No matter where you are today, you must have already noticed the painful increase in everyday prices. Whether it's food, gas, or that flagship phone you wanted to buy last Christmas, prices are soaring non-stop. That is inflation. Unfortunately, this current inflation period is higher than usual and is hurting the economy.
In this article, let's explore and understand the current inflation period we are all facing and find ways to negate its effect, particularly in the shipping and logistics industry.
Before focusing on how inflation affects shipping costs, let's first examine the role of inflation in general.
Inflation, as established above, is the increase in prices. You can also think of it as decreasing one's purchasing power. This phenomenon is normal, and a small amount of it is actually healthy for the economy. In fact, the Federal Reserve recommends and targets a 2% inflation rate.
Unfortunately, at the time of writing, we are facing an 8-10% inflation rate worldwide. Gas prices soared from $1.93 per gallon in April 2020 to $5.03 in June 2022. Consequently, groceries and utilities have increased as well.
Now, although inflation affects everything, it's not the same for every industry. Some may be more affected than others; in this case, the shipping, logistics, and transportation industries are punished severely. Here's why:
As stated, gas prices soared from just $2 per gallon in 2020 to $5 this year. That $3 increase is already painful for the everyday car owner; imagine how excruciating that might be for fuel-hungry engines. A container ship alone consumes over 60,000 gallons a day! This is not to mention trucks and airplanes, which logistics companies also heavily depend on.
Gas isn't the only factor driving the price increase in logistics services. The workforce is another severe issue. When you hear there's a shortage of truck drivers, there's not. The truth is, being a truck driver is just not a job that anyone would like to have. Period.
According to Steve Viscelli, University of Pennsylvania labor expert, "There is no shortage of truck drivers. These are just really bad jobs." The fact that you have to drive for at least 11 hours each day to get 10 hours of rest in a cramped compartment while continually fearing theft as you park your truck in isolated areas is reason enough to dishearten applicants.
Many factors caused the inflation period we all face today. Besides the war in Ukraine affecting fuel prices, there's also a shipping container shortage, pushing container prices to skyrocket from $1,800 in 2020 to $3,500 for a new one today.
Well, we can thank the pandemic for that and the Suez Canal (disrupting $58.2 billion in global trade). To top it all off, one of the biggest reasons for the high inflation in the logistics industry is the simple fact that there's just more demand than ever. The pandemic was the core catalyst for people to opt for eCommerce.
For clarity, we're going to give our two cents to businesses, not consumers. For Surus, the most practical way to fight the cost of inflation is to focus on efficiency and operations improvement. Increasing product or service prices should never be the first option.
Now is the perfect time to reevaluate your current processes and approach to dealing with your customers. For manufacturers, reassessing supplier options and undertaking equipment upgrades may be your most viable option. For retailers, only taking on quickly sellable items may be an immediate fix, while personalization, assortment, and putting more effort into digital marketing may be critical to long-term sustainability.
We strongly advise business owners to embrace AI, technology, and digitalization as a core part of their business. AI can help you with better forecasting and automates product personalization, dramatically increasing the chance of sales.
Some technologies help your business identify new opportunities to market your products and services, while others are focused on giving accurate pricing recommendations based on your customers' behavior (demand for products).
Last but not least, going digital allows you to improve your brand awareness, gain feedback from your customers in real-time, and increase profit by becoming less dependent on brick-and-mortar stores.
There are a variety of ways to utilize freight transportation. You can use an enclosed trailer if your goods need to be covered up, a temperature-controlled trailer for perishables, or even an open flatbed trailer. An open flatbed trailer allows for the transportation of a wider array of goods and equipment as opposed to the other options mentioned earlier.
Flatbed trucks are excellent for hauling large cargo or equipment, but there’s much more to them than carrying bulk loads. If you are not familiar with open flatbed shipping, this article will cover the basics for you. Let’s jump right in.
Flatbed trucks or trailers are the perfect choice when you are working with wide loads, bulk cargo, or oversized equipment. The open nature of flatbed trailers allows them to be loaded from any angle, which is perfect for situations where you need to load cargo with a crane. This also makes them a good choice for hauling cargo from shipping terminals. You can use a flatbed to transport just about anything, provided it doesn’t need to be temperature controlled. You should use a flatbed when the cargo you want to haul won’t fit in a traditional dry van trailer.
The main benefit of flatbed trailers is that they don’t have the same space limits that come with dry vans or refrigerated shipping. This makes them an excellent option for oversized shipments, like heavy machinery. Here are some common examples of products and equipment that are normally shipped on flatbeds:
One caveat with flatbed trailers is that the cargo will be exposed to the elements. Depending on what you are hauling and its size, you could cover your goods with a tarp, but that might not always be an option.
Driving with a flatbed isn’t quite the same as driving other types of trailers or trucks due to the way a flatbed’s axles are distributed and the type of cargo they haul. backing up with a flatbed trailer is far more complex than backing up while operating other vehicles. Driving with a flatbed is also somewhat more dangerous, but only when cargo isn’t secured properly. Thus, this is a job that requires patience and meticulous care.
When it comes to loading goods onto a flatbed, there are many complexities such as understanding the Gross Vehicle Weight Rating (GVWR), as well as considering where on the bed you are loading the most weight. Different areas of flatbeds have different ratings. In general, you want the center of gravity to be as low as possible. That means heavier items are placed near the rear of the bed and above the axles.
Since flatbeds are open, they can be loaded from any angle. Usually, cranes or forklifts are used to load cargo on top of the trailer.
There’s another option to consider when it comes to cargo hauling, which is using a train. Trains are more fuel-efficient and can carry significantly more weight. However, they aren’t a great option if you are pressed for time, and they can be too expensive for short trips.
On the other hand, flatbed trucks have more predictable freight transit times and are significantly cheaper for shorter trips.
A third option is using a Trailer on Flatcar, also called piggybacking. This is where you load a trailer onto a train car and then use a truck to take it to its final destination, which offers the best of both worlds.
Flatbed trailer hauling isn’t for the inexperienced. You’ll want to work with professionals to ensure the integrity of the cargo, and to find the best route, whether trains should be involved, and prices available. Working with a logistics company allows your cargo hauling to be more efficient, which can lead to lower costs on your end and increased customer satisfaction.
If you are looking for a logistics company in Michigan that performs flatbed shipping, then Surus is what you need. When you work with Surus, you’ll get expert consulting and solutions for your distribution needs. Contact us today.
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In the logistics and freight transportation industry, there are a lot of options to choose from when it comes to how exactly you'll get your cargo where it needs to be. You can go with temperature-controlled trailers, open-air flatbed trucks, or dry van trucks.
Choosing between one or the other can be difficult if you don't know what differentiates them or their pros and cons. We believe an informed individual makes the best decisions, so we'll share all you need to know about Dry Van Trucks in this guide.
A dry van truck or trailer is a closed box trailer attached to a semi-truck. They are the most common and popular shipping method you see because of how they keep the goods "dry" and protected from external elements like the sun, rain, or snow. In many ways, it's like a giant closed box on wheels.
Dry van trucks are not temperature-controlled and are best for hauling dry cargo, like household goods and non-perishables. They are also excellent for eCommerce shipping due to their cost-effectiveness and plentiful space.
Dry Van trailers can be used for both full truckload and less-than-truckload (LTL) freight shipments, and they can haul up to 45,000 lbs. Some common types of freight for dry van trucks are:
Dry Van has always been a popular shipping option, as it offers many advantages. But it doesn't come without its own set of disadvantages. If you are considering going with dry van freight transportation, you should consider the following pros and cons:
If you have a small or medium-sized business, LTL shipments can do wonders for you. Foremost, this dry van truck shipping option allows you to save more money by delivering your goods in bulk sets (pallets) to strategic locations (distribution sites).
This approach allows you to save a significant amount of money compared to parcel delivery or shipping your items directly from your establishment to your customer. LTL shipment also allows you to stream your goods continuously, allowing a steady supply in your distribution outlets.
Although FTL saves you the most money, not every business is prepared to charter an entire truck. Small businesses forcing themselves to opt for FTL to save money may create supply shortages, making it an impractical approach.
One of the best things about dry van truck shipment is the consistent and fair pricing. The National Motor Freight Traffic Association publishes standard freight class codes and updates every three or four months.
The National Motor Freight Classification (NMFC) codes help everyone in the logistics industry identify and quote shipments correctly. It also gives you an accurate estimate of how much you're going to spend. See the table below (the higher the class number, the higher the cost):
|Class||Commodity Example||Weight Range per Cubic Foot|
|50||Clean freight (bulk ingredients)||50+ lbs.|
|60||Car accessories & car parts||30-35 lbs.|
|70||Automobile engines||15-22.5 lbs.|
|85||Crated machinery||12-13.5 lbs.|
|100||Boat covers||9-10.5 lbs.|
|125||Small household appliances||7-8 lbs.|
|150||Auto sheet metal parts||6-7 lbs.|
|200||Aircraft parts||4-5 lbs.|
|250||Bamboo furniture||3-4 lbs.|
|300||Wooden cabinets||2-3 lbs.|
|400||Deer antlers||1-2 lbs.|
|500||Bags of gold dust||Less than 1 lbs.|
Dry van trucks are perfect for all sorts of cargo. That's why most established companies have their own logistics department with fleets of dry van trucks – they're flexible, reliable, and incredibly cost-efficient.
If you're a small or medium-sized business, however, there's no need to worry. You don't have to spend millions on owning a fleet. You can have your cargo delivered to wherever you need anywhere in the US through Michigan's top logistics company, Surus.
We offer competitive rates, a streamlined process, and experienced personnel. Contact us today.
Starting with the basics, intermodal shipping is simply using two or more modes of transportation. Utilizing intermodal containers, shipments are able to be moved seamlessly between cargo ships, trucks or trains. The advantages are plentiful, though it might be difficult to know how it tangibly affects the bottom line.
So, what are the business benefits of intermodal shipping?
Intermodal is a cost-effective, fuel-efficient, sustainable option when compared to long-haul trucking. Intermodal transportation has the available capacity needed by some and the consistent, reliable service expected by all.
While shipping by rail may sound old-fashioned, railcars hold significantly more load and offer more competitive pricing per mile than its counterparts. The cost is competitive, however, when freight needs to be moved long distances, rail can save businesses roughly .75–1 cent per ton-mile.
Many companies also consider their carbon footprint when choosing between freight shipping options. A standard truck can carry 80,000 pounds at a time and only gets around 7 miles/gallon, while rail can transport one ton of freight up to 500 miles on just a single gallon of gas. Having the option to move inventory in a way that is more sustainable, and only utilizing trucking in the last steps of delivery, make intermodal a choice many are making.
While local and regional shipping options are sufficient for some, intermodal transportation solves many capacity issues that companies may have. The consistency in service is not to be overlooked. Many drivers work on set schedules more closely aligned to office hours, having the option to ship via train means taking advantage of fully staffed loading docks that are equipped specifically for the incoming freight.
And intermodal shipping has come a long way with the adoption of 21st century technology. Rail has adopted automation technology that allows real-time tracking for every entity involved. This ensures the right people are where they need to be at the right time and on-time shipping and savings is passed on to the customer.
While businesses like Amazon and WalMart have perfected the free 2-day shipping option, many shipments cannot work on that model. Intermodal lead times can fluctuate due to many factors, so it is especially beneficial for shipments that have flexible timelines. Additionally, high volume and large capacity shipments have requirements that cannot be met with 2-day shipping style models. And while traditional trucking is not an option for every shipper, intermodal is.
For businesses looking for a cost-effective, sustainable shipping option, intermodal transportation offers benefits and rates that can’t be beat.
Around the world, the transportation and logistics industry is experiencing unprecedented disruptions and recent challenges have further stressed the supply chain. Consumer demand remains high – with no signs of let up – but the typical flow of goods is continuing to be delayed due to rapid swings in the labor market and restrictions placed on industries.
Transportation costs have increased dramatically for many reasons and those price increases are passed onto companies shipping their goods and consumers looking to make purchases. Workforce demands, driver shortages, regulations, and potential new emissions legislation that could mandate commercial vehicles in Canada and the United States toward battery-electric or zero-emissions are just a few examples of how these costs could be affected.
As organizations try to figure out how to work around the supply chain issues, there’s also the need to determine how to manage the transportation and logistics that go along with it – and ensuring the cost of it all works in favor of every party involved.
How can companies in need of transportation mitigate some of the costs associated with these lingering issues? And how can the transportation and logistics industry help pass savings along to organizations and consumers without sacrificing safety or service?
5 Strategies to Reduce Logistics and Shipping Costs
Be agile in how you’re willing to transport goods.
The mindset of, “this is how we’ve always done it,” has been confronted with so much change in the last couple of years. Prepaid, online, or upfront payments might only seem like minimal cost savings, but those savings can add up.
Consider packaging changes and be willing to adjust quickly.
Something as simple as packaging goods differently can allow for stacking, Tetris-like packing, and utilizing vertical space in a seemingly horizontal industry.
Remain open to load consolidation.
Cut shipping costs on less than truckload freight with a third party that does the work to secure the most competitive rates, streamline shipment coordination, pick-ups, and deliveries.
Be willing to spend more to save more.
It might seem counterintuitive, but with current labor shortages, it’s important to weigh the cost of hiring additional help at potentially increased rates in order to fulfill demand. The benefits of being seen as a reliable delivery service can ensure continued business.
Find a transportation and logistics provider.
No two supply chains are the same and companies in need of transportation services can benefit from the relationships that are built by third-party logistics coordinators. Multiple pick-ups and drop-offs, expedited shipments, and just-in-time delivery service can help cut costs to companies used to handling shipments one at a time.