Category Archives: Blog

3 Solutions to Common Problems for Freight Brokers in 2014 & 2015

Problem solving is an essential part of the freight industry. Every freight broker must be ready to face a fresh set of problems every day and handle them efficiently in order to keep their customers happy.

 

Carrier Capacity

Sometimes it feels like carriers are tripping over themselves to pick up your loads, but with the truck labor shortage growing it seems more often than not difficult to find someone to pick up your load. One solution for this is to plan ahead and establish relationships with carriers before you actually need them. Utilize the technology and networking as it will allow you a broader outlet of carriers. And always make sure to pay your carrier on time for their services! Even when your customer is slow to pay you, keep up that good relationship with your carriers to guarantee they will be there for you in the future.

 

Transit Delays

There are so many ways for freight to get delayed: bad weather, construction and mechanical breakdowns can all hinder freight reaching a customer. When these things occur you must be prepared to work with your customer and the carrier to get the freight to its destination as quickly as possible. A broker can often prevent some delays by being aware of transit patterns and helping carriers to avoid areas of construction or poor weather. It isn’t the broker’s job to ensure that a truck doesn’t drive into a snowstorm, but being aware that it could cause a delay and keeping everyone informed always improves the customer experience.

 

Cargo Loss or Damage

A freight broker is not responsible for covering fees for lost or damaged freight, but often a customer will come to the broker with these issues. The best way to handle this is to be aware of the process that carriers should be following when handling freight. The driver is expected to review the BOL before leaving with freight to ensure that what is loaded on the trailer is actually there and the consignee’s receiving clerk should also review the shipment before signing off on it. When you hear of a claim, immediately contact the carrier and dispatcher. You will often be needed to act as the middleman between the customer and the carrier, therefore going above and beyond to help resolve the claim will ensure that your customer knows you truly care about their business.

Every day brings a new set of challenges to a freight broker, but that’s part of what makes this field an exciting one! By making sure that the customer is always given the best possible service in difficult situations, you can ensure that the future of your company will be very strong.

 

Transportation Intermediaries Association Questions Proposed Food Safety Modernization Act (FSMA) Sanitary Transportation Rule

The Food Safety Modernization Act signed into law in 2011 includes provisions that will allow implementation of the 2005 Sanitary Food Transportation Act. On February 5, 2014, the FDA published the proposed requirements for the final transport regulations due March 31, 2016.

Since the proposed rule would apply to shippers, receivers and carriers transporting food within the United States both by motorized and rail transport, the Transportation Intermediaries Association is concerned. In addition, the proposed rule would apply to exporters shipping container loads of food to the US by oceangoing vessel or by airfreight and also applies to those who arrange the transfer of the container to rail or motor vehicle transport for consumption or distribution in the US. Under the proposed rule, the FDA considers the exporter to be the shipper despite being located outside the US.

For the transportation industry the rule would establish the following requirements:

  • The design and maintenance of the transportation vehicle and equipment must ensure against food contamination.
  • During transportation, safeguards against contamination such as adequate temperature controls and segregation of non-food from food carried in the same load must be present.
  • Communication processes must be in place for sharing of appropriate information about previous cargos, equipment sanitization and temperature control among the shipper, carrier and receiver. For example, potential allergens from a shipment impacting a subsequent shipment of non-allergenic cargo through cross contact must be prevented.
  • Carrier personnel should undergo documented sanitary transportation practices.
  • Updated written procedures and records of cleaning, prior cargos and temperature control by carriers and shippers must be in place.

If it is in the public interest, the FDA may issue a waiver of these requirements if it determines that it will not result in unsafe conditions for human or animal health.

The Transportation Intermediaries Association wants to make certain that the FDA realizes that freight forwarders and brokers are not shippers and should be excluded from the law. The TIA and other concerned members of the transportation industry feel that automatic rejection of at risk loads will result in sharp increases in cargo claims, insurance rates, shipping costs and ultimately higher costs of goods for the end consumer.

In regards to cost, the FDA estimated that 83,609 businesses, including food transportation carriers and facilities that ship covered food would be subject to the proposed rule. After the first year of implementation the approximate annual cost of the rule per business is at least $360 ($30.08 million annual total) without taking into account the accessorial costs absorbed throughout the industries.

In its Federal Register notice FDA said it only found 6 incidents of contaminated food or the potential to become contaminated during transportation in a 36-year period. However, in 2005 congress mandated a focus on prevention of food safety problems throughout the food chain.

It is important that every member of this industry contributes by improving efficiencies, promoting growth through intelligent legislation.

Seven Fundamental Principals to 3PL (Third-Party Logistics) Success

If you are growing frustrated with old 3PL methods of handling domestic freight insurance, we may be able to help.

Here are seven ways to handle third-party logistics differently:

  • Know current pricing – The latest information on domestic rates is located on this site. With this, you can adjust your budget to include insurance.
  • Get an accurate estimate of the value of your shipment – In the event of a cargo claim, a proper assessment of values being shipped will allow a much smoother claims handling process for all parties involved.
  • Don’t take short cuts – Experienced shippers have horror stories of under insuring their cargo or not insuring it at all.
  • Choose dependable carriers  – Accountability is fundamental to growth.
  • Nurture relationships – A good customer experience improves retention.
  • Keep costs in line – Do your research to ascertain what options is the best value for your money.

We recognize that you don’t want to pay for what you don’t need. We can help you tailor your insurance packages to the exposures present in your business model. We even offer spot/excess cargo insurance through our Exclusive Freight Insurance ASAP Program. When you partner with GSIS, we will support all of your Risk Management & Insurance needs.

See our website for more on this topic.

Map 21 Pension Provisions Extended by HATFA

Recently, President Obama signed into law the Highway and Transportation Funding Act (HATFA) of 2014. Littler reports that among other things, the law extends the pension provisions that were developed by the 2012 Moving Ahead for Progress for the 21st Century (Map 21). Here are the details:

  • Map 21 amended the IRS code to set interest rates for pension plan funding valuations at approximately the 25-year average of historical interest rates.
  • This range was between 90-110 percent in 2012, expanding to between 70-130 percent in 2016.
  • HATFA extends the 90-110 percent range to 2017. The range then expands to 70-130 percent by 2021.
  • The provisions are retroactive to the 2013 year and sponsors can defer using the HATFA rates until the 2014 plan year.
  • In order to defer, sponsors need to provide written notice to the plan’s enrolled actuary and sponsor.
  • In addition, a sponsor will be considered deferring if, on its Form 5500 and Schedule SB, it uses the Map 21 plan rates for 2013.
  • The deferred status can be revoked if the plan files an amended return using the HATFA rates or provides written notice of the revocation.
  • Election to defer must be made no later than December 21, 2014.
  • According to the U.S. Department of Transportation’s Federal Highway Administration, the main thrust of Map 21 is a long term funding of surface transportation programs, with $105 billion provided for fiscal years 2013 and 2014. It was the first long term highway authorization provided since 2005. It builds on the highway, transit, bike and pedestrian programs that were established in 1991.

For more information on Map 21, HATFA, and other programs impacting the transportation industry, contact us.

 

If You’re Considering Becoming a Freight Broker, Read This.

Are you considering opening up your own freight broker business? If so, there are some things you must know according to a recent article from Entrepreneur. Among the first things you should know about starting your own freight brokerage is that you should first gain experience in the industry in order to not only gather technical expertise, but also to make contacts that are vital to your success.

It is important also to understand the economics of the industry so that you can negotiate terms with your shippers and carriers. In addition, you need to understand the record-keeping that is required of brokers. For every transaction, your records must show the name and address of the shipper; the name, address, and registration number of the originating motor carrier; the bill of lading or freight bill number; the amount of compensation received; a description of any non-brokerage service performed in connection with each shipment and the amount of compensation and name of the payer connected to that non-brokerage service; the amount of freight charges collected by the broker and the date of the payment to the carrier.

New freight brokers should understand the importance of developing solid banking relationships, as well. New brokers often need a line of credit or factoring company in order to pay for their expenses before they receive payment from their customers, the article stated.

Before you start your business, you will have to register with the Federal Highway Administration. Registration consists of paying a filing fee, filling out an application, obtaining a surety bond or trust fund, and designating an agent for service of legal process. Once you’ve registered, you will receive your permit with an MC number. At that point, you’re legal to operate as a broker in the U.S.

The transportation and logistics industry has been hit hard in recent months with many court cases and large verdicts awarded against logistics companies. It is always important to consider purchasing insurance coverages. As a Freight Broker the coverages available will help stabilize you bottom line by providing coverage for unforeseen legal costs and expenses.

For more information on starting a freight brokerage, contact us.

Third Party Logistics Companies (3PLs), Motor Carriers and Brokerages Suffer in Labor Shortage

According to a recent article from HDT Trucking Info, the U.S. trucking industry isn’t alone in the suffering brought about by the labor shortage. Brokerages and third party logistics companies are also impacted.

At an industry conference, the CEO of Transportation Intermediaries Association (TIA), Robert Voltmann, stated that the pain caused for the capacity crunch would continue to be felt by Third Party Logistics Companies (3PLs) and brokers, who are also struggling to find qualified employees. The 3PL industry in particular has been growing rapidly, now valued at $160 billion per year, and features a number of employment opportunities.

Some of the situations that are fueling the growth, include retailers who are putting distribution centers near their customer bases in order to offer same-day delivery. Also, the advent of the fracking industry is causing foreign firms to build manufacturing facilities in the U.S. in order to take advantage of relatively cheap energy and those facilities need trucks to move their products.

In addition to a driver shortage and employee shortages spurred by growth, 3PLs also face the issue of deteriorated infrastructure. Shipments are slowed by the poor condition and congestion of roadways, Voltmann explained. The regulatory environment, too, is causing some stress for companies within the logistics industry. Among increased regulations that Voltmann cited is hours of service and electronic logging device rules.

What it comes down to is this: it’s both a profitable yet demanding time to be a third party logistics company. For more information about third party logistics and the impact of new laws and labor shortages to the industry, contact us.

 

OTI Surety Bond Overview

If you’re an ocean freight forwarder, then you are likely familiar (and if you aren’t familiar, then you certainly should be) with the OTI Bond Program. As it’s always good to remind yourself of the details of the business, here are some facts from the Federal Maritime Commission (FMC) to refresh your knowledge:

  • Ocean Transportation Intermediary (OTI) ocean freight forwarders are required to prove financial responsibility. This is usually accomplished through an OTI surety bond, the FMC states.
  • The amount required to prove financial responsibility is $50,000. An additional $10,000 is required for each unincorporated U.S. branch office that provides ocean freight forwarder services.
  • The U.S. Department of Treasury must approve the surety company who underwrites the bond and the company must appear on its listing of approved sureties.
  • The bond must be signed by both the OTI and the surety, with a current power of attorney attached that permits the surety representative to sign the bond.
  • In order for a bond to be cancelled by either the surety or the OTI, a notice of cancellation must be received by the FMC. The cancellation won’t be in effect until 30 days have passed since receipt of the notice.
  • If a bond has been cancelled, then the OTI is removed from the commission’s list of active OTIs and it cannot perform OTI services within the United States trades. The FMC warns, inactive OTIs offering these services could face substantial penalties.
  • It is sometimes permissible, if the surety issues a notice of cancellation, for the OTI to obtain replacement coverage. Provided there has been no lapse in coverage and a reasonably short period of time has passed, the commission will generally reissue the license.

For more information about the OTI Bond Program, contact GSIS today.

Delays Expected from FMCSA (Federal Motor Carrier Safety Administration) On New Rule Making

An article from Go By Truck Global News stated that delays are likely on any rule making from the FMCSA (Federal Motor Carrier Safety Administration), particularly regarding anything controversial. Annette Sandberg, a former FMCSA administrator, said that the departure of the head of the administration and the naming of an acting administrator will probably cause big decisions to be delayed until at least the end of the year, or until a new administrator is named. This impacts such issues as the minimum insurance requirement rule that was expected to be published this month, as well as the entry-level driver training rule & TIA (Transportation Intermediaries Association’s) supported H.R. 4727.

Also affected by the leadership change will be the electronic logging device mandate that Congress has been pushing the agency to get out by January, Sandberg stated, pointing out that the FMCSA has been pushing for carriers to implement e-logs as soon as possible, even in spite of a final rule. The issue is both controversial and technically complex, the article noted.

Another issue that will likely be delayed is any rule making regarding sleep apnea, though the National Registry of Certified Medical Examiners has offered guidance as to when drivers should be tested for the condition.

In spite of the delay on future rules, the article stated, Sandberg warned that a number of regulations that are due to begin will be on schedule. This includes the requirement that all drivers maintain commercial driver’s licenses in their home state and the change in enforcement that will apply violations from one carrier to all other carriers who operate under the same company.

The Origin of the Ocean Cargo Policy

Perhaps the first cargo insurance program was the “general average” practice of the inhabitants of Rhodes in ancient Greece around three thousand years ago. Groups of merchants whose goods were being shipped together collected a pool of money that would be use to reimburse any merchant for losses during transport because of storms or sinking. The ancient Athenians’ so called “maritime loans” provided funds in advance for voyages with the interest rates calculated according to risk. Repayment was cancelled if the ship was lost.

True maritime insurance was invented in Genoa, Italy in the 14th century. Insurance pools were backed by pledges from landed estates. The insured paid premiums based on estimated risks. Between the 14th and 15th century maritime insurance was widely developed as were systems for estimating risk to calculate rates. The first book on maritime insurance entitled (in Italian) “On Insurance and Merchants’ Bets” was written in 1488 (four years before Columbus’ voyage), and published in 1552.

Formal dedicated insurance companies began appearing during the late 18th and early 19th century. Historical records mention formalized insurance in London as early as the early 17th century. The first insured events were in fact related to the safe arrival of a ship. London was becoming increasingly important as a maritime trade center during the 17th century.

When, in the 1680s, Edward Lloyd opened a coffee house popular among ship owners, captains, and merchants, the demand for ocean cargo insurance was high and so was the number of industrialists willing to underwrite such contracts. Lloyd’s of London, probably the first Cargo Insurance Broker, was established in the early eighteen hundreds.

Today, ocean cargo insurance has become an essential part of the shipping trade. The ocean cargo insurance market is well developed with many kinds of cargo insurance available along with many levels of coverage. International law plays an important role in regulating the industry. Although international conventions limit the liability of carriers in case of a wide variety of unfortunate events, cargo must be insured to recover full losses.

Cargo insurance is a fast changing aspect of the shipping business. Up to date information and advice is necessary in this complex marketplace.

 

A Projected Increase in Holiday Inbound Freight Is Expected To Have a Positive Impact for Transportation Companies & Intermediaries

According to a recent article from Bloomberg entitled “Your Presents On Way Offer Holiday Sales Clues: EcoPulse,” a projected uptick in inbound container volume is projected for the holiday season. Though inbound container volume at California’s Los Angeles and Long Beach ports was down .7 percent in July when compared to July of 2013, the volume had risen 13 percent from the prior month due to retailer anticipation of a good holiday selling season. Those two ports account for almost 50 percent of all U.S. container imports, the article noted.

A possible dockworker strike also prompted early ordering this year, the article stated. Retailers have been quick to ink contracts with carriers to ensure that trucks will be available to deliver their holiday goods in the busiest shopping weeks of the year. Experts say that this, again, points to gains in economic recovery and the promise of shoppers who are a little more comfortable with gift-buying this year.

Retail sales excluding the purchase of automobiles, gasoline, and spending at restaurants is expected to increase 4.2 percent in November and December, according to non-seasonally adjusted figures. Each of the past two years have seen gains of 3.1 percent during that time period, the article stated.

Container demand is not just increasing in the U.S., but globally as other countries’ economies also improve. The net operating profit after tax this year in freight industry is expected to be significantly higher than last year’s $1.5 billion. Because of the increase in inbound freight volume at the Los Angeles and Long Beach ports, there is likely to be an increased demand for trucking as well, as the same retailers who brought the goods to the country in the first place will utilize trucking companies to have them delivered to stores, the article noted. It is also important to note that the U.S. is experiencing a very significant Capacity Crunch with a shortage of Truckers this will undoubtedly have a positive effect on Freight Brokers who have the flexibility of a large network of Truckers at their disposal.

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