Shipping School

Ask yourself this question:   What costs more to ship - A truckload of Dimensional Weight bricks or a truckload of feathers? Answer: They cost the same. (because they take up the same amount of space).

Now:   What costs more to ship - A ton of Bricks or a ton of Feathers? Answer: The feathers. (because the load of feathers will probably take up 10 times the space.

These real differences in freight "type" forced the early trucking operations to adopt what is known as "dimensional weight".

What is Dimensional Weight?:

For the most part, dimensional weight is the simple calculation of one cubic foot of space inside a trailer. Most trucking companies assign the default weight of 10 lbs. per cubic foot. Simply stated, if the weight of the goods exceeds 10 lbs/cubic foot, the trucking company will "rate" you according to the "weight" of the shipment. If however your shipment is "lighter" than 10 lbs/cubic foot the "dimensional weight" will prevail. (that is 10 lbs/cubic foot)

Example: If you have one pallet that is 4' x 4' x 4' in dimension the "dimensional weight" will be 640 lbs. (4x4x4)(10) = 640. This represents the minimum weight that the carrier will assign to this shipment. However, if the this same pallet weighs 1800 lbs., the weight of 1800 lbs. will be used instead of the 640 lbs.

Quick Tip: If your freight is measured in inches i.e. 48" x 40" x 55" just use this formula to arrive at the dimensional weight: [(48x40x55)/(1730)]*10.

Spot Rates and Weight:

The above method usually does not apply to spot market freight quotes. This is because spot market freight usually does not involve "maxing out trailer dimensions" in the same way as consolidated LTL service does. Generally speaking, these types of quotes involve "rates per pallet" with a max weight of 1750 lbs. per pallet.

Why do I need a customs broker?

Customs plays an important role in managing the security and prosperity of a nation. While most of the issues we hear about "customs" have to do with security, the main function of customs is to account for all of the products and resources entering and leaving a country.

The main way that customs officials track this information is by reviewing the "Commercial Invoice" for goods that are shipped across the border. This document should clearly show the customs agent what the goods are, who is buying the goods, who is selling the goods, where the goods are going & what value to assign to the goods.

What role does the customs broker play?

The professional customs broker assign a H.S. or "Harmonization Code" to each piece of freight being shipped. this code is listed on the commercial invoice and basically breaks down the product to its most exact description as required by law. The customs broker also plays an important role in notifying the customs official which carrier is hauling the goods and when the expected arrival at the border is.

The PAPS / PARS process: Click here for PAPS/PARS tracking

When you are shipping international goods the trucking company will ask for a copy of the Commercial invoice as well as the bill of lading and any other applicable forms. The trucking company will then place a sticker "paps" in the U.S. or "pars" in Canada on the commercial invoice. The trucking company will then fax the commercial invoice (with the paps/pars sticker on it) to the customs broker who is authorized to represent the importer/exporter. Once the customs broker has this information they can then send it to the customs official who will now know what freight is arriving to the border as well as which carrier is hauling it.

• Accessorial Charges - Charges usually billable to the party whom is responsible for the freight charges. These are additional charges not usually foreseeable at the time of executing the shipment. e.g. waiting time, hand bombing & tailgate usage.
• Bill of Lading - BOL or B/L - Legal document that describes point of origin, destination, description of goods etc. and travels with the shipment. Each shipment must have a Bill of Lading.
• Blind Manifest - An Alternate bill of lading (prepared form the original) which prevents the consignee from seeing where the shipment originally came from. See Also drop shipping.
• Cargo Van - A Small vehicle with limited capacity used for urgent shipments.
• Closed Dry Van 48' and 53' / Dry Box Typical traile lengths used in the transportation of freight. Standard internal lengths are 53' long x 96" wide x 110" high.
• Collect - Transportation cost is paid for and absorbed by the consignee.
• Commercial Invoice - Document required by U.S. / Canada Customs that describes product and associated value for reporting purpose.
• Container - Usually 20' or 40' in length - these are used to house freight that is traveling by ocean. Varieties are also available for refrigerated or frozen requirements.
• CPC (Canada Pallet Exchange) Pallet exchange program
• Customs Broker - Responsible for representing the shipper or consignee when the product is clearing customs at the border.
• Conditions of Carriage - Terms & Conditions by which Equitrans Express International Inc. will undertake to arrange transportation services for a client.These conditions can be found here.
• Declared Value / Insurance - Unless otherwise agreed to shipments are usually covered for $2.00 per pound at no additional cost. If a value is declared on the bill of lading which exceeds $2.00 per lb., a surcharge is usually levied to cover the additional costs.
• Demurrage /Waiting Time - Trailer loads, in particular, where the cab and trailer are tied up for more than the normal one or two hour grace period, hence "waiting time" is chargeable until the unit is loaded
• Domestic Freight - Point of origin and destination are within the same country.
• Door to Door (Dock to Dock) - A service requiring that the freight be picked up at the shippers facility and delivered right to their customers facility.
• Door to Port (Air or Ocean) - Freight is picked up at the shipper's facility and delivered only to the Air or Ocean port which is closest to the customer's facility.
• Fifth Wheel - The connector located on the cab which the trailer is connected to.
• Flatbed Trailer - Used to haul freight that is too high for vans or for freight that must be off-loaded by crane. There is no top to these trailers, however, tarping is often used to cover the freight to protect it from the elements.
• Floor Loaded/Loose Loaded - Product which is loaded directly onto the floor of the trailer. This can be time consuming and may increase the cost of the shipment.
• Fork Lift Truck - Forked machinery used for loading / unloading and stacking of skids.
• FTL (Full Truckload) - Usually 24-26 pallets. Shippers may request an FTL shipment even if they are shipping less than a full load. This is done to significantly increase the probability of time-definite delivery.
• Head Haul / Back Haul - Trucks derive revenue based on round trips. Seldom are the cost equal for outbound and inbound legs. Each market area or lane is rated differently. The head haul is considered the to be the leg of a round trip producing the most revenue.
• High Cube Van - Refers to a 110" inside on a regular trailer.
• Hub / Break Bulk - A central location where freight may be temporarily cross-docked and transferred to another truck for efficient distribution through the U.S. or Canada.
• Line Haul - The portion of a journey between two cities of the origin and destination. In the simplest of models, there is the local pickup, the line-haul and the local delivery at the destination.
• Live Load vs. Trailer Drop - Live load/unload refers to product being directly loaded/unloaded upon arrival of the trailer and the pickup/drop-off location. At times, the shipper will request that a trailer be left in his dock and the dock hands will load/unload at their convenience. This is referred to as a "drop Trailer" and usually involves added cost.
• Load Bars - Bars used in inside vans to prevent product from shifting. Provided upon request at additional charge.
• Logistics Trailer - Same as other Dry Van trailers except racking is employed to allow skids to be placed in tiers. The upper layer of skids rests on bars so that lower skids do not have to bear the weight.
• LTL (Less than Truckload) - A shipment that occupies only part of a trailer e.g. 1 or 2 Pallets. LTL shipments from several shippers will be used to build a full truckload.
• MSDS - Material Safety Data Sheets - Data sheets that describe chemical products, the degree of medical hazard, how to treat n case of emergency etc. Also see HAZ-MAT
• NAFTA Certificate or Origin - Document which is used to qualify for free trade (zero duty or reduced duty). used to indicate country of origin. Product is described or categorized under "Harmonization" code.
• Non-Asset Based Company - Companies who arrange transportation services on behalf of another company, and typically develops relationships with carriers rather than deploy it's own equipment.
• Prepaid - Transportation cost is paid for and absorbed by the shipper.
• Prepaid & Add - Transportation cost is paid for by the shipper but subsequently billed back to the consignee or some other party.
• Proof of Delivery or POD - This usually takes the form of a signed bill of lading indicating that the receiver / Consignee has received the goods. Date and time of delivery is usually indicated.
• Pump Truck - A small forked piece of equipment with wheels which allows for the loading/unloading of single skids from a truck/ traileror for shifting skids within a trailer or warehouse.
• Reefer Van - Temperature controlled vans used for freight that either must be kept cool, frozen or heated. Reefer trailers have slightly less internal space available for loading than closed Dry Vans.
• Rolling Stock - Refers to a transportation company's truck or equipment trailer resources.
• Ropes /Chains & Binders/Corners - Accessories used on a flatbed truck to stabilize the load.
• Straight Truck - These trucks are usually 24' to 28' in length with 8' x '8 width and height. These differ from vans on that straight trucks are 1 integral piece ie, the front is not detachable from the cargo carrying portion.
• Sufferance Warehouse (Bonded Facility) - If a shipment does not get customs cleared at the border, either at the request of the shipper or because the paperwork is not in order, a shipment may still enter the country, however, it must travel in bond and temporarily deliver to a bonded facility (sufferance warehouse) where remote customs clearance can take place.
• Tail-Gate - A hydraulic lift plate attached to the back of a truck which is used for shipments that are picked up or delivered to facilities without a dock.
• Tandem vs. Tri-axle - refers to the number of axles along the underside of a trailer. Most freight is handled on tandem (2 axle) trailers (up to 44,000 lbs). Heavier weighted shipments must use 3 or more axles to comply with apllicable laws.
• Tarp - Durable textile cloth used to drape over freight on a flatbed truck for protection from the elements.
• Temporary Import Bond - Document allowing the temporary import of goods, not subject to duty and taxes, because the product is not being sold and likely being used for a trade show etc. The bond is cancelled once the product has been returned to it's country or origin.
• Third Party Billing - Transportation cost is billed to neither the shipper or the consignee, rather it is billed to a 3rd party.
• Totes - Very large sacks or plastic containers used to transport product in raw bulk form

Regular LTL

Regular LTL service typically involves having a "city" truck picking up the freight at origin then bringing the freight to a terminal for consolidation with other freight moving through a similar geographical location. The carrier in this situation has the ability to manipulate the loads to find the most efficient method of transport, which generally results in a cost savings to the customer.

The are two main drawbacks with this type of LTL service. First, the freight is more prone to damage due to the increased number of times it is handled. A typical LTL operation can handle freight up to 5-6 times depending on the number of miles it has to travel. The second drawback is transit time. Since every terminal-transfer results in lost time on the road, regular LTL service takes at least twice as long as expedited service. If the LTL freight is more than 2000 lbs. or more than 6 pallet-spots, it may be more economical to go with expedited LTL service.

Expedited LTL

Expedited LTL is normally the domain of brokers, 3PL's and specialized carriers. Expedited LTL usually picks up and delivers on the same truck and generally does not get touched throughout the course of its travel. Pricing for Expedited LTL is generally more focused on the "space required" than the weight. Since the freight is not manipulated at a terminal, carriers typically do not stack expedited freight so most Expedited rates are for "pallet spots from floor to ceiling" with a weight maximum of 1750 to 1850 lbs.

There is often confusion as to how taxes are applied to freight transportation services in Canada. While GST/HST does not apply to any shipments that cross the border (international Shipments), it does apply to domestic shipments within Canada.

Revenue Canada applies a "place of supply" test to determine what types of GST/HST to apply to a typical transaction. Simply stated, the tax rate used will be determined by where the freight delivers. For example, if the freight delivers to Ontario from B.C. an HST rate of 13% will apply. If however, a shipment from B.C. delivers to Nova Scotia the HST rate will be 15%.

The freight transportation industry has many essential players. Carriers handle the physical transportation of goods, Brokers connect Shippers with Carriers that operate in specific geographies and 3PL's often operate as a hybrid between the two. 3PL operations may include a warehousing and distribution component. There are advantages and disadvantages inherent in all operations, here are a few to consider.

CARRIERS

Advantages: Without carriers the freight simply cannot move. Carriers, without a doubt, are the most essential component to getting freight from point A to Point B.

Disadvantages: Carriers must always consult their own interests before moving a truck for any shipment. The high cost of fuel and the possibility of not having enough freight to justify moving a truck and trailer will often result in a customer's freight sitting until a carrier can consolidate enough freight to make departing the terminal profitable. Additionally, carriers operating in the spot market often find if difficult to promise equipment availability, as they generally only deploy equipment when and if a particular lane can sustain adequate volumes.

BROKERS

Advantages: Freight brokers have the convenience of operating in their client's best interest when tendering freight. When a freight broker has freight to move he or she is generally looking for a carrier that is actively searching for that same amount of freight to complete their load. This fact means that the broker's freight will typically move faster and in many cases for less overall cost because the "last half of the trailer sells for much less than the first half"

Disadvantages: Freight brokers are completely at the mercy of the overall freight market. Freight brokers may have freight to move but in a tight market, they can have a difficult time asking a carrier to move their freight on a priority basis.

3PL's

As mentioned previously 3PL's can be a hybrid between brokers and carriers and can also deal in the warehousing and distribution of a client's freight. The main advantage in this scenario is that the 3PL can work with the client's freight long after it has left the client's dock. This means that shipping and receiving can be done outside normal business hours and order fulfillment can usually be executed in less time than with a typical "shipper to consignee" model. The main disadvantage with a 3PL is that often they offer a suite of services that are not fully optimized in any area.

Getting An Accurate Freight Quote

To get an accurate freight quote, the shipper must have the following information: Spot Market Quotes

1. 1. Origin City
2. 2. Destination City
3. 3. Number of pallets or Linear feet of trailer required.
4. 4. Total Weight.

Small LTL Service Quotes (under 6 skids & under 2000 lbs.

1. 1. Origin City Zip/Postal
2. 2. Destination City Zip/Postal
3. 3. Pallet dimensions & sizes
4. 4. Freight class (if shipping to/from/within the USA)

Note: It is important to indicate as to whether the freight is hazardous.

It is very important for shippers to distinguish what type of freight they are shipping when requesting a quotation. Below are some characteristics common two both commercial and residential freight commonly known as "personal effects".

Commercial Freight

1. 1. Typically move from Loading Dock to Loading Dock. These shipper can also usually accommodate large trucks up to 53' in length.
2. 2. Commercial freight is usually "palletized" which allows the shipper and the carrier to easily move the freight into and out of a trailer by way of a forklift.
3. 3. Commercial freight is usually shrink wrapped and secured to the pallet to prevent the freight from moving while in transit.
4. 4. Commercial freight normally picks up and delivery with normal business hours Monday through Friday

Residential Freight

1. 1. Residential freight generally does not move on pallets and is in various sizes and weights.
2. 2. This type of freight usually requires straps and or blankets to protect the integrity of the product while in transit.
3. 3. It is important to determine as to whether the origin or destination can accommodate large trucks and if there are any weight restrictions.
4. 4. Most residential shipments require tailgate service as it is uncommon for individual shippers to have loading facilities.