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Top 10 Reasons to Outsource Your Warehousing Operation

Here’s a list of the top 10 reasons why businesses outsource warehousing operations to reduce costs and make their businesses more competitive.

  1. 1.       Focus on your core

If warehousing and shipping isn’t your core business, then outsourcing your warehousing operations to a 3rd Party warehouse often results in greater focus on core business activities like sales, marketing and new product development.

  1. 2.       Risk Reduction

Warehousing and shipping comes with all kinds of risks; from financial risk of inventory loss and damage to possible injury of your workforce.  Outsourcing your warehousing and shipping operation typically results in less business risk for you.

  1. 3.       Better Systems and Performance

A 3rd Party Logistics warehouse’s main business is warehousing and shipping products.  They have systems and processes suited to do just that.  Typically, their investment in technology specifically related to manage inventory, pick, pack and ship is greater than the average business where this operation is not their core business.  By outsourcing to a 3PL Warehouse you can take advantage of their leading edge technology without the huge investment!

  1. 4.       Cost Reductions in Storage

Typically, outsourcing your warehousing operation to a 3PL Logistics company results in an overall cost reduction.  Here’s why:  Most businesses have cyclical sales.  That is to say sometimes they need to carry more inventory than others.  So, if you are taking care of your own shipping and warehousing you have to own/lease capacity for your peak inventory.  Even if that only happens once per year.  A 3PL has the ability to mix and manage different customers with different peaks in their business.  Therefore, you only have to pay for what you use.

  1. 5.       Cost Reduction in Labour

Much like warehouse space capacity, labour usage for a typical warehouse has peaks and valleys.  If you’re running your own warehouse, you need to staff for the peaks and then have less than optimal labour usage when you’re not busy.  If you choose to outsource to a 3PL then the labour a 3PL uses is spread of many customers, reducing slack time and waste.

  1. 6.       Better use of Capital

Warehousing is an expensive proposition in terms of capital and investment.  If you’re like most business, you fight for every dollar of capital for investment.  If you’d rather invest your precious capital in developing new products or buying new machinery that gives you a competitive advantage, then 3PL warehousing is for you.   Because you only pay for what you use, it’s an expense, not a capital investment.

  1. 7.       Economies of Scale in Shipping

Because 3PL’s ship for a variety of customers, that volume of shipments are pooled together allowing the 3PL Warehouse to get better shipping rates on your behalf.  You save based on their larger volume of shipments.

  1. 8.       Agility

If you’re business suddenly grows or shrinks, this has a huge impact on your investment in storage space and your human resources if you’re managing your own warehouse operations.  It takes time to ramp up or slow down.  You may miss market opportunities while you’re building and hiring.  With a 3PL you have access to instant capacity.  This makes your business more agile and responsive to the market.

  1. 9.       Choice of Location

When you choose to outsource warehousing and operations to a 3PL, you have a choice of location.  You no longer have to have your warehouse attached to your head office geographically.  You can choose a 3PL that makes geographic sense where it’s optimal to serve your customers.  This typically results in savings from shipping operations and better customer service.

  1. 10.    Improved Service

Because a 3PL warehouse’s sole business is to pick/pack/ship, they are specialists.  They have the systems and people to excel at this operation.  Most business that chooses to outsource their warehousing operations experiences an improvement in customer service as a result.

 

XTL Distribution has warehousing operations in Toronto and Montreal with over 75 years combined experience in warehousing and distribution operations.  Plus, XTL’s Distribution operations combined with XTL Logistics and XTL Transport give clients unparalleled access to warehouse, logistics and transportation assets in Canada.  Contact us for a free consultation on how we can help you leverage 3PL warehousing to reduce your costs and make your business more competitive.

2014 Year in Review in the Trucking Industry

Wow, what a year of extremes we had in 2014!  As we begin 2015 this article is a look back on the highs and lows of 2014, an extremely volatile year.

The price of fuel

The price of fuel peaked at a National Average of just over $4.00 US per gallon and finished the year dropping to 3.21 per gallon, a price not seen since 2010 as we were coming out of the economic collapse of late 2008.

 

fuel graph 2014

 

Freight Volumes

The year opened with a bang! Transcore reported that their freight index was the highest ever, it peaked in April, but has since declined to slightly below 2012, and 2013 volumes for the month of December 2014.

Regulatory

  • In 2010, the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration announced joint greenhouse gas emissions standards and fuel efficiency standards for medium- and heavy-duty engines and vehicles, applicable to model-year 2014 vehicles and engines.
  • After a strong stance on the latest HOS regulations, on December 16, 2014 FMCSA suspends the enforcement of 49 CFR 395, regarding the restart of a driver’s 60 or 70 hour limit restart that drivers were required to comply with since July 1 2013.

 

Biggest News Stories

  • The driver shortage was by far the biggest story of 2014.  A combination of a booming economy, aging/retiring workforce and Hours of Service regulations that restricted capacity; everyone was feeling the pinch of more freight than they had drivers to move.
  • Extreme weather events:  the year started out with a massive ice storm the hindered transportation and left hundreds of thousands of people without power.  Late 2014 the Buffalo area was hit with a massive snow storm that closed down all major highways leading to the border for several days causing a major transportation disaster.
  • The Canadian dollar has slowly been declining with the price of oil, as Canada’s resource based economy is highly dependent on commodity prices.  The year started off with a 91 cent dollar that fell to 86 cents by the end of 2014.  If this continues it should effect the balance of trade and mean more southbound truck traffic to the US.
  • In part because of the dollar, and in part because of falling price of oil, the balance of trade with the US has experienced wild swings.  Making transborder logistics unpredictable.

The Canadian Dollar

  • The Canadian dollar has slowly been declining with the price of oil, as Canada’s resource based economy is highly dependent on commodity prices.  The year started off with a 91 cent dollar that fell to 86 cents by the end of 2014.  If this continues it should effect the balance of trade and mean more southbound truck traffic to the US.

Balance of Trade with the US

  • In part because of the dollar, and in part because of falling price of oil, the balance of trade with the US has experienced wild swings.  Making transborder logistics unpredictable.

balance of trade

Outlook for 2015?

Let’s hope for the best, but many of the issues that caused uncertainty in the industry are going to be around for 2015.  The driver shortage is not going away any time soon, the price of oil remaining low could have significant effects on the economy and freight patterns, but one ill political situation in an oil producing country could cause oil to dramatically rise to more recent high prices.  As global warming increases over time, the weather situation will only get worse.

This is what makes trucking and logistics a challenge for everyone who works in the industry.  This year in 2015 XTL is celebrating 30 years in the business.  XTL has been navigating the ups and downs of the transportation industry for 30 years.  We certainly know how weather troubling times and uncertainty.  If you need help with your trucking and logistics systems, XTL can certainly help you.  Contact us to put our years of experience to work for you.

 

 

 

 

 

 

 

 

 

 

Extreme Weather Events and Their Impact on Logistics

ariel-view-snow-smallClimate change affects everyone. The trucking industry bears the brunt of many extreme weather events in North America. It’s not only the postman who has the motto “rain, sleet or snow…” Shippers expect their transportation providers to deliver no matter the weather conditions. Climate change and extreme weather events are impacting the transportation industry in a drastic and negative way.

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temperature controlled transport

Seven “Hot” Tips to Increase Your Heated Freight Capacity this Winter

With heat season just over a month away (many people start heating freight the first week of November), many transportation managers are wondering how they can avoid a shortage of heated trucks this winter. Especially, since freight capacity is already tight.  Here are seven tips that will help you out this winter manager your heated freight capacity.

Separate Heated Freight from Non-Heated freight

Many shipments are loaded with 90% of the freight being freeze tolerant and only 10% of the shipment requiring freeze protection or temperature control.  Not only does this cost the shipper a premium but it uses up heated capacity where none is needed.  Often by splitting the shipment into two, the cost of the increased LTL will be offset by reduction in the heated premium.  This is easy to implement and your front-line shippers should be made aware of this option.

Consider “no heat” on short runs

If you’re struggling to find heated trucks for a short run of less than a day, you may consider shipping without heat.  While there is a slight risk involved in this practise, generally, liquids that are in motion will not freeze.  Just like a river.  Plus, the liquids will have some residual heat from the time of loading.  For short runs, as long as you can work with your carrier not to leave the freight on the truck over night, you’ll probably be OK to ship without heat.  Use your judgement here; extremely freeze sensitive material would not be worth the risk!

Consider Blanket Wraps

Blanket wraps are a great way to increase heated capacity.  The idea is to wrap the liquid drums or totes in an insulated blanket.  The residual heat in the product slowly dissipates over time.  However, with proper calculations you can often ship freeze sensitive product over a few days without issue.   The blanket manufacturers should be able to help you with grade, timing and temperature rules of thumb.  The only downside to this method is you’ll have to ship the blankets back, so include that in your cost benefit analysis.  Plus, there is some risk involved here.  You should do your calculations carefully and include temperature probes and/or monitoring in your shipment.

Consider “heated” vs. “Temperature Controlled”

In transportation, the term “heated” could mean a diesel powered portable heater in the back of a dry van, or it could mean putting the freight on a temperature controlled reefer unit.  This may seem trivial, but when capacity is tight, you should consider what you actually need.  If your product has a freeze temperature at zero or below, and the weather is not in a deep freeze of say -20C, then you should be OK with “heated”.  That will open up your capacity to a much wider range of carriers with portable heating units.  However, if you state “must maintain between 5-10C, then you are limiting yourself to a temperature controlled reefer unit.  This will limit your options, if you don’t actually need that specification.

Consider Round Trips

If you happen to have the opportunity to ship between A and B (or very close points) let’s say the points are Chicago and Toronto, and you have heated freight from Chicago and non-heated from Toronto, then you can work with your carrier to send out a heated unit and work out a deal to buy the backhaul in advance.  Your carriers will love this, it makes their life easier and you just made your life easier by covering that heated shipment.

Book Early

Book early when you can.  Carriers have to plan their truck dispatch constantly.  Much of the time based on unknowns.  If you can provide your carriers with as much information as possible by booking early, they can often plan to have the right equipment where you need it.

Call XTL Transport

XTL has made a significant investment in temperature controlled trailers over the last few years, including specially designed TEMPSOLUTION trailers that precisely monitor and maintain temperatures for very sensitive goods like pharmaceuticals, chemicals and food grade additives.  If you’re worried about heated capacity this winter, now’s the time to contact XTL for a review of your needs.

How to Manage On-Time Deliveries

On-time deliveries are a key performance metric for your supply chain and transportation providers.  However, it can be really confusing to measure and manage.  Here are some key things you should understand before defining an on-time metric.

There’s no such thing as “on-time”

The first thing you have to know about “on-time” is there really is no such thing.  “On-time” is more of a concept than a reality.  This may shock you, but here are some examples that make “on-time” difficult to measure.

  1. Ordered to pick up on the 5th and deliver on the 7th.  However, it wasn’t ready to be picked up on the 5th, but was ready on the 6th and consequently got delivered on the 8th.  Was the carrier late?
  2. Same scenario, but order picked up on time, then got stuck in customs for 2 days through no fault of the carrier.  Was the carrier late?
  3. Same scenario, but then there was a blinding snow storm where the highway got shut down and the carrier could not travel.  Was the carrier late?
  4. Same scenario, but picked up on time, but when they arrived to deliver, the receiving department closed early for their weekly staff meeting and the freight couldn’t deliver till the next day.  Was the carrier late?

I could go on, but if you’ve spent any time in the transportation industry you could probably list 100 different scenarios that you would consider late, or not late, etc.  The crux of the problem is your trying to put a static measure on something that’s fluid.  Pick up and delivery times change constantly because of all kinds of factors.  Trying to pin down on-time/not-on-time is an oversimplification of a bigger problem.

How you really manage “on-time”

First, you have to recognize the bigger picture.  There are numerous parties involved and numerous causes for scheduling changes.  The key to managing this picture is deciding on what to measure.  One of the best ways is to just measure the all reasons for re-scheduling an order.

Start measuring re-schedules

For example:

  • End customer rescheduled
  • Not ready from supplier
  • Truck broke down
  • Bad weather
  • Consignee could not unload
  • Shipper could not load
  • Traffic
  • Order entry error

If you did a fishbone diagram or a pareto chart, it would help you in finding as many reasons as possible.

Now, categorize responsibility

The second step is to gather all the reasons and sort them by responsible party.  For example, you could put them into categories like: Shipper, carrier, consignee, Other.  Weather and random customs inspections would be an “other” category for example.

Start Measuring

Now that you have some order to classifying reschedules you can start measuring the reasons for re-schedules and the ultimate goal is to reduce the total number of reschedules.

Have discussions with the parties involved.

Now that you have a clear picture of what’s going on in your supply chain, you can have really productive discussions and problem solving sessions with you vendors, carriers and customers.  Less rescheduling normally means things go smoother all around, and when things go smoother, costs are reduced and customers are happier.

How XTL Can help

XTL’s staff are logistics experts.  If you’re trying to reduce costs or improve service in your supply chain, contact XTL today for a free discussion with one of our logistics experts.

transportation securiry

7 Tips to Improve Transportation Security

Transportation security is a big issue in the supply chain, not only to keep insurance cost low, but to prevent stolen merchandise from ending up in the black market.  Here are 7 easy tips to improve your transportation security.

 1.  Use a reputable carrier

This seems obvious, but it’s surprising how many companies will ship with a new and unknown carrier to save $100 on a shipment worth thousands of dollars.  Not that there is anything wrong with small 1-2 truck carriers, but they just don’t have the systems in place for things like:  hiring policies, satellite tracking and check ins, etc.  Check out your carriers, get references and make sure they have been in business for a long period of time with a good safety record.

2.  Wrap LTL… tight!

If you’re shipping LTL, use good quality stretch wrap and add a couple of extra layers.  Wrap it tight.  This simple measure can help reduce a missing box, or a box getting broken into.  At least if it happens, you have strong evidence for a claim!

3.  Pin-lock drop trailers

While this is not fool-proof, it is a deterrent.  If a thief has a choice of two trailers, one with a pin lock and one without, guess which one he’s going to choose.  A good quality pin lock and a system to ensure they are used goes a long way in securing dropped trailers.

4.  Avoid dropped trailers

Most theft occurs when trailers are dropped and left un-attended.  Try to avoid this situation as much as possible.  If you have to drop, make sure it’s in a secured yard that has a guard.  Otherwise, it’s just an invitation for a thief.

5.   Have a system to ID carriers picking up

It’s amazing how many shippers don’t implement this.  They load thousands of dollars worth of freight on a truck because a driver shows up and says, “I’m here for the load to Canada”.  He get’s loaded and he’s gone.  It’s a surprise later when the actual booked carrier shows up later for the shipment.  Make sure you ID your carrier either by the name on the truck and match it to the one booked, or get the driver’s ID and make sure he works for the company booked with.

6.  Use FAST/C-TPAT Carriers

Carriers that are part of the FAST or C-TPAT programs have already been verified by government bodies for their compliance to various security standards.  Simply choosing one will increase the level of security of your shipments.

7.  Seal full load shipments

A wire seal isn’t going to stop anyone looking to steal a shipment, but it does discourage tampering and a few missing boxes type of theft.  At least if theft happens, you’ll have evidence it happened during transport and increase your chances of a successful claim.

About XTL Transport

XTL is both a FAST and C-TPAT carrier.  We take load security very seriously.  If your concerned about the security of your shipments, give us a call to discuss how we can help you.

shipping scheudule

Working with your Carriers: Shipping/Receiving Department Scheduling

This is probably one of the biggest issues that causes strife between carriers and distribution departments more than any other.  This article explores options and consequences of different shipping/receiving department scheduling philosophies.  At the heart of this issue is that carriers get paid by the mile, so they don’t want to wait to get loaded/unloaded, and shipping departments get paid by the hour, so they don’t want to be standing around waiting for trucks to arrive, or add extra labour to accommodate the small periods of “busy” times during the day when trucks show up.

First Come, First Served Scheduling (FCFS)

Depending on who you ask, some people love this method of scheduling trucks for pickup and delivery and others hate it.  This practise tends to favor the shipper and receiver at expense of the trucker.  Usually, it means that the shipping/receiving department has limited resources and has the trucks wait in queue until they are able to be served.  Sounds fair right?  If you get there first you get unloaded first.  However, truckers get paid by the mile and not by the hour.  Having to wait 2-3 hours to get unloaded is unreasonable for the carrier.

This system is not without benefit for carriers some of the time though.  If a carrier can show up “anytime on Tuesday” for delivery, they get flexibility in when they have to be there and it really helps them when unforeseen delays occur like weather and traffic.

Best of both worlds?  A FCFS system with enough internal resources at the shipper/receiver to handle the busiest times.  However, now this becomes expensive for the shipper, they’ll have labour sitting around 90% waiting to serve the 10% of the time when it’s busy.

Appointment Scheduling

Some people love appointment scheduling, others hate it.  Similar to FCFS, it has both benefits and drawbacks.  Appointment scheduling is great for carriers when they arrive on time and get in and out fast.  It’s also great for shippers/receivers because they can plan the load on the department in advance and arrange for the appropriate amount of labour.  This sounds like it’s efficient for everyone! It can be! However, when uncertainty creeps in, it causes problems for this system.  If a carrier gets stuck in traffic, has a breakdown or gets delayed at a prior, all which is in a day’s work for a carrier, then the system breaks down.  If Carrier A shows up for his 10am appointment at 10:30 due to getting stuck in traffic,   there is no one to unload him because the labour is already committed to serving the 10:30 appointment who is there on time.  This is fair right?  Make him wait till 4pm when all the other deliveries are unloaded.  Not really.  It shouldn’t be a punishment to deliver at your  facility!  Strict adherence to a scheduling system causes a lot of bad feelings with carriers who do their best to get your freight delivered.  On the other hand, always accommodating late appointments will earn you the reputation as “the last delivery”.  You’ll forever be accommodating late deliveries.

A Hybrid System, The best of Both Worlds?

There really isn’t a “perfect” solution to this problem.  Each shipping/receiving policy has cost consequences for both the shipper and the carrier.  Any cost absorbed by the carrier, will eventually find its way back to the shipper in the form of rates increases.  So the optimal solution has to be a cooperative one.  One which balances the needs and resources of the carrier with the needs and resources of the shipper.

Some Good ideas:

  • An appointment system, with some flexibility to accommodate lates.
  • Measure lates so as not to end up accommodating everyone.
  • Talk to your carriers and find out what works best for them.  This often changes based on your location, time of day and freight being delivered.
  • Fines can work as a deterrent, but must be used with caution.  If carriers find there is no flexibility they will not want your freight, or want to charge extra for the possibility of fines.
  • Longer shipping/receiving hours can minimize congestion.
  • Being able to move labour over from other departments to accommodate a rush of trucks is helpful if feasible at your company.

XTL Transport can Help You

XTL Transport has been helping customers with logistics problems for close to 30 years.  If you’re looking for ways to reduce cost, improve service, or just reduce headaches, then XTL has solutions for you.  Please contact us for a free consultation.

trucking capacity crunch 2014

10 Tips to Help Ease the 2014 Capacity Crunch

If you’re having difficulty getting shipments moved in the capacity crunch of 2014 then this article is for you.  Trucking has been booming for the past few quarters.  Record amounts of shipments are ready to move and carriers didn’t add capacity over the last few years because of the slow economy.  Compounding this issue is the supply of truck drivers entering the market is just not enough to keep up with demand.  All these factors have lead to a very tight market for trucks.

1.     Flexible Pick Up Times

A carrier’s day is very complex.  It requires coordination of people, materials and equipment across huge geography.  To add to this, much of what they plan is unpredictable like the weather, traffic conditions, and border wait times.  If you have flexible pick up times this really makes your location attractive to carriers.  If they know they have a large pick-up/delivery window then it’s so much easier for their people do deal with the unforeseen and still be able to pick up and deliver.  Consider more flexible pick up times in shipping/receiving department to attract more carriers to your lanes.

2.     Weekend Pick & Deliveries

There’s a lot of equipment sitting idle on the weekends waiting for pick-ups or deliveries that can only be done on Monday.  If you offer weekend deliveries, this may be attractive to carriers during the capacity crunch because it frees up equipment and eases the load on Monday deliveries.  If you accommodate weekend pick-ups, a carrier who would otherwise have to layover a driver until Monday would be happy to pick up your shipment.

3.     Reduce Time Wasters

Truck drivers get paid by the mile, not by the hour.  Nothing aggravates a driver more than having to wait for long periods of time to get freight loaded, wait for paperwork, Certificates of Analysis, customs documentation or anything else preventing them from driving.  If your facility has a good reputation for getting drivers in and out fast, you’ll have carriers lined up for your business.

4.     Pre-Loaded Trailers

This is another way to offer carriers not only a fast turnaround but a commitment of future freight.  To set up a drop trailer has a small investment to spot the trailer, but offers the carrier quick turn-around.   The trailer can be loaded in advance and the carrier just has to drop the empty and hook up the full.  Fast and easy!  Plus, the carrier knows they’ll get repeat business because their trailer is there.  This is a great way to make things easier for everyone and get a capacity commitment from your carriers.

5.     Be Fair and Authentic

Carriers have a very difficult business to run just like you do.  Their business runs on information for the most part.  They have a huge task of coordination to undertake every day.  If your freight is tendered at 34,000 lbs, it should be 34,000 lbs when the carrier gets there, not 36,000 lbs.  Being fair, open and honest about your freight and the requirements helps the carriers plan better.  If you have a reputation for being fair and authentic, then carriers will be glad to do business with you.

6.     Do what you say and say what you do

An extension of being fair and authentic is to clearly outline requirements for the carrier.  If you’ve committed to pay in 30 days, pay in 30 days.  If you’ve promised a 1 hour load time, load in 1 hour.  If you’re clear and consistent without any surprises, you’ll have a good reputation with the carriers and they’ll choose your freight over someone else’s that may come with “problems”.

7.     Longer Shipping Department Hours

Many shipping departments close at 5 pm.  This leaves the carrier rushing to get there during rush hour traffic and if he’s a few minutes late, he misses the load and has to layover.  This is a big deal for carriers.  If you have the ability to load until 9pm or midnight even, offer this to the carriers.  Many will jump at the chance for a late pick up because it saves them the layover and avoids rush hour traffic.

8.     Cater to Drivers at Your Facility

Make your driver waiting area comfortable and treat the drivers with respect.  Offer them washroom facilities and maybe a free coffee.  This goes a long way with the drivers. You’ll get a good reputation of a great place to pick up and deliver.  Carriers will want to do business with you and drivers will want the loads.

9.     Know the Market

Make sure you’re offering competitive rates.  In the tight market of 2014, rates you paid during the recession are just not realistic.  Make sure you’re paying with the market and you’ll be more likely to get your shipments moving.

10.Consider LTL

It can be expensive, but sometimes if you have no other option, splitting a Truckload shipment into two LTL shipments can open up new opportunities to get your freight moving.

11.Bonus Tip:  Call XTL

XTL has solutions for both truckload shipments and LTL shipments through XTL Logistics.  We can help you find capacity and get your shipments moving. Contact us.