3PL Perspectives
THE PAST TWO years have been dynamic, especially when it comes to the freight industry. Many of us recall how in seasons past the early months of the new year were a time to take a breather as volume leveled off after the holidays. Volume would gradually ramp up over the summer to hit peak season in late summer/early autumn and then continue the momentum of high volume/tight power capacity through the year-end holiday season.
Today, there is no longer a breather, and it seems like capacity is never available. Not to mention that rates seem to increase by the day. So, what’s a transportation provider to do to keep their customers’ product moving? As a non-asset Intermodal Carrier (IMC), a great solution that we have discovered is getting creative with our customers via consolidation. In instances where customers were experiencing unsustainable expenses due to shipping constraints, we stepped in to develop custom programs to handle each of their situations by thinking outside of the box.
Freight Consolidation Project #1:
Knichel Logistics developed a freight consolidation program for a customer of ours who specializes in creating custom spice blends and recipes for local restaurants and food manufacturers in Ohio. This program was developed in order to reduce expenses related specifically to less than truckload (LTL) charges for this customer. Many of their shippers are located in the NorCal area, thus it made sense to have all of their product trucked to Knichel’s affiliate NorCal warehouse. Our LTL carriers also move their product from shippers in Oregon and bring it to the same warehouse. From here, the consolidation takes place. We arrange for the NorCal and Oregon product to be loaded on to an intermodal container, balance the weight and apply appropriate blocking and bracing, then we ship this intermodal container to the customer’s facility in Ohio. This freight consolidation reduces our customer’s LTL expenses and helps maximize the use of the container’s space/weight capacity. By doing this, cost per pound dramatically decreased. One disclaimer is that this was most cost effective prior to intermodal peak surcharges being put into place, but is still an excellent way to streamline one customer’s supply chain while also saving them money.
Freight Consolidation/Distribution Project #2:
We also work with a company that manufactures drinking cups. This customer has freight that comes into the New Jersey ports from overseas on a regular basis and was really struggling with managing these international shipments in a cost-effective manner. The Knichel team worked out another freight consolidation program for this customer by working with our strong drayage partners and warehousing affiliates in New Jersey. Once we dray the customer’s international product out of the port, it is directed to our affiliate warehouse close by. At the warehouse, we sort and segregate the combined product (often multiple containers), build new pallets and BOLs, then ship out the consolidated product via LTL or full truckload, depending on the instruction from the customer. Thankfully we were able to help this customer out via this program and have created a solid partnership that has lasted over 15 years!
Freight Consolidation Project #3:
We’ve handled two projects thus far with another forthcoming where we’ve partnered with a new customer who has inbound shipments to the Port of New Orleans. Once the vessels arrive at port, the shipping containers are offloaded at a warehouse inside of the port where consolidation takes place. Knichel provides the drayage and 53-ft equipment to pick up the consolidated containers at the warehouse and transloads the freight on the rail in order to move it to the receiver in Idaho. The full consolidation may not solely be in the hands of Knichel in this particular instance. Working collaboratively with customers to meet all of their needs, from port to warehouse to rail, is something that Knichel has been creative with to enhance service offerings and increase customer satisfaction.
Things to Consider:
- Building our own custom consolidation programs based on specific customer needs is something that we’ve invested a lot of time and processes on creating, and it has been a major selling point for these particular types of projects. If you have the resources and operations personnel available to dedicate to developing this service, it is worth the investment.
- When one stop/shipper does not tender or move enough freight for a full load, using LTL carriers is a cost-effective way to move freight from one point to another while using intermodal for the final delivery. Doing so can drive your cost per pound down, especially in today’s market where pricing is critical. There is also the added benefit of greater flexibility when timing shipments, as pallets can be brought in and stored until a full load is confirmed. These are some GREAT benefits to convey to your shippers.
- Continuously work on expanding your network! Talk to dray providers, warehouses, LTL carriers, IMCs—solutions sometimes come from unexpected connections.
