Freight Management FAQs

What is freight management?

A: Freight management is the process of efficiently and strategically moving freight across a network from its point of origin to its desired destination using various modes of transportation, intermediaries, and technologies. The process employs logistics and supply chain expertise, physical assets such as trucks, distribution centers and warehouses, and technology to move freight efficiently and cost-effectively.

Why has freight management become such an important component of business?

A: The ability to deliver freight on time to the right destination, in the right quantity, damage-free, and at the lowest possible cost, has always been critically important to businesses. In today’s competitive environment, this ability is more important than ever due to factors such as leaner shipper inventories, just-in-time manufacturing, rising warehousing and labor costs, tighter delivery windows, and consumer fulfillment expectations driven by ecommerce.

What modes of transportation do freight managers use?

A: Freight mangers ship cargo by air, rail, road, and water. Combinations of these modes, often referred to as intermodal transportation, are also used to provide optimal logistics and delivery solutions. Within the United States, roughly 70% of freight is transported by commercial trucks.

What are the different road transportation options?

A: Ground transportation comes in many varieties but common choices for shippers are full truckload (TL or sometimes FL), less-than-truckload (LTL), and parcel. In TL transportation a shipment fills an entire semi-truck trailer, whereas LTL shipments only partially fill a semi-trailer and can be comingled with other various other appropriate freight to make up a full load. Parcel refers to the transportation of small and mid-size package units. Each option requires a different freight management approach.

What are the different freight management options via truck?

A: The three primary freight management options by truck are: private carriage, common carriage, and dedicated contract carriage. Shippers that choose private carriage elect to manage their own trucks and drivers. In common carriage, freight is moved by multiple third-party trucking carriers on an as-needed and transactional basis. Dedicated contract carriage (DCC) — an increasingly popular method — provides the same fixed capacity and control as private carriage but shippers fully outsource the operation and management of their fleet to a third-party logistics provider (3PL) or lead logistics providers (LLP). In the instance of DCC, the 3PL operates and maintains the truck fleet, hires and manages the drivers, and ensures the safe, on-time delivery per the shipper’s requirements.

Visibility is a common supply chain term. What is it?

A: Supply chain visibility is essentially the ability to track the status and location of parts, components, and products as they move from origin to destination. It’s difficult to overstate the importance of supply chain visibility. It underpins excellent customer service and enables companies to drive cost out of supply chains by, for example, anticipating and avoiding operational disruptions.

Transparency is another widely used supply chain term. What is it, and how does it differ from visibility?

A: While visibility covers the monitoring of units flowing through supply chains, transparency refers to how companies share their freight information with other trading partners in the supply chain. This may include manufacturers, distributors, trucking carriers, 3PLs, upstream and downstream suppliers, freight brokers, freight forwarders, regulators, or even customers themselves. The concept of transparency within the supply chain ensures the smooth, efficient hand-offs and shared knowledge of everyone working within a logistics network. Transparency has become especially important in consumer-facing industries such as retail, CPG or food where shipping has become ever more complex, and customers are demanding more information into the products they buy. The evolution of trends like blockchain are clear evidence of a greater desire for transparency.

How can a shipper maintain high levels of visibility and transparency?

A: Technology is a critical piece of the visibility and transparency puzzle. 3PLs and LLPs use tools such as transportation management systems to track and trace the movement of freight and disseminate this information to authorized parties as quickly as possible. Leading 3PLs and LLPs also use advanced tools such as artificial intelligence to spot anomalies in freight networks and notify shippers of potential disruptions or delays.

What is a transportation management system (TMS)?

A: A transportation management system (TMS) is a platform for managing freight and freight flows. One of the most important tools in the logistics toolbox, TMS technology has evolved rapidly over the last decade. Modern systems support day-to-day freight operations as well as strategic decision-making through advanced analytics.

How is Internet of Things technology applied in freight management?

A: Internet of Things (IoT) is the term used to describe technology that connects everyday objects to the internet via sensing devices. Products and components moving through supply chains as well as assets such as trucks can be tracked using IoT-based sensing systems. These systems provide companies with real-time or near real-time location data and status updates such as the temperature of loads.

What is a routing guide?

A: A routing guide is a guide to which carrier or carriers a company chooses to move its freight. Routing guides come in many forms, but generally include preferred carriers that align with the shipper’s logistics needs.

What is a spot market rate in trucking?

A: Spot market rates are one-off rates quoted by truck carriers to haul a particular load or loads. Unlike contract freight rates which are fixed according to a pre-negotiated agreement between shipper and carrier, spot market rates fluctuate. Using the spot market to move freight is usually the more expensive option. Maintaining comprehensive routing guides is one way to lessen a shipper’s dependence on the spot market.

What are accessorials?

A: Freight accessorial charges are charges incurred outside of regular load pickup and delivery activities. Examples include fees for packing or unpacking cargo or a charge imposed by a carrier for unplanned delays at a loading dock. These extra fees can significantly inflate logistics costs.

What is a preferred shipper?

A: Trucking companies generally prefer to do business with companies that are efficient, financially sound, and highly collaborative — commonly called preferred shippers. The accolade translates into a competitive advantage. For example, a preferred shipper is more likely to find carriers to haul its freight during periods when carrying capacity is in short supply. There are various ways to become a preferred shipper. One is to keep loading/unloading delays to a minimum (see accessorials above).

How can a freight management partner save time and money for shipper clients?

A: There are numerous ways in which freight management partners deliver significant time and cost savings. For example, leading 3PLs and LLPs help shippers to negotiate the most competitive freight rates to minimize costly supply chain disruptions, and to ensure that freight networks run to maximum efficiency.

What should I look for when choosing a freight management partner?

A: It is vitally important that shippers choose a freight management partner that has the right level of logistics expertise and is compatible both culturally and organizationally. Here are some notable red flags:

  • Does the 3PL / LLP have a long and successful track record of managing different types of freight?
  • How responsive is the 3PL / LLP to market changes and trends as well as supply chain disruptions?
  • What resources does the 3PL / LLP offer in terms of infrastructure, technology, and personnel?
  • Does the 3PL / LLP have a strong presence in multiple industries? Cross-industry expertise is extremely important in today’s highly competitive logistics market.
  • Is the 3PL / LLP an innovator in terms of the logistics solutions it has implemented and the technology it deploys?
  • Can the 3PL / LLP show that it is ahead of the technology curve?
  • Is the 3PL / LLP financially sound and well-insured?
  • Does the 3PL / LLP have a strong reputation and brand in the marketplace?

As one of the top-ranked third-party logistics provider (3PL) and one of the industry’s original lead logistics providers (LLPs), Penske's team draws upon 50 years of experience helping market-leading shippers succeed with safe, on-time and efficient deliveries. Our freight management specialists create customized freight management plans to best meet the specific needs of your business — whether that is improving service levels, driving down costs, enhancing operational performance and driving change, or some combination of these common needs.

Supply chain operations are always complex, and each link in the chain must operate as planned to avoid disruptions. The food and beverage supply chain brings even greater complexities that must be managed to ensure overall success.

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Visibility is critical at the border, and being proactive rather than reactive can keep products moving. Penske has added a border workflow technology tool as part of its ClearChain® technology suite that facilitates collaboration between the many stakeholders involved in a border crossing to mitigate the risk of a delay.

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There are several reasons why a production line may unexpectedly shut down, including a lack of supply, a lack of employees or a cyberattack. During COVID-19, production lines were shuttered worldwide, causing unprecedented supply chain disruptions. Restarting a supply chain, especially when stoppages are widespread, can be complex.

“Plants may have experience starting up after a summer or holiday shutdown, but an unexpected shutdown, such as COVID-19, creates a unique situation,” said Andy Moses, senior vice president of sales and solutions for Penske Logistics. "During the pandemic, some companies experienced a six-to-eight-week cessation of production, and their transportation providers and suppliers have also been experiencing turmoil."

Companies can embrace these five tips for restarting the supply chain after any type of shutdown.

1. Examine Your Carrier Base

When there is an extreme disruption carriers may be affected as well. The lack of cash flow some carriers are experiencing is going to affect the carrier base. Moses recommends companies examine their carrier base and, if possible, do a financial analysis. “If that isn’t in your procurement group’s sweet spot, the right 3PL can help,” he said. “Identify those companies that might be troubled and set up meetings to have frank discussions.”

By working together, shippers and their transportation partners can find ways to address cash flow issues. “In extraordinary times, extraordinary measures may be needed,” Moses said. “That could be changing the payment terms to seven days from 30 days. It is something to consider as a good partner.”

What’s more, if a carrier declares bankruptcy, a shipper may have to spot-buy a lane until it can resource it, and typically spot rates increase when capacity tightens. “It might be smarter to work with that carrier on cash flow issues rather than not,” he said.

As part of the conversation, shippers should examine the whole book of business they have with a carrier. "It could be that, of the 25 lanes they have with you, five are unprofitable, but they took them as part of the bundle. You could discuss altering those,” Moses said. “Have a collaborative attitude so you can help each other."

2. Assess Your Supply Base

The question of financial health also applies to the supply base. “During COVID-19, many companies hadn’t seen cash flow for two months,” Moses said. “If that situation happens, have open conversations with them to try to collaborate and create an environment where both companies can survive and thrive.”

Ports worldwide continue to see disruptions, and companies need to be aware of any cargo limitations. “When shipments arrive, can you process them, or is there a Plan B? Are you going to incur demurrage fees on containers if you can’t unload them? You may need to secure warehouse space short-term,” Moses said.

Prepare early by identifying the capacity, equipment or facilities that may be needed when shipments resume.

3. Review Your Assumptions

Post-COVID-19, there was a new definition of normal and everyone has learned that situations can change rapidly. "It may not be practical for you to think that everything is going to happen the way it always has,” Moses said. “You need to look at every piece of the supply chain and examine your assumptions and your realities.”

It’s prudent for shippers to have a Plan B and C. “Plan B could be as simple as having a relationship with a brokerage company so you can dial up capacity quickly,” Moses said. “You can get brokerage contracts in place now so you know who to talk to and which lanes or areas may be critical.”

Lanes may shift if freight patterns change. “Your freight might not come into the Ports of LA and Long Beach like it always has,” Moses said. “You have to check all of your assumptions. If you’re running through your checklist and say, ‘I don’t need to worry about this because it has never been a problem,’ that’s the one most likely to trip you up.”

4. Ensure Visibility

The supply chain comprises multiple moving parts that all must come together at precisely the right time. Technology can provide visibility to help shippers monitor the health of each individual movement as well as their entire transportation network. “Once our major disruption hurdles are cleared, shippers are still going to want to know the status of loads and whether there is a risk of a delay due to weather or traffic,” Moses said.

5. Start Early

By working with providers and preparing early, shippers can help ensure a fluid network. It is essential to start soon, as people may be hard to reach during a disruption. “Give yourself enough time to get everything in place,” Moses said.

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The holidays can create a surge in demand for trucking capacity, and now is the ideal time to prepare for potential spikes.

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Freight brokerages like those operated by Penske Logistics can serve as strategic partners for shippers and carriers, matching available trucking capacity with freight. Shippers commonly utilize a mix of transportation options to fill capacity gaps and will work with brokers to aggregate capacity and access a larger pool of carriers. Penske Logistics brokerage solutions provide another option for shippers to secure capacity and move goods.

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The area within the four walls of the warehouse is at a premium, and effective and efficient warehouses maximize space, increase productivity and improve performance. They also make the most of available labor and ensure timely service. From improving slotting patterns to embracing technology, there are several ways to optimize the movement of goods.

Strategies for Warehouse Optimization

Improve Slotting Patterns: Optimal slotting patterns place high-velocity pick items as close to the door and as tightly together as possible to drive efficiency. Optimal slotting designs are based on historical sales data, including volumes and A, B, C and D movers, along with forecasted demand and seasonality. That data will provide insight into what to stock and where to position it to get the top movers out of the door faster. It isn’t hard to move slotting patterns as demands change, and adjustments should be completed at least once a year to ensure efficiency. Some industries, such as food and beverage, change slotting patterns seasonally.

Separate Fulfillment Channels: The growth in e-commerce means more and more warehouses have three fulfillment channels: shipping to their own locations, outside retail locations and business-to-consumer. Depending on the volume or the way warehouses receive orders, there can be a pallet area, case-pick area, and an each-pick area to maximize each category’s efficiency.

Find the Ideal Racking Solutions: The right storage solutions are often based on the cost of specific geographic locations, which varies. Space is much more expensive in California than in the Midwest, so in California warehouses, it might make sense to invest in vertical racking. Sites can utilize single-deep racking, double-deep racking, push-van racking or other types to get additional spots on the rack.

Examine Labor Standards: Labor is central to warehouse operations and software can help manage the movement of people and track productivity. That data can be compared to warehouses’ labor management time standards and results should be evaluated every day after every shift to ensure employees are meeting their productivity standards.

Utilize a Robust Warehouse Management System: A warehouse management system provides inventory visibility and tracking and ensures products don’t get mixed up or misplaced. Improving your warehouse management software can provide several benefits, including the traceability of products, which will become even more important for certain industries, such as food and beverage, that have increased safety standards.

Invest in Technology: Various technologies can help improve operations within the warehouse. Some warehouses use a voice-pick system to help pick items more efficiently and employees can close out orders as they pick them, using their voice and an index finger scanner. Radio frequency scanners, including forklift mounts, handhelds and wearables, direct employees to the correct picking location. Once employees pick the products, the system automatically updates the picked items in the warehouse management system.

Augment Labor: Drones and visual guided vehicles can help free up human talent to focus on more important tasks within an operation and improve overall safety. Drones can fly through a distribution center’s aisles and provide updates on inventory or alerts if products are not in their assigned slot. Visual guided vehicles can be used to move pallets or other inventory throughout the warehouse, and are trained to run the same pattern.

Create a Contingency Plan: Supply chain disruptions have highlighted the need for contingency planning, which can range from preplanning for a natural disaster to knowing how to ramp up operations if there is a spike in business. Thinking through and predefining potential scenarios can ensure an efficient shift when necessary.

Utilize a Multi-Client Warehouse: Companies looking to expand their footprint and move inventory closer to end consumers are turning to multi-client warehouses, which enable them to take advantage of smaller space within a facility. Multi-client solutions make sense for customers needing 75,000 square feet of space or less.

Realize the Benefits of Warehouse Optimization

From efficiency improvements, lowered operating expenses, enhanced worker productivity and reduced turnover to greater inventory management and better customer service, the benefits of a solid warehouse optimization plan are significant. Ensuring you have the right processes and platforms in place can help your business run more efficiently than ever before.

There are many elements to choosing the right logistics partner. Penske places a premium on taking the necessary time to clearly understand how our logistics solutions may impact the entire company. Our goal is to ensure the efficiencies provided by Penske are realized at virtually every level.

For more information on what Penske Logistics can do for your organization, please contact us at 800-529-6531.

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Proper handling and regulatory compliance for food and beverage is paramount throughout the cold chain, including within the warehouse. Interest in multi-client warehousing is growing as companies look to expand their footprint and move inventory closer to consumers.

Temperature compliance is paramount for both the quality of product and for food safety precautions. Penske Logistics has a team of subject matter experts leading our Food Safety Program to ensure compliance with the Food Safety Modernization Act as well as meeting third-party GFSI Food Safety Audits with high marks.

"When you're talking about perishable food, getting product closer to the consumer is always beneficial," said Don Klug, vice president of distribution center management at Penske Logistics.

However, even smaller footprints within food-grade facilities require careful attention to detail. According to the Annual 2022 Third-Party Logistics Study, the cold chain requires a certain level of sophistication from both shippers and logistics providers, and several unique challenges within the cold chain require tracking and special designs.

Tracking and Tracing

Tracking is used in several areas, including the monitoring of temperatures as well as the lot control, expiration dates, etc., said Don Klug.

Penske utilizes temperature tracking in different zones throughout the warehouse. Klug said most refrigerated facilities are multi-temperature, which include refrigerated, frozen and air conditioned or ambient temperature spaces.

"Devices, which some look like small hockey pucks, track and monitor the high and low temperatures. We have systems and people monitoring it all the time and making sure we have excellent knowledge of what is going on to maintain the temperature requirements of our customers," Klug said. "We utilize the same technology in our multi-temperature reefer trailers. If there is a driver on the road and something happens to the unit’s refrigeration, we can alert them and get them to a Penske shop to get it fixed."

Temperature tracking is as essential as inventory accuracy. When it comes to food and ensuring safety requirements are met and spoilage is mitigated, the warehouse management system WMS must be able to manage both. With systemic monitoring and controls, regulatory compliance of temperature monitoring for food safety controls effectively eliminates risk of temperature abuse, or not storing foods at the proper temperature.

The WMS system tracks attributes which includes lot control, expiration dates, and other rules, such as shelf-life, FEFO (first-expired first-out) and/or FIFO (first-in first out). Klug said inventory accuracy is critical to the overall cold chain process.

"The customer provides the requirements, and we add it to the rule set within the WMS," Klug said. "We have to be cognizant of lot control and expiration dates when we’re working with food and beverage products."

Building Design

Food and beverages must be stored in a food-grade building, which has several features not found in a standard warehouse. All ceiling lights must be shatterproof or have protection to catch any glass or debris if a bulb breaks. Plus, any warehouse area with temperatures below 32 degrees requires heat within the floor or else damage will occur, Klug said.

The exclusion of pests, such as rodents and birds, is essential within the food and beverage industry. There must be 12-18 inches of gravel around the building in a food-grade warehouse to help prevent pests or rodents from entering the space. Additionally, nothing should be stored directly against the walls on the inside of the building, eliminating spaces that may be attractive to rodents.

Additionally, dock plates have brushes to minimize gaps. "The dock door will have a dock shelter mounted on the concrete," Klug said. "When a truck backs in, it seals the truck to the opening, so no light comes through, to keep birds and rodents out."

A robust Food Safety Plan also must take into consideration all working operations to always maintain sanitary conditions of the facility. This includes the layout of traffic patterns for associates, adequate handwashing and associate facilities, adequate drainage, and designated storage areas for sanitation supplies and MHE equipment.

Penske maintains several food safety audit certifications, including the BRCGS Global Food Safety Standard. "To get BRC certified, you have to follow standard operating procedures and do testing to make sure the building meets all of the requirements," Klug said.

Cold Chain Growth

The 2022 Annual Third-Party Logistics Study found that opportunities exist within the cold chain, and 91% of shippers and 100% of 3PLs said they expect demand for cold chain capacity to increase over the next three years. Both shippers (70%) and 3PLs (52%) said COVID-19 accelerated their growth plans, increasing their need for more cold chain capacity.

As a result, 70% of shippers said they expect to grow their cold chain capabilities and talent over the next three years, while 50% said they plan to outsource more of their cold chain capabilities. About 90% of 3PLs said they plan to expand their cold chain capabilities and service offerings.

Penske’s Food Safety Program is designed to maintain all regulatory requirements, a Global Food Safety Initiative food safety audit program, along with any specific quality requirements to meet the needs of our customers. Penske actively participates in certifying leaders with the FSPCA Preventive Controls for Human Food as a tool to continuously cultivate and grow our Food Safety Culture. With Penske's dedicated Food Safety Leadership, our locations are monitored through a rigid internal auditing process for food safety that strives for continuous improvements to maintain a "best in class" food safety program.

To learn more about how Penske can assist with multiclient warehousing within the cold chain and food and beverage industries, contact us today.

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