Restaurant Equipment & Supply

Commercial Freight Options Demystified

Sep 9, 2013 1:51:24 PM

LTL Shipping, much more than getting it from A-to-B. One of the greatest economic accomplishments of American society is our ability to move products around so efficiently. It is amazing to me that we can ship a pallet with 500 pounds of product from Bangor, Maine on Monday and have it delivered to San Diego, California on Friday. Furthermore, we can move those goods for under $500! After we move the freight 3,275 miles, there are several delivery options available for your convenience. In this article, I am going to discuss how this works and explain some of the common terminology associated with shipping freight.

Choosing the right carrier for the freight
The type of shipper is determined by the size or weight of the product: Parcel Carrier, Motor Freight also known as Less Than Truckload (LTL), or Trailer Load Freight. Packages under 150 pounds and under 165 inches (length and girth combined) are usually best suited for parcel carriers. Commonly known parcel carriers include UPS, USPS and Fed Ex. LTL carriers ship products ranging from 150 pounds to thousands of pounds. LTL customers either ship large products in forklift accessible crates or place several products on 40” x 48” pallets that are shrink-wrapped. LTL shipments often include several pallets, up to about 6 pallets or 14 linear feet. Once an excessive amount of weight or a large percentage of the trailer space is occupied it becomes more advantageous to move the shipment by trailer load. Trailer load shipments usually do not combine products for multiple pick-ups or deliveries, and are dedicated for a single shipment.

How LTL Works
LTL carriers move product around the country by combining short haul shipments, consolidation and long haul shipments. The carrier picks up the freight at the Origin location, which is usually on a short haul route. Once the freight is at the local terminal it is combined with other shipments going in the same direction and sent to a regional hub. The freight is further consolidated and sent to other regional hubs in long haul shipments. Depending on the carrier, the amount of freight being shipped and the distance, it is possible some of the freight may go by rail. Once the freight reaches the final regional hub, it is consolidated again and shipped to the local terminal. This shipping model is referred to as the “Hub and Spoke” model, similar to passenger air travel. The freight is picked up by the local driver and is delivered to the Destination address. Larger freight carriers are able to have the freight remain in their company system for the entire duration of travel. Smaller or regional carriers sometimes need to partner with other regional carriers to move the freight for a portion, or leg, of the transit to give full national coverage. The practice of using multiple carriers to move freight is called Interlined. If a problem should arise with interlined freight, additional challenges occur because ownership, tracing and responsibility change hands throughout the shipping process.

How freight charges are calculated
A freight quote requires the origin zip code, destination zip code, weight and class. The first three components are easy to understand; it costs more to ship heavier products longer distances. The Freight Class refers to the National Motor Freight Classification (NMFC). The NMFC is a standard that compares freight commodities and groups them into 18 classes ranging from low (50) to high (500). The commodities are evaluated on four transportation characteristics: density, stowability, handling and liability. This standard also addresses minimum packaging requirements to ensure goods are adequately protected and is used in the damage claim process. Examples of freight classes for different shipments may be as follows: a pallet of sheet pans may be a class 70, a refrigerator may be class 110 and wood furniture may be class 175. Depending on a shipper’s sales volume and frequency of damage claims, a freight carrier may include in the customer’s contract a Freight all Kinds (FAK) provision. FAK’s bundle multiple freight classes into one lower class allowing the shipper to have the same freight class for a wider range of products. The class often is the key cost component to freight charges since it costs the carrier more to ship and insure 500 lbs. of low density, high liability product like furniture than 500 lbs. of dense, low cost product like a pallet of rubber mats.

Additional Services and Fees
The majority of the freight LTL carriers transport moves between businesses with warehouses. These businesses have dedicated shipping areas with dock doors and warehouse personnel that are able to quickly load or unload the freight. Anything outside of the freight carrier’s standard shipping process will require additional services. The restaurant industry has some additional services commonly requested: Pre-Notify, Lift Gate, Inside Delivery and Residential Delivery. Pre-Notify provides the destination a phone call to schedule a delivery timeframe, since the freight carrier is not required to deliver at a specific date or time. This usually is very useful for restaurants to prevent shipment refusal fees caused by shipments that arrive at a rush period or on a weekday when they are closed. Most freight dispatchers and drivers want to avoid refused shipments, so they tend to accommodate reasonable requests. Pre-Notify services may or may not add additional transit time. Lift Gate service provides the driver the ability to get the freight from the back of the truck (4 feet high) to the ground. The freight carriers are not required to assist customers in unloading from the tail of the trailer to the ground without the lift gate service. When drivers have a lift gate service selected, they typically unload the freight in the parking lot near the back door depending on the access to the building. Inside Delivery service moves the freight inside the building. The driver will typically move the freight with a pallet jack. If the freight cannot move freely with a pallet jack additional charges will accumulate. Inside deliveries can become very expensive if obstacles, such as stairs, are in the delivery path, the freight is too large to fit through hallways or doorways, or if more than one person (the driver) is needed to move the freight. The drivers do not set up, hook up, uncrate or remove packaging. Residential Delivery service is available for customers that are in non-commercial zones or are non-commercial destination. The most common residential delivery customers in the foodservice industry are airports, government buildings, country clubs, schools, universities and residences.

Who is responsible for what, when, and how much
The chain of custody of the freight shifts from shipper to carrier to customer with the Bill of Lading and the Delivery Receipt. The shipper ensures the freight is free of damage and is properly packaged when the freight is received by the carrier. The carrier is responsible for inspecting the exterior of the packaging for damage and signs the Bill of Lading, transferring responsibility to the carrier. When the freight is delivered to the destination the driver requires the receiving person to sign the Delivery Receipt, transferring the responsibility to the destination party. It is the destination party’s responsibility to inspect the freight for damage or shortage prior to signing the Delivery Receipt. The driver will not leave without a signed Delivery Receipt. Do not sign the Delivery Receipt without inspecting the freight. In the unlikely event the destination party finds damage or product shortage it must be written on the delivery receipt in detail. The destination party can either refuse the shipment in total or file a claim for the value of the damage or shortage. If you have any problem with the shipment, we suggest calling customer service at this time to aid in the process. The evaluation of the damage is determined by several factors including the classification of the freight, the cost of repair and the cost of the product. The destination party must retain all packaging if the freight is not refused for inspection by the freight carrier. If the product has Concealed Damage, or damage to the product that is not visible on or through the packaging material, it must be reported in 15 days to the carrier. We usually have better claim results if the concealed damage is reported to our customer service department immediately. Our experienced customer service department is able to leverage our long standing partnership with the carrier and our history of infrequent damage claims to ensure the best possible outcome with the freight carriers. Filing claims after the driver leaves makes this process more difficult and reduces our ability to get the best possible claim outcome.

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