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The LTL Pricing and Carrier Relations department works hard to ensure you stay informed about industry events, items of interest, and changes that may impact you. Below please find information that you should find useful. We encourage you to review this complete document. For questions or comments, please reach us at LTLPricing@GlobalTranz.com.

Friday, September 14, 2018

Benefits of Shipper Insurance

The ultimate goal of an LTL carrier is to deliver cargo intact and on time.  Unfortunately, that does not always happen.  Shipments may be damaged in transit. They may be partially or completely lost.  US federal law dictates that motor carriers are liable for loss or damage to goods they transport unless it can be proven they were not at fault.  When loss or damage occurs under their care,  certain exceptions apply that can absolve the carrier from liability.  For example, a weather event or a failure by the shipper to properly package their goods may relieve the carrier from responsibility.  Further, carriers have the right to limit their liability.  We find that carriers increasingly are taking advantage of this right.

Most LTL carriers provide standard liability of up to $50,000 to $100,000 per shipment, but no more than $25.00 per pound.  When a carrier is liable, they of course are only liable up to the actual value of the cargo lost or damaged.  However, they commonly limit that liability based upon the nature of the actual cargo tendered:

  • By Class – The lower the class, the less coverage provided.  Class 50 often receives only $1.00 per pound.  Class 100 may only receive $5.00 per pound.
  • By Commodity –  Articles prone to damage, such as compressors and household appliances, are often subject to very low liability limits such as just $1.00 per pound.
  • By Shipment Type –  Volume quote and other spot quotes are usually limited to $1.00/lb.  Used articles are usually limited to $0.10/lb.
  • By All Types –  A number of LTL carriers take a very simplified approach and limit liability on all shipments to a maximum of just $5.00/lb.  In fact, some carriers limit liability to just $0.50/lb for all shipments.

It is in your best interests to be aware of the liability limits offered by the partner carriers you work with.  You will find these limits in each carriers’ rules tariffs which are available on their website.  Globaltranz does our best to display the maximum cargo liability offered by each carrier based upon the profile of the shipment quoted.  But due to the many and complicated ways that carriers limit liability, it is challenging to always display the correct amount.

An excellent solution to the quandaries presented by limited carrier liability is Shipper’s Insurance.  Globaltranz has partnered with Cargo Shield to offer insurance via Roanoke Underwriting.  Shippper’s Insurance provides many benefits over standard LTL carrier liability limits, Including:

  • It is real insurance –  The liability coverage offered by LTL carriers protect them from claim payout in the event the loss or damage deemed out of their control.  Cargo Shield’s insurance is actual “all-risk” that covers events such as floods and hurricanes.  And it covers your freight up to the actual value you request, providing protection over and above LTL carrier limits.
  • Highly economical –  Insurance for LTL shipments is incredibly economical for the protection offered.
  • Greater coverage – Coverage for up to $3,000,000 can be obtained.  This is much more than the typical $100,000 and $25.00 per pound maximum that LTL carriers offer.
  • Covers shipper invoice value –  Insurance covers the shipper invoice value.  LTL carriers only cover up the cost of goods sold.
  • Confidence of coverage –  With shipper’s insurance, there is no mystery as to how much coverage you have.  Insurance will cover up to the requested amount (but not more than actual value), with no surprises on limits. The policy clearly defines all exclusions and exceptions.  LTL carriers limit their liability in multiple and confusing ways.  And they make frequent adjustments to these limits which are difficult to track and lead to unfortunate surprises.
  • Fewer Prohibited/Excluded Commodities –  Insurance excludes far fewer commodities from coverage than what the typical LTL carrier excludes.  And rather than tracking these exclusions across multiple carriers, customers can simply refer to the excluded list contained within the issued Insurance policy.
  • Faster claims processing –  Cargo Shield will pay or settle claims much faster than the typical LTL carrier.  In fact, we are seeing claims resolved at least 25% faster.
  • Consistency of claims handling  –  Rather than dealing with the varying claims processing methods and actions of multiple carriers, Cargo Shield provides one simplified, uniform, and consistent claims process.

You will find that the Shipper’s Insurance program offered by GlobalTranz is highly beneficial for your customers.  We encourage you to make your customers aware of the benefits of this offering as it will often be in their best interest.

Shipment Dimensions

GlobalTranz BOLs tendered to carriers contain dimensions at the handling unit level roughly 60% of the time.  Carriers greatly appreciate this, as it helps ensure they have accurate information for costing and load planning purposes.  This information can even be transmitted to carriers with the EDI pickup request, accelerating the benefit.

Accurate dimensions help ensure disputes from reclasses are minimized, as these shipper-provided dimensions can be used to confirm the correct NMF item-sub and class is applied.  And of course, accurate dimensions help ensure that accessorials such as Excessive Length are appropriately considered.  That is becoming increasingly important as LTL carriers continue to adjust application on their Excessive Length rules.

The example BOLs below contain appropriate descriptions, NMF items, and classes matching definitions in the NMFC.  They also have accurate dimensions for Length, Width, and Height for each handling unit.  This is exactly what our partner carriers want, and what you should encourage your customers to provide.  It solidifies GlobalTranz as the “3PL of Choice” for our partner carriers.

LTL Carriers determine Length/Width/Height based upon the greatest straight-line dimension of the handling unit.  That means they take into consideration all protrusions and will include all packaging such as the skid and do not stack cones.  Each dimension is measured in inches, multiplied, and then divided by 1,728 to calculate the cubic feet.  A 40” x 48” x 36” skid = 69,120 cubic inches = 40.00 cubic feet.

 


Reweighs

Virtually every LTL carrier utilizes freight scales to verify the BOL weights of shipments tendered to them.  They do this for several reasons.  The primary reason, of course, is that shipment weights affect the revenue they collect.  If a shipment’s BOL weight is under-reported, and the carrier does not fix that error, they stand to receive less revenue than they deserve.

LTL carriers typically receive 2% – 3% of their net revenue from reweighs.  This represents a significant revenue stream for carriers, and a significant profit stream.  In an industry where profit margins average around 10%, reweighs can represent 25% to 33% of a carrier’s profit dollars.  But carriers would really prefer that BOL weights are accurate on the front end, and that the revenue and profit they deserve is generated without the need to perform reweighs.

But revenue is not the only reason carriers reweigh freight.  They also want accurate weights for safety reasons.  Trailers should be loaded in a fashion that properly spreads out the weight across the trailer.  Heavier loads should be placed in the nose of the trailer to prevent it from swaying during transit.  And carriers want to ensure they do not over-load a trailer, as that increases the odds of an accident and leads to over-weight fines.

Carriers also want accurate BOL weights as they use tonnage for their operational metrics.  Terminals are measured and graded based upon how many pounds they move on the dock, and how many pounds are loaded on a trailer.

Today you can expect LTL carriers to reweigh upwards of 90% of the shipments moving in their network. Several carriers have forklift scales mounted on each of their forklifts and can thus reweigh a shipment each time it is touched.  These reweigh weights are increasingly transmitted electronically from the scale their computer system as this alleviates data entry errors.

If a customer is providing inaccurate BOL weights, chances are the carriers are going to find it and fix it with a reweigh.  Carriers mostly use forklift scales to reweigh freight, as this is the most efficient method.  However, some do use stationary platform scales, and may even integrate these with their shipment dimensioning devices.  Scales generally cost about $5,000, so carriers are going to use them heavily to get their return on investment.  In the image below, the forklift scale is the rectangular red carriage that the forks rest upon.

Forklift and platform scales used by carriers must be certified for use by US Department of Commerce standards because they are used to calculate price.  These standards are referred to as “Legal For Trade” or “LFT”, and are the same standards used to certify scales at your grocery store and at the airport.  These standards for forklifts require weight graduations in 5 pound increments.  Therefore you will almost always see the weight from a carrier reweigh ending in a “5” or a “0”.

Carriers really do not target shipments for reweighs given their prevalent use of forklift scales. In most cases, they simply try to reweigh every shipment.  To prevent reweighs from occurring, there are some tell-tale signs and other considerations you should watch for to ensure your customers are providing accurate BOL weights.

  • Weights ending in “00” or “000” –  BOL weights such as of 500 pounds, 1200 pounds, and 2,000 pounds are suspicious as they typically indicate the shipper is guessing at the weight.  If you commonly see weights like this, make sure your customer is not just guessing.  When people guess how much a pallet weighs, they usually guess on the low end.  It’s just human nature, as we are not used to picking up things that weigh hundreds of pounds.
  • Lack of pallet weight –  Pallets and crates are considered part of the shipment and thus their weight should be included.  If you frequently see reweighs with a customer, make sure they are including the weight of pallets and other packaging on the BOL.
  • Calibrated scales –  Many shippers have their own platform scales for weighing pallets.  But these scales can go out of calibration over time.  Most states require that scales are certified each year, but scales can quickly go out of calibration in between certifications.  Carriers verify the calibration of their forklift scales on a weekly or daily basis.
  • Product databases –  When customers know the weights of the products they ship, then can often determine the total weight from internal product databases. But the weights generated are only as accurate as the databases themselves.  If you see recurring reweigh issues with an account, check to see if a common commodity seems to be the culprit.
  • Manual BOL updates –  Sometimes our GTZ systems will flag a shipment as a rebill due to a reweigh when really the cause is a manually-updated BOL weight that differs from the BOL generated during the booking process.  If your customer is over-riding the weight printed on the BOL, find out why they are doing that and collect the right weight up front.

Positive Carrier Stories

GlobalTranz helps our customers move thousands of LTL shipments each and every day.  The majority are picked up and delivered on time with no service or damage issues, and with an invoice that meets expectations.  But, of course, exceptions do occur.  At times we experience issues or challenges that require some form of escalation with a carrier.

It is easy to begin forming the opinion that the exceptions are the rule.  But the reality is that when things go smoothly, they often go unnoticed.

We all know that capacity is tight these days.  Our partner carriers are struggling to maintain their service standards.  They are all working hard to take care of our GTZ customers.  To help show our partner carriers that we appreciate the hard work they are doing, please funnel any positive stories you might have.  It could be a driver who went above and beyond on a pickup or delivery.  Or a Customer Service Rep who stayed on the line and did whatever was needed to resolve a difficult situation.

Send your stories to LTLPricing@GlobalTranz.com, and include as much specific information as possible (Pro #, BOL #, location, employee names, etc).  We will be sure and share those stories with our partner carriers.  They will greatly appreciate this positive feedback, and so will their employees.

Questions? Feedback?

If you have any questions about the contents of this email, or any questions in general about LTL pricing, please reach out to us at LTLPricing@GlobalTranz.com. Thank you.