leadership succession process undertaken by Damman and the Board to ensure the continued success of MODE for years to come.  Damman and Malesh will be working closely together to execute a comprehensive transition plan. Following the transition, Damman will continue to work with Malesh and the Board to drive the strategic agenda for the business. 

Jim Damman was named President of MODE in 2004. “On behalf of the entire MODE organization, we want to thank Jim for his leadership and dedication to MODE’s agent, customer and carrier partners over the last 16 years,” said Daniel Gluck, Managing Director at York Capital. “During his tenure, the Company consistently expanded its agent and customer relationships, more than tripling revenues to over $2 billion. We are excited to welcome Lance to the company and look forward to him perpetuating MODE’s strong growth and leadership in the transportation and logistics industry.”

Lance Malesh is an accomplished senior executive with 20 years of experience in technology, operations, sales, and marketing. Combining his extensive experience, along with a hands-on management style, he has helped companies implement new technologies and business strategies that have driven growth and profitability. Malesh most recently served as Chief Commercial Officer for BDP International and previously was President / CEO of BridgeNet Solutions.

“I am pleased to announce Lance’s appointment to the President & CEO role following a comprehensive search,” said Jim Damman, “It was important to me to find a strong successor to lead the great people at MODE Transportation into the future, and I am confident that Lance will accomplish great things at MODE. I look forward to working with him and the Board in my new role.”  Lance Malesh said,“Jim and the MODE organization have a rich history, and I look forward to working with the team and partners to help build upon the strong foundation that is in place.”

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MODE Transportationand SunteckTTS have Combined, Creating a Leading Multimodal Logistics Provider with over $2 Billion of Revenue

DALLAS, TX December 10, 2019 — MODE Transportation (“MODE” or the “Company”) announced today that it has completed the acquisition of SunteckTTS Inc. (“SunteckTTS”).  The two companies are leading multimodal third-party transportation and logistics providers that combined will facilitate more than 1.5 million annual customer shipments and generate over $2 billion of revenue.

The combined Company will offer a broad range of capabilities across all major modes of transportation including truckload, less-than-truckload, rail intermodal, drayage, air, ocean and parcel freight. The Company will leverage its increased scale and resources to continue investing in technology and innovation for the benefit of its agent, shipper, and carrier communities.

“MODE and SunteckTTS together will create one of the strongest and most customer-focused multimodal 3PLs in the industry,” said Jim Damman, CEO of MODE Transportation.  “We are excited to leverage our combined talent and expertise to bring an enhanced suite of capabilities and creative solutions to our customers, agents and carriers.”

“Since the announcement of the combination of MODE and SunteckTTS, we have received overwhelmingly positive feedback from our employees, agents, carrier partners and shippers. We are excited about our new team and capabilities and look forward to integrating our platforms and gaining the benefits of this industry changing transaction,” said Ken Forster, President and COO of MODE Transportation (formerly CEO of SunteckTTS).

MODE is a privately held portfolio company of funds affiliated with York Capital Management. MODE received legal advice from Kirkland & Ellis, LLP. SunteckTTS is a portfolio company of funds affiliated with Comvest Partners, who will continue to own an interest in the company following the completion of the transaction. SunteckTTS was advised by Piper Jaffray and McDermott Will & Emery.  

About MODE Transportation

Founded in 1989, MODE Transportation is a leading North American third-party transportation and logistics company. MODE serves more than 3,500 customers across a diverse set of end markets and modes of transportation. MODE has relationships with over 35,000 carriers and operates from over 100 offices throughout North America. The Company is headquartered in Dallas, TX.

About York Capital

York Capital Management is a global private investment firm that was established in 1991.  The firm manages approximately $18 billion in assets across public and private investment strategies, including its private equity platform, the York Special Opportunities Fund.  York Capital employs approximately 60 investment professionals and 200 total employees globally, primarily in New York, London and Hong Kong.

About Comvest Partners

Comvest Partners is a private investment firm providing equity and debt capital to middle-market companies across North America. Since its founding in 2000, Comvest has invested over $4.7 billion. Today, Comvest’s funds have over $3.7 billion of assets under management. Through our extensive capital resources and broad network of industry relationships, we offer our companies financial sponsorship, critical strategic and operational support, and business development assistance.

For more information about MODE Transportation, visit www.modetransportation.com

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LTL 101:Cubic Capacity

Do you know how Cubic Capacity can affect your shipments?

Almost every carrier we utilize through our LTL platforms has a cubic capacity rule in their rules tariff that may affect any of your shipments. LTL carriers impose minimum cubic capacity rules to effectively counter very light, fluffy shipments that take up more than their fair share of a trailer.  In most cases, LTL carriers state that if a shipment consumes 750 cubic ft. of space     or more, AND the shipment has a density of less than 6 pounds per cubic foot (pcf), it’s not paying its fair share.  While the rule varies dramatically amongst carriers, most artificially adjust the weight to a minimum of 6 pcf, AND apply a class of 125 or 150 to the commodities being shipped with their associated tariff rates.  Most carriers use the 750 cubic feet as the threshold, but not all.

This week we wanted to clarify what to watch for with Cubic Capacity by providing an example from XPO:

XPO is now enforcing their standard cubic capacity rules on all tariffs. What this means is that shipments requiring 350 cubic ft. or more of the trailer with an average density of less than 3 pcf will have the weight calculated differently then what the actual weight is. Yes that is correct, the actual weight will not matter!

350 cubic ft. of the trailer equates to approximately 5.46 linear ft. of the trailer so you can see that we are severely limited on the amount of skids of LTL we can ship when the density is below 3 pcf.

As an example, for two pallets of LTL, cubic capacity would be calculated as follows.  Please note that the carrier uses the actual height (96”) of the trailer when they look at the cubic capacity of the shipment, not the actual height that the shipment might be:

One skid = (40” x 43” x 96”) / 1726 cubic inches per cubic ft. = 95.67 cubic ft. x two skids = 193.34 cubic ft.

You can see that this falls way under the 350 cubic ft. rule so we are safe to ship this with XPO.

However, if you want to ship 4 skids, the cube of the shipment is now double at 386.68 cubic ft. which is outside of the cubic capacity limit. The only way you could ship this as an LTL shipment is if the density of the shipment was greater than 3 pcf.

Four skids with a total weight of 500 lbs., the density would be the 500 lbs. / 386.68 cubic ft. = 1.3 pcf. 

If we shipped this LTL, we would be hit with the cubic capacity rule and our cost would skyrocket.

Four skids would have to have a total weight of 1161 lbs. or greater for us to be able to ship them as a standard LTL shipment with no problems. 1161 lbs./386.68 = 3.0 pcf.

Below is the actual excerpt from the XPO rules tariff:

rules tarriff
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LTL 101:Volume vs Standard LTL Moves

We have great rate engines in place to obtain quotes on standard LTL moves, but do you know when not to use a rate engine?  LTL carriers will impose limits within their tariffs (that vary with every carrier) to limit moving shipments that are too large for their network. Some carriers structure their operations to carry volume LTL shipments while others do not. Volume quotes, also known as Spot quotes, should be obtained based on the below in order for you to get the most economical rate.

Single shipments with standard size pallets (48x40x48) that are stackable:

  • 1 – 8 pallets is best for standard LTL quotes (unless the weight exceeds 8,000 lbs., then pursue a volume LTL quote)
  • 9 – 10 pallets pursue a volume LTL quote or a partial TL quote
  • 11+ pallets pursue a volume LTL, partial TL, or even a TL quote

LTL carriers will rate any single shipment up to 19,999 lbs. as LTL but it will be costly:

  • 8,000 – 10,000 lbs. shipments could be considered as partial TL’s and quoted accordingly
  • Excess of 10,000 lbs. shipments should always be quoted with volume LTL, partial TL, and TL to obtain the most economical rate

Odd size or non-stackable pallets:

  • 1 – 4 pallets is best for LTL (unless the weight exceeds 8,000 lbs., then pursue a volume LTL quote)
  • 5 – 10 pallets, pursue a volume LTL or a partial TL quote
  • 11+ pallets should always be quoted with volume LTL, partial TL, and TL to obtain the most economical rate
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LTL 101:Limited Access Charges

Limited access charges were created to compensate LTL carriers for additional time spent at your shipment’s pick up or delivery locations and constraints that can result from these specific locations. Limited access is defined as meeting any of the following conditions:

  • Not open to the walk-in public during normal business hours
  • Not having personnel readily available to assist with the delivery or pickup function
  • Not having access to loading dock or platform
  • Sites where carriers are delayed with security related inspections and processes prior to freight tender

Did you know: Some of these high security locations will ask for a driver’s license and drivers have the right to refuse to do so? This causes the carrier to find a driver who is willing to do so, which in turn causes a domino effect or constraint on the daily operations of that particular terminal.

In order to avoid unexpected charges, it is best practice to ask the consignee if they have a dock or way to unload the freight and ask them if they need a liftgate for delivery. Liftgates are commonly associated with limited access and if the consignee advises they don’t need a liftgate, let them know that if the driver offers a liftgate and it is used OR signed for even without being used, there will be an additional fee that will be charged to them.

Limited access fees can be assessed on both commercial and non-commercial delivery sites. Charges and what constitutes as a limited access will vary based on carrier, but here are some of the most common examples:

  • Camps, Carnivals, Fairs
  • Churches, Mosques, Synagogues, Temples
  • Schools (not including colleges and universities)
  • Colleges and Universities without a dock
  • Medical/Urgent care sites without a dock
  • Prisons
  • Individual / Mini Storage Units
  • Mines, Quarries, Natural Gas or Oil Fields
  • Golf Courses, Country Clubs
  • Nuclear Power Plants
  • Military Bases/Installations
  • Parks, Farms and Rural locations
  • Courthouses
  • Daycares
  • Hotels, Motels, Retirement/Nursing Homes
  • Restaurants
  • Cemeteries
  • Convents
  • Amusement Parks
  • Construction Sites
  • Outdoor Flea Markets
Camps, Carnivals, FairsChurches, Mosques, Synagogues, TemplesSchools (not including colleges and universities)Colleges and Universities without a dockMedical/Urgent care sites without a dockPrisonsIndividual / Mini Storage UnitsMines, Quarries, Natural Gas or Oil FieldsGolf Courses, Country ClubsNuclear Power PlantsMilitary Bases/InstallationsParks, Farms and Rural locationsCourthousesDaycaresHotels, Motels, Retirement/Nursing HomesRestaurantsCemeteriesConventsAmusement ParksConstruction SitesOutdoor Flea Markets

Google Maps is a great tool that can be used to help explain whether or not a location has limited access. However, please keep in mind that even though the location is easy to get in and out of, and they may have the necessary equipment to unload, they may still be considered limited access. Some great examples of this are as follows:

  • Farms: While they are easy to get to and have equipment, they usually take the driver off his/her usual route which causes delays for the other shipments on the trailer
  • Mini Storage Units: The driver will have to use a smaller trailer with or without a liftgate and thus make fewer deliveries that day because of the space available on the trailer, so the charges are there to compensate
    • Carriers normally have fewer trailers with liftgates which makes this even more difficult when the volume of limited access or liftgate shipments goes up

Keep in mind: Commercial buildings with docks are normally clustered in the same area, a carrier can easily make multiple pickups or deliveries in a business park in the same time it may take to make one limited access delivery.

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Training Tuesday:Being a Confirmer

Being a successful salesperson requires a lot of practice, being able to envision making a sales call that results in sales success. Confirming the sale requires a lot of confidence and belief that you can make the sale and help the customer. The confidence you demonstrate when talking with a customer about our ability to deliver the service they need has the effect of transferring that confidence to them.

In the transportation industry, a lot of credit is given to a salesperson who is a proven closer. That has always been my reputation – a guy who always asks for the sale and expects the customer to say “YES.” Being known as a “Closer” is a big compliment. The only downside is the negative connotation of being a “closer,” when it is more accurate to call it “confirming the sale.”

Whatever you decide to call it – there’s no magic to confirming the sale. Right from the initial approach to the very end of your presentation, bit by bit, you should be confirming the sale. It’s when you find out if you did your job properly, but by following your instincts and confirming the sale throughout the process then the customer will let you know when it’s time to close the sale.

Closing or confirming the sale should be the most natural thing about selling. It’s the only reason for your job and it should become automatic. Don’t hesitate to ask a shipper for his or her business. The only time you shouldn’t be outwardly confirming the sale is when you’re on the fact-finding call, and even then, there will be a series of opportunities for minor closes that prepare your prospect for your next sales call.

You must have complete confidence in your ability to close the sale, if not, the prospect becomes consumed with doubt. The prospect can sense when it’s time for you to confirm the sale, and it’s up to you to ask for the order. They knew you were a salesperson when they agreed to see you, and if you lack confidence to ask for his business, they’re going to lack confidence in making a decision.

Confirming the sale is simply demonstrating a confidence that you’re ready to provide the prospect with the service they want and need. When the prospect feels comfortable with you in this regard, it’s time to say, “Okay, when are we going to handle your first shipment?”

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LTL 101:Density Based Rules and Price

Density is very important in selecting freight class. One carrier that rates solely on density of an item is Central Transport. Some carriers will rate based on density if the commodities’ National Motor Freight Classification (NMFC) is a density based item. Three carriers that do this are Midwest Motor Express, UPS, and Saia.

With these NMFC density based rating carriers the general rule is anything under 48 inches high will be calculated as 48 inches and anything over 48 inches but under 96 inches will be calculated as 96 inches for density purposes.

Please see the actual wording from one of the carrier’s rules tariff below:

So how could this affect your shipment?

Say you were shipping 1 pallet of sheet steel, or NMFC 175120, which is a density based item.
• The dimensions are 144” L x 45” W x 18” H
• The total weight is 550lbs.
• This equates to 8.1 PCF & Class 100
o In turn, sub 6 would be selected for this NMFC (175120-6)

However, if you change the dimensions based on the carrier’s rules tariff above, you now have the following:
• The dimensions are 144” L x 45” W x 48” H
• The total weight is 550lbs.
• This equates to 3.1 PCF & Class 250
o In turn, sub 3 would be selected for this NMFC (175120-3)

DUE TO THE HIGHER CLASS OF FREIGHT
THE PRICE WILL GO UP SUBSTANTIALLY!

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