Freight Tec Blog

The Federal Motor Carrier Safety Administration (FMCSA) has issued a final rule that will eliminate Cargo Insurance requirements for freight forwarders and most motor carriers.  Only household goods carriers will be required by law to maintain Cargo Insurance.  All other motor carriers and freight forwarders will no longer be required to maintain Cargo Insurance as of March 11, 2011.

What is the logic of this?  The FMCSA originally proposed eliminating Cargo Insurance in a proposed rule dated May 2005 along with the then new unified registration system.  The FMCSA has noted that motor carriers typically carry Cargo Insurance in excess of the regulatory requirements ($50,000 Minimum).  Most Shippers require the carrier to have cargo insurance as a condition for doing business.  Shippers also have the option of buying their own cargo insurance policy.  As a result, the FMCSA felt that since Shippers and motor carriers negotiate their own contracts, the FMCSA did not need to regulate Cargo Insurance.

Big and Medium Shippers understand this and have mechanisms for verifying that the motor carriers that they use do have Cargo Insurance.  But smaller, infrequent Shippers typically assume that the government regulates motor carriers and that a motor carrier automatically carries all the liability insurance necessary to protect the public—including Cargo Insurance.  As of March 11, 2011, this will definitely not be the case.  Any Shipper who ignores verifying the kinds of insurance that it feels is necessary to protect them and their freight from liability issues with a motor carrier will do so at its peril.

One Solution to this problem for Shippers is to use a freight broker such as Freight Tec to move their freight.  Freight Tec qualifies every single carrier and verifies that each carrier has Active operating authority, Cargo Insurance, Automotive Liability Insurance, and appears to be reasonably safe according to the information available from the federal government.  This is a great service for Shippers who do not have the budget or do not want to do a carrier qualification process by themselves.  In addition, Freight Tec carries its own Professional Errors and Omissions Liability Insurance Policy (same as Doctors, CPA’s, and attorney’s carry) to protect its Shippers from loss in the event Freight Tec makes a mistake and fails to properly qualify the carrier.  Less than 100 freight brokers out of 15,000 nationwide carry this insurance. This provides added Peace of Mind to Freight Tec’s Shippers.

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What happens when a Shipper gives one load to multiple freight brokers in order to find a truck? Market Distortion, and it’s Expensive for Shippers.

An interesting Market Distortion occurs when Shippers call multiple Brokers to move their load(s).  When a Broker receives a call from the Shipper to move a load on a particular lane, he will post the load on the various load boards unless he already has a truck available.  If a Shipper thinks that they are going to have better coverage for their load at the lowest price, they are mistaken.  Brokers pretty much use the same load boards.   Here is what happens when the Trucker sees 15 load postings for the same   lane.  Truckers subscribe to the same load boards as the Brokers and they will notice that there are 15 loads for one lane and that he is the only truck in town to move 15 loads.  Immediately, the Trucker thinks in terms of “supply and demand” economics.  If there are 15 loads to move he can easily raise his price as he is the only game in town.  The Trucker will call several Brokers.  The Trucker raises his price to move that load to a higher level—sometimes a much higher level.  The Broker receiving the call from the Trucker can’t move the load for the price the Trucker is demanding so he calls the Shipper to advise that he has found a truck but that they will need more money to move the load.  The Broker isn’t going to move the load for free so either the Shipper pays more money or the Broker backs off the load.   Then, the process repeats itself until the Shipper pays more to move the load.  That is a Market Distortion!  Yet it repeats itself many thousands of times each day.

As trucks become tight, this Market Distortion due to multiple postings of the same loads by multiple Brokers will cause the prices required to move the loads to rise at a faster than normal rate.  The best solution for the Shipper is to only use one or two brokers and reduce the redundant postings to counter this Market Distortion.  Using multiple brokers will only create higher prices for the Shipper as the false signals for supply and demand are broadcast through the load boards.

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Stay current with valuable updates – simply by checking your email.

A great way to stay up-to-date on the transportation industry is by subscribing to Freight Tec’s Email Updates.  You’ll automatically get valuable updates from our blog delivered right to your Inbox.

Technology can be a great asset to your business.  Take advantage of this technology today and sit back and let the updates come to you.  You don’t have time to browse the web, you’re running a business – so let the web come to you.

So, how do you sign up?  I’m glad you asked.

In the upper-right corner of this blog, you’ll see an area that looks like this:

Simply follow these instructions:

1. Enter your email in the top box, or click on Get Email Updates.
2. Next, you’ll be asked to confirm your email by typing in a code.
3. Then, check your email.  You should receive an email from us with a final link for you to activate your updates.
4. That’s it! Enjoy!!

You’ll now receive updates whenever we post valuable information on our blog.

If you have any troubles at all, please Contact Freight Tec and we will be happy to help.

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Capacity is rapidly tightening up on ocean containers from China. How will this affect the U.S. domestic market in 2010? How will these containers be utilized in the supply chain?

Fast-paced change buoyed by surge in demand, shortage of containers.

Ocean container spot freight rates on the key export trades out of China to Europe and the U.S. east and west coasts soared by an average of 24 percent in the past three months.

The rate of recovery is much faster than expected, buoyed by a surge in demand this month, according to Alphaliner, the Paris-based container shipping consultant.

Continued high vessel utilization rates on certain trades, especially on services to Europe since Christmas, have also created shortages of empty containers in a number of locations, which in turn, has underpinned the higher freight rates.

The Far East-Europe trade posted the strongest performance with spot freight rates surging by 50 percent since October from $2,500 per 40-foot container to $3,700 based on rates filed with the Shanghai Shipping Exchange.

The steep rise in rates resulted from successive rounds of rate increases imposed by ocean carriers since October and the extension of the peak season surcharge until February.

“It remains to be seen if the rates are sustainable as the Lunar New Year holidays in China in mid-February could lead to some weakening in freight rates,” Alphaliner said.

Spot rates from Shanghai to the U.S. West Coast have risen by 26 percent in the past three months and are 17 percent higher on shipments to the U.S. East Coast.

Asia-Australia and Asia-Africa spot rates also have risen over the past three months, but rates to the Middle East, especially to the Gulf region, remain under pressure.

The high spot market rates on the major trades from China to Europe and the United States have come at a key period as contract rates for 2010 have also strengthened, Alphaliner said.

Twelve-month contract rates for the Far East-Europe trades starting in January or February 2010 are reported to be about 200 percent higher than last year, reflecting renewed optimism about trade prospects.

by Bruce Barnard

The Journal of Commerce Online

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We are proud to announce Freight Tec’s new Shipper Rate Quote feature on our website.  It’s Quick, it’s FREE, and it’s our special service to YOU.  Even if you are not currently doing business with Freight Tec, we invite you to request a quote from us for your next shipment.

We all know things are changing with the economy – and shipping rates are certainly no exception.  It’s hard to find the time to keep up with the latest rates, so let Freight Tec do it for you.  We’ll quote you a rate for your shippment and offer to arrange for the transportation of that shipment.  That’s our specialty.  You’ll get the peace-of-mind that comes from knowing Freight Tec is a reputable broker, follows a strict carrier qualification process, and has the insurance in place to protect you.

What are you waiting for?  Give our FREE Shipper Rate Quote a try today and let us earn your business.

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Excellent article taken from Transport Topics, Jan. 04, 2010.

In Pursuit of Accurate Safety Ratings -

CSA 2010, as it is known, is the agency’s revamping of a flawed and oft-criticized safety rating system based on the unreliable SafeStat database.

Freight Tec pays close attention to Safety Ratings and strives to only use safe, qualified carriers in order to protect our shippers as well as public safety.  Our rigorous qualification process has always been somewhat weakened by the often skewed SafeStat and Federal reports.

FMCSA, to its credit, recognized the need to change the way it evaluated motor carriers when it launched CSA 2010.

The data is getting better and more reliable – and thus, it will give us all much more accurate safety reports.  A major difference now will be that a carrier’s ratings will be based on MILES TRAVELED, and not just the size of their fleet.  This is “the real measure of a carrier’s exposure to potential accidents”.

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Freight Tec would like to wish you a very Merry Christmas and a Happy New Year!

- Best Wishes to you and your family, from Freight Tec’s corporate office.

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Excellent article taken from Transport Topics, Aug. 11, 2009.

Opinion: The Customer Service, Dispatch Dilemma -

By Greg Shelton, Dispatch Consultant

As the recession deepens, there is growing awareness in the transportation industry of the role dispatchers play in keeping third-party logistics firms and freight brokerages competitive, particularly in the areas where dispatch and customer service collide.

This article reviews the fierce competition that exists in today’s market.  More and more Brokerages and 3PLs are striving for higher levels of customer service standards to keep customers.  Let’s face it – “keeping customers happy is a matter of corporate life or death”, states Shelton.

Think of it as the evolution of dispatch, in which basic survival depends on a company establishing and observing customer service standards. In a normal economy, hiring more customer service staff might solve the problem, but that’s difficult during a belt-tightening recession. It’s a dilemma that has caused some companies to reach outside the transportation industry and hire customer service and call center managers to help them make do with existing staff.

An experienced manager from another industry could help a company become more efficient by instituting phone upgrades, call accounting and service standards and by creating clear guidelines for various problem-escalation situations. An outside manager also could optimize staffing models by examining call volume spikes and pinpointing scheduling needs by means of forecasts.

But there is a caveat: Bringing in a manager from another industry might sound good to a company in this chaotic environment, but it also might prove to be counterproductive.

Look at this way: Hockey and lacrosse are somewhat similar sports. They both use sticks, have face-offs and use goalies. A hockey coach, while unfamiliar with lacrosse, could use the same techniques to motivate players and evaluate talent on the field, but that is where his effectiveness would end. Shooting a puck off a stick while on skates is radically different than running full speed and launching a ball out of a net.

This is the potential problem with managers from nontransportation backgrounds. Their intentions are good, but relying solely on their previous experience and knowledge will block any chance of success.

Customer service’s focus is on the individual caller and on never giving that caller cause to consider the experience negatively. Call center managers are trained to promote efficiency and work inside statistical models — calls should be answered in so many rings, resolved in so many seconds and agents should answer a predetermined number of calls per shift.

But one cannot assume these methods will translate effectively in a dispatch environment. A dispatcher’s job is to keep freight moving, and as a result there are countless situations encountered on a daily basis that may require excessive time or a firm hand. A manager has to realize that.

There is a real danger in companies becoming so dazzled with call reports and efficiency upgrades that they fail to see the department actually is regressing. Dispatchers become less self-reliant, less diligent and less focused on the overall goal.

Should dispatchers be evaluated using negative feedback, efficiency and call totals? Of course, but letting these philosophies be the only criteria in defining the position will undermine the department’s effectiveness.

My favorite point that Shelton makes is “Can one learn to swim by watching someone or by reading a book?  Perhaps, but without getting wet, you’ll never know what it’s like.”  This means that in order for a company to be successful, those that manager dispatchers need to know exactly what it’s like by doing it.  They won’t learn or understand how to fully motivate, teach, inspire, or otherwise manage a dispatch team if they have no idea what it is really like. 

The Question, as Shelton puts it, is “Which service did your customer pay for?”  Are they paying you for dispatching their loads, or are they paying you for your customer service abilities, which will inevitably become, empty promises.

During this downward trend in the economy, focus on what you do best.  Focus your efforts on your company’s Core Goal.  And strive for that goal in everything you do.  It’s time to simplify processes, re-think programs, and get back to the basics of customer satisfaction.

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If you didn’t catch it yet, be sure to check out Freight Tec on the cover of Internet Truckstop Magazine for the Sept/Oct 2009 Issue.

Visit Truckstop.com for more information or go right to the full magazine by clicking Here.

Be sure to check it out and let us know what you think by commenting below.

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Freight Broker Agent

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