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Press Coverage
Can Online Spot Quotes Save You Money on Shipping? show/hide
This article was published in OH! Polymer Networker
Can Online Spot Quotes Save You Money on Shipping?
Key Points
Highway shipments account for 75% of the freight that is moved everyday.
New online companies allow manufacturers to compare shipping prices from a number of carriers.
Spot quotes on one-time prices benefit carriers because they can sell open capacity and balance their lanes.
Our nation depends on the timely, cost-effective movement of freight to supply the massive U.S. economy. In fact, the U.S. transportation system moves an average of 57 million tons of freight every day. Highway shipments, including less than truckload (LTL) and truckload (TL) freight, account for about 75% of those loads, while rail, air, and ocean transport support the balance. Just about every manufactured good sold in the U.S. spends part of its journey on one or more freight trucks.
To help keep costs down many manufacturers that use outside freight carriers find it necessary to contact a number of carriers in order to find the best shipping rates available at any given time. Out of this need, a number of online companies have emerged to automate the process, making it more efficient and cost-effective. These companies provide manufacturers with web-based automation similar to that of the travel and banking industries, and apply it to the freight transportation market. This automation enables them to provide manufacturers with a quick comparison of shipping prices from a number of carriers.
To find out how these companies are helping manufacturers keep shipping costs down, we recently interviewed Ray DeSabato, CEO of CarrierStore, one such online service that provides direct access to spot quote pricing from LTL and TL freight carriers:
Interviewer: How is the trucking segment performing in the face of rising fuel costs?
Ray: Although trucking remains the preferred method of distribution, its popularity with shippers has been waning recently, largely due to the rising price of diesel fuel. While fuel costs have generally been on the rise since 2002, diesel fuel has skyrocketed in the past 16 months from $2.45 per gallon to more than $4.60 per gallon \an 88% increase. Years ago, carriers began charging fuel surcharges to insulate themselves from the increasing volatility in oil prices. But in the past year these add-on fees have more than doubled on average, from approximately $0.30 per mile to a whopping $0.70 per mile, leaving shippers to absorb the added costs.
Interviewer: What affect do rising shipping costs have on manufacturers?
Ray: For manufacturers, freight costs represent a sizeable portion of a company's overall expenses. The majority of small and medium-sized business owners cannot easily absorb a 20 to 30% rise in shipping costs. For companies looking to expand their customer base, higher shipping rates can affect decisions on what regions of the country are viable for expansion, or if growth is even possible.
Interviewer: How is the market downturn affecting freight carriers?
Ray: In addition to rising fuel costs, carriers face additional pressures from increased security and emissions requirements, growing highway congestion, rising maintenance and insurance costs, and ongoing driver shortages. All of these factors have led to higher freight costs for shipments, while shrinking demand from a slowing economy has created more open capacity for the carriers who are struggling to balance lanes, contain costs and maintain profitability. This economic scenario pits carriers eager to fill their open capacity and generate incremental revenue against shippers who are desperate to find innovative ways to reduce their freight costs.
Interviewer: What can shippers and carriers do to improve the current situation?
Ray: Most volume and truckload shippers obtain carrier pricing through a freight broker or third party logistics provider (3PL), but rising freight costs are forcing shippers to shop around their freight to multiple carriers. Spot quotes on one-time prices for a specific load benefit carriers because they can sell open capacity and balance their lanes--much like an airline or hotel will offer discounted prices for unsold seats or rooms rather than allow them to go unused.
Interviewer: Is there a downside to using a 3PL or broker?
Ray: The downside for shippers and carriers is that the current system for obtaining spot quotes can be costly and time-consuming.
Interviewer: How can the spot quote market become more automated and efficient?
Ray: Some carriers now offer spot quote pricing directly from their websites. Many 3PLs and some non-brokerage companies provide web-based services that offer shippers an online interface with selected carriers to receive spot quotes.
Interviewer:What are the benefits of using one of these new online shipping services?
Ray:The shipper receives multiple, all-inclusive quotes direct from carriers with no obligation to use any of the bids provided. By taking advantage of open capacity, shippers can realize a savings of 30 to 40% off their current tariff-based pricing programs with no additional fees. Some services offer comprehensive reporting and direct billing from the carrier.
Interviewer: Do you see this as a new trend in the freight shipping market?
Ray: Absolutely. As the price of oil surges past $125 per barrel and the cost of fuel continues to rise, it is likely that shippers and freight carriers will continue searching for new ways to reduce costs. Minimizing empty lanes helps carriers maximize their revenue and shippers benefit from direct access to open freight capacity from a number of major carriers.
OH!Polymer Networker has been prepared solely for the purpose of providing helpful information to users of this service. The information has been compiled by Tech Resources, a contractor to OH!Polymer, however, no representation is made as to the completeness or accuracy of the information contained therein. In particular, some information may be incomplete, may contain errors or may be out of date. In addition, neither Tech Resources nor OH!Polymer endorses any product or service mentioned therein.
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Using the Spot Quote Market to Balance Lanes show/hide
The following article appeared in Transport Topics.
By Dan Clark
President
CarrierStore
10/29/07
Balancing lanes is the key to carrier success.
A completely balanced lane is achieved when a tractor-trailer leaves a terminal full and arrives back at the terminal full. The major challenge every carrier faces is how to get freight on their trucks that will fill open capacity, thus balancing their lanes. Securing volume freight , 3,500 pounds up to a truckload, is an excellent way to meet this challenge.
Carriers, however, are finding that this coveted volume freight is moving into the spot-quote market. What does this mean? In a nutshell, shippers are no longer automatically shipping their volume freight through contracted carriers at agreed upon tariff-based rates. Instead, they are shopping around their freight to multiple carriers to get spot quotes.
A true spot quote is when a shipper contracts with a carrier for a one-time price to move a particular piece of volume freight. If the shipper?s freight matches the carrier's open capacity, the shipper will see huge savings.
The savings are substantial enough that increasing numbers of shippers are getting spot quotes on every piece of volume freight they move.
As a result, carriers no longer can assume shippers will move volume freight on their trucks with contracted tariff-based rates. They need to embrace the spot-quote market and provide these quotes to shippers in a timely and cost-effective way.
Let's step back now and look at the freight movement process to see how obtaining volume freight through spot quotes helps balance lanes.
Regional less-than-truckload carriers expect 70% to 80% of their bills to be picked up one day and delivered the next. Through inbound planning and dock operations, current-day freight, coupled with scheduled appointments, is loaded on planned pickup-and-delivery trailers for delivery that day. Based on that day's freight characteristics, drivers are able to interleave pickups with deliveries, increasing driver efficiency. The goal is for drivers to pick up sufficient freight during the day to fill the trailer prior to returning to the terminal that evening.
Through outbound planning and dock operations, LTL pickups arriving at the local terminal via the P&D cycle are transferred to linehaul trailers scheduled to move freight to the terminal closest to the shipment's destination.
Linehaul usually represents 30% to 40% of an LTL carrier's overall costs. LTLs have linehaul schedules that generally require tractor-trailers to leave that evening to deliver goods to the destination terminal the next morning.
Although the goal is for linehaul trailers to leave a terminal completely full, this goal is often compromised because even if the lane lacks sufficient freight, the trailer is obligated to leave that evening to meet delivery commitments.
To avoid sending partials and meet next-day commitments, carriers will move freight through hubs. In addition, if a lane is two or more days and there is insufficient freight to justify a terminal-to-terminal linehaul schedule, carriers will use break terminals to aggregate freight to maximize the trailer cube before arriving at the final terminal.
These LTL approaches are very similar to the spoke-and-hub concept used by most airline carriers to ensure fully loaded planes on longer flights. For the same reasons airline travelers dread having to go through hub terminals, missed connections, longer travel times and lost baggage, sending LTL freight though hub or break terminals results in additional handling and the danger of lost or damaged freight.
Shippers and LTLs alike benefit when LTL freight does not need to be aggregated via hub or break terminals.
Balancing inbound and outbound lane schedules with P&D and linehaul power (equipment) and resources are critical to ensuring LTLs are profitable.
As labor can account for as much as 60% of overall costs for an LTL, schedules for dock, driver and equipment must be managed for maximum productivity. Likewise, if P&D or linehaul trailers return empty to terminals, the LTL will find profitability a challenge.
LTLs understand their overall schedules and the costs for various P&D and linehaul schedules. These schedules vary based on the time of month, season of the year and the number of customer contracts. Spot quotes are an excellent vehicle to balance a given LTL?s lanes. A single spot quote shipment can make an unprofitable lane schedule profitable.
Each LTL?s schedule is different, based on customer contracts, and a profitable head-haul lane for one carrier may be an unprofitable backhaul lane for another. Spot quotes create a supply-and-demand situation that helps carriers balance inbound and outbound schedules to optimize P&D and linehaul processes, the goal being to eliminate the need to send freight through hub terminals.
Carriers often give spot quotes over the phone or e-mail, but are finding the need to automate this process to free up account manager time in the terminals and better serve customers. Some carriers have turned to the Internet and are providing spot quotes on their Web sites. And there are several Web-based services offering shipper choice by providing spot quotes from multiple carriers.
The CarrierStore xChange connects shippers directly to the pricing departments of carriers for volume and truckload freight spot quotes. CarrierStore is based in Acton, Mass.
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Pricing's Spot Support show/hide
The following article appeared in Traffic World.
Pricing's Spot Support
By John Gallagher
Spot market keeps pressure on truckload, LTL rates; carriers use service to support sagging price ceiling
Truckers may have staved off a pricing free-fall in the weakest freight environment in years, but the spot market still could push truckload and LTL rates to new lows in 2007.
While some carriers are cutting prices to maintain market share, others are banking on high service levels to keep prices from falling. Carriers with the deepest pockets have had the most success at avoiding drastic dips in both price and service.
" Over the past two quarters our public truckload carriers' reported yields have remained surprisingly solid considering the weakness in spot market pricing," said trucking analyst Ed Wolfe of Bear Stearns.
" We believe the larger carriers have chosen to sacrifice utilization and deadhead to maintain their higher paying freight. However, with most of the large bids that were out in the market during the first and second quarter now complete, we believe yields as reported by the large truckload carriers will be down compared to last year," Wolfe said.
Wolfe says LTL carriers are seeing growing price competition, particularly from the large parcel carriers.
" We see an increasingly competitive marketplace as UPS and FedEx move deeper into the LTL market through acquisitions and as (Arkansas Best) and (YRC Worldwide) increasingly are expected to roll out new next-day products for the first time in that fast-growing market dominated by regional players. We also see many public and private LTL providers who expect to pick up market share through the downturn by growing new products and/or new geographies."
New England Motor Freight, a subsidiary of the Shevell Group, Elizabeth, N.J., is attempting to do that.
" If you don?t have much that differentiates you from everyone else, then it?'s a difficult time to compete,? said Michael Bare, president and CEO of the Shevell Group. "We set out on a path over a year ago to focus on (maintaining service) and allowing the ups and downs of capacity and the economy to play havoc on others."
Michael Regan, chairman and CEO of TranzAct Technologies, says lines between truckload and LTL are blurring in the spot market, giving shippers more opportunities if they can take advantage of them.
"A lot of shippers are wedded to core carrier programs, and their base of carriers is relatively fixed," he said.
" In this environment, if (shippers) can expand the carriers with whom they work, they can take advantage of particular lanes. The drawback is that may hurt when capacity gets tight again, because carriers are going to flow trucks to their higher yielding business."
NEMF, which participates in the spot market in traditional backhaul lanes such as inbound to Chicago and outbound from the Northeast, says prices can fluctuate depending on the time of day, a particular terminal and the day of the week.
The key , he says, is not allowing competitors that can't provide the same range of services to dictate price.
" Competing against smaller companies that don't pay near what large companies pay, if we have to look at that in addition to the cost of infrastructure and the cost of recapitalizing large fleets with safe equipment, we have to find a way to prove to customers a value. Otherwise we won't be able to buy a truck that's 20 percent more efficient or open a terminal where the per-door cost has gone up 20 to 30 percent in the last two years."
One company trying to even the spot playing field is CarrierStore, a Web-based freight exchange that connects shippers directly to the pricing departments of LTL carriers for automated spot quotes on shipments more than 3,500 pounds, up to and including a full truckload.
"More and more freight is moving in the spot market and away from tariffs" President Dan Clark said.
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LTL Execs Launch Online Quote Service show/hide
The following article appeared inTransport Topics.
A trio of former less-than-truck-load executives has created a service to connect business-to-business shippers with LTL carriers.
The startup service, CarrierStore xChange, accessed at the Web site www.CarrierStore.com, was founded by Dan Clark, who worked as an executive for Central Freight Lines and USF Corp. The company said Walt Ainsworth and Eric Rhea are participating in Clark?s venture to help shippers and carriers deal with inefficiencies when seeking spot-market price quotes. Ainsworth and Rhea also worked for Central Freight and USF.
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New Launch Would Handle Spot Loads show/hide
The following article appeared on Logistics Today Online.
A Web-based market exchange will link shippers to pricing departments at carriers for automated spot quotes.
Written by: LT Staff
6/29/2007
CarrierStore.com is aimed at the spot market for shipments over 3,500 pounds, up to full truckload. It was developed to match volume and truckload freight to carriers' spot capacity. Based on conversations with founder Dan Clark, the concept differs from other exchanges in two key ways.
The shipper's request for a quote goes directly to the carrier's pricing department, not through sales channels. The carrier can set a freight-specific price based on its current lane density needs, reflecting actual capacity and costs at the time of the quote. Clark says the Web-based system avoids delays over repeated calls to a carrier sales department, which doesn't fit the nature of a spot quote.
Shippers pay the carrier invoice price; carriers pay a transaction fee to CarrierStore.com.
According to Clark, as the carrier's open capacity changes it can adjust pricing to help fill that capacity. For the shipper, pricing reflects the best market rate and a similar move may be priced differently at different times based on real time market conditions and costs. The carrier is able to control yield by pricing accurately.
Carrierstore.com has developed a list of carriers and it will run each registered shipper though a credit check.
The service launches July 7th at www.carrierstore.com.
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New Web-based portal connects shippers and carriers for LTL freight movements, overcome spot quote challenges show/hide
The following article appeared on Logistics Management Online.
A new Web-based service, which is designed to link shippers and carriers of less-than-truckload (LTL) freight to move volume and truckload shipments, has officially launched today.
Jeff Berman, Senior Editor
Logistics Management
June 26, 2007
ACTON, Mass. A new Web-based service, which is designed to link shippers and carriers of less-than-truckload (LTL) freight to move volume and truckload shipments, has officially launched today.
The service, entitled CarrierStore xChange, is a product of startup company CarrierStore. Dan Clark, the company's president, told Logistics Management that the impetus for this endeavor was to enable shippers and carriers to overcome inefficiencies in the "spot quote" process often used for shipments more than 3,500 pounds up to a truckload.
Clark explained that when shipments exceed a particular weight break, which is 3,500 pounds or more, shippers typically call around to carriers to get a spot quote, a singular price for a specific freight movement on a particular day.
"Even with a really good discount using a tariff-based rate, it is still hard for carriers to be competitive enough to get freight for a volume order," said Clark. "And the business for volume shots has grown into spot quotes, and spot quotes are a very painful process for both shippers and carriers.
Shippers, explained Clark, want to get the best freight rate they can for a particular day, so they will call around to multiple carriers to get rates. And the time it takes to pin down the right person to get that information can often be difficult and time-consuming, he said. Some carriers now are offering spot quote rates on their Web sites, which has made it a bit easier for shippers to collect rates, noted Clark. But more often than not, he said the typical process still requires multiple phone calls to track down the right person to get the price to the shipper.
This, according to Clark, is where CarrierStore's xChange comes in to try and help make things smoother.
With this Web-based system, a shipper can post shipment information online, which is then immediately transferred to a carrier?s pricing department. Once the carrier enters a price, it is then routed back to the shipper within one hour, giving carriers one hour to bid on the freight. And at the end of that hour, all the carriers in the CarrierStore network that bid on that particular shipment will have their bids displayed for the shipper to select. Clark likened this process to a hybrid between SouthWest, eBay, and Lending Tree.
Shippers that use xChange are credit qualified before receiving a user name and password that will navigate them to a security-enabled section where they can enter shipment information, including address, item description, quantity, weight, and freight-dimensions, which are auto-saved for repeat customers.
When this information is entered it is then validated and submitted to carriers for bidding. At this point, the qualified carriers that could potentially handle that shipment, receive an e-mail notification for a new bid opportunity, which prompts them to log on to xChange and look at the shipping summary, put a price on it, and submit a bid.
With this tool, said Clark, shippers can be more selective when fielding bids.
"This tool provides shippers with the best prices possible form best in class carriers," he said. "And they can choose from multiple carriers and match shipments up with a carrier's open capacity, as well as improve service"
CarrierStore xChange has been undergoing beta testing for the last two months, with roughly 20 shippers and three carriers vetting 5,000 shipments. The company partnered up with technology services provider MercuryGate for the Web-based platform. Clark said 18 national carriers?including USF Holland, USF Reddaway, and R+L Carriers?are signed up for xChange, with the potential to go up to as many as 25
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CarrierStore Launches Trucking Exchange show/hide
The following article is currently online at www.trafficworld.com.
6/26/2007
Thomas L. Gallagher
Web Editor
CarrierStore on June 26 launched operations of its Web-based market exchange for volume and truckload freight.
CarrierStore, based about 26 miles northwest of Boston in Acton, Mass., brings together B2B shippers and LTL freight carriers for the movement of volume (over 3,500 pounds) and truckload shipments. Through its Web portal, shippers can get freight specific quotes directly from the pricing departments at LTL freight carriers.
"Working in the industry trenches I saw that the process for quoting volume and truckload freight was fundamentally flawed and that both the shippers and carriers were looking for a better solution," said company founder Dan Clark. "The opportunity to match volume freight with a carrier's open capacity provides great benefits to both the shipper and carrier, but a more efficient quoting system is needed. To address this challenge, I recruited industry, technology and marketing experts to develop the xChange. Your people are your greatest asset and I believe CarrierStore's success will be driven by its team."
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