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What Can Freight Forwarders Expect From Brexit Deal or No Deal?

OilFieldTechnology.com recently reported the opinions of an  energy logistics expert on the possible logistics management implications of the Brexit deal about to be voted on in the House of Commons next week.

Talking about the oil and gas industry in particular, he commented that those businesses with the EU trading partners will be viewing particular elements of the draft UK withdrawal agreement favourably.

Adam Johnson, director of Tudor International Freight, a Leeds based company, welcomed the full approval of the UK Brexit document given by EU leaders.  Their positive response helps bring an element of confidence about future trading arrangements with this bloc, so long as Parliament votes the existing document through too.

Johnson said that EU ratification confirms that goods will continue to be shipped between the UK and E.U., without the burden of new tariffs impositions or any need for time-consuming border checks.  Documentation may change, but brokerages and third party logistics providers can harness the power of automation to up-date any necessary changes in freight systems, once adjustments are made to management software templates and working practices.

Johnson explained: “The current largely economical, quick and simple shipping of goods between the UK and EU takes place mainly because we’re members of the bloc’s Customs Union. If the draft withdrawal agreement takes effect, we’ll enter a 20 month transition period after leaving on 29 March next year, during which our relationship with the EU will essentially remain unchanged.”Assuming the withdrawal agreement is passed in Parliament on Tuesday’s vote, freight forwarding companies and brokerages therefore have a period of adjustment in which systems can be reviewed and made ready for changes ahead.

In the event of no long term free trade agreement going through, which is possible, there is it seems provision for extending a transition period also. Johnson explains it thus: “Moreover, the draft says if a long-term free trade agreement isn’t concluded between the UK and EU by July 2020, the parties can agree to extend this transition period indefinitely and that, in the absence of such an accord, the ‘backstop’ will take effect. This measure – designed to guarantee a continued open border in Ireland – would mean the UK and EU remaining in a single customs territory ‘unless and until…a subsequent agreement becomes applicable.’”

Another reason for the oil and gas sector  being satisfied at this point with E.U. ratification is the opportunity for the free movement of labour provided for in the draft agreement. This is beneficial to freight forwarding companies and European traders. “Many of our customers depend on foreign workers to facilitate their international trade and numerous freight forwarders similarly rely on employees from abroad to drive lorries and run warehouses, for example.”

Freight systems, it seems then will remain as they are under Theresa May’s ‘best available deal’, at least until the end of a transition period, at which point companies may have made other arrangements.

In terms of the UK crashing out of the E.U., without agreement from the Houses of Parliament, the government is making preparations to minimise disruption at the ports. It would be unrealistic, however, to expect no disruption to logistics management, as Johnson acknowledges.

It’s no secret the UK government has done little preparation for such an outcome and all the facilities, staff and often-complex processes needed to handle such an eventuality will simply not be in place by next March. The recently highlighted dangers of 20-mile queues of lorries trying to reach Dover and shortages of imported foods and medicines, for example, after such a Brexit, are therefore very real.”

Experienced in overseas trade, he believes more than four months are needed to address problems if no-deal E.U. departure happens.  For instance, there will be additional administration burdens, such as the UK currently only being equipped to issue  around 5% of permits for UK vehicles heading for the EU.  In terms of air freight, currently our membership agreement allows for flights to and from the E.U.; these arrangements cease in a no-deal scenario.

As Johnson says, government ratification is still “…far from a formality.” Supply chains are likely to expect some disruption, some of which can not yet be anticipated, or if some companies are asking the questions at a local level, the message is not carrying through to parliamentarians.

This makes it even more imperative for freight management companies to look to their existing systems to find efficiencies, as exports and imports could realistically be hit, not only by backlogs in delivery either way, but extra documentary and regulatory obligations are likely to provide a headache for a variety of businesses.

Freight forwarding software is already proving its value in helping businesses achieve cost savings. In a highly competitive market, where constraints on supply become tighter, the irony is that even as some companies are tightening their belt in readiness, they are also potentially hampering their capacity to avoid some of the unnecessary burdens of administration by not investing in updating their digital freight management software and hardware.  Many freight forwarding experts claim the automations and efficiencies new market tools provide can give the edge needed to move through what could yet turn out to be either coming log jams, or conversely greater volumes of trade.

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Freight Broker Companies and 3PLs Must Embrace Technology or Suffer

UK Brexit is around the corner and freight logistics management technology is proving its value daily with companies going ahead with systems innovations.  Venture capital investors also recognise that transport and logistics offers huge returns for those companies transforming the transportation industry with freight management software and tools.

Transport topics claim that for freight broker companies and third party logistics providers (3PL) to remain competitive in this fast changing market, adoption of efficiency driving tech is essential to remain viable.  The risks of not adapting were made clear early last month at the Transportation Intermediaries Association’s inaugural ‘3PL Technovations’ conference.

One supply chain management cloud services agency representative described the pace of technological change in the sector thus: “We are in the middle of a revolution.” Those companies that adopt the technology available will be the survivors through the process of uncoupling from Europe politically and beyond.

Smartphones and portable devices are “…far more powerful than the computers NASA used during the Apollo program,” says Transport Topics.  Incredible processing power of modern digital ware also allow for the growth in artificial intelligence applications to garner data from pre-existing and enhanced computer systems to identify operational gaps, challenges and business opportunities for the future, according to one speaker.

Apparently, more business investors are supporting sector innovation. Kurt Cavano of GT Nexus referred to a pool of untapped venture capital and private equity totalling $1.1 trillion, this money while committed for investment, “remains unspent”.  Given the scale of digital and technological advancement yet to be realised in freight management, the modern investor recognises the potential returns on investment in this multi-trillion dollar, global industry.

As Brexit issues remain unresolved fully, investors in the UK will be playing their cards close to their chests, but there are some who understand that however detrimental Brexit could be in the worst case scenario, the UK remains the fifth largest global economy and overseas trade could experience unanticipated benefits following the 29 March Brexit deadline.

UK overseas trade is in a transition stage, but with UK government investment in freight forwarding system technologies, chances are, private investment will be less difficult to achieve in terms of match funding.

Whatever the UK’s trade outcomes, technologies are unavoidably transforming businesses of all types and sizes and procrastination over upgrading current freight systems risks companies being left behind.  Potentially comparable to the industrial revolution of over 100 years ago, companies cannot avoid the inevitability of winners and losers from freight management software and hardware innovations happening.

Cavano puts this latest fight for survival of the future fittest in stark terms: “We’re going to go through this incredible transformation, and it’s going to leave no one undamaged. You’re going to either be on the train, or you’re going to be run over by the train.”

The president of England Logistics and chairman of TIA’s board, Jason Beardall, suggested in his speech to the conference that logistics and transport professionals regard emerging technology “not as a threat, but as an opportunity”.  Currently, some companies are still afraid to innovate for fear the technology they invest in could be superseded by the latest generation of upgraded systems. This indecision is actually hampering growth, given such systems have already proven to pay for themselves in terms of savings they facilitate.

Some industry experts also fear that technologies coming through could lead to the replacement of the freight broker or 3PL provider.  However, strategic decisions still need to be reviewed by human partners to the technologies at play.  Current AI based tech requires human collaboration, given the scale of variables at play for any particular business and scenario.  Certainly, however, the data can suggest alternative decisions being made to what may have otherwise happened.

Logistics firms and their stakeholders need to recognise that there are countless opportunities available in harnessing the latest logistics management technology.  Not only the early investors can benefit, but their customers too will appreciate the savings and level of accountability they can achieve from their service providers who can prove their word, backing up performance claims with robust statistical analysis. Companies can create efficiencies that help them gain real competitive advantage in the market, said Beardall.

He further commented that “The problem is our willingness and our pace of adoption.” This was a message echoed by others and which we fully endorse at Logistician.

Bob Voltmann, President of the Transportation Intermediaries Association’s speaking recently at the inaugural ‘3PL Technovations’ conference pronounced on technological innovation in logistics management, saying: “If we don’t change and adapt, we’re dying”.  Voltmann was talking to an audience of third party logistics (3PL) providers, transportation brokerages  and freight forwarding company representatives, actively encouraging listeners to “be the disrupters, not the disrupted”.

From the range of speakers at this industry conference, the audience was left in no doubt about the necessity to move with the times in terms of adopting a freight brokering system fit to take businesses forward into a highly competitive future.

One example among many described how contemporary technology demonstrably improves the supply chain for all concerned. For fleet owners and managers, one obvious efficiency saving is in the visibility of under-utilisation of truck capacity, where road freight vehicles are often prone to carrying less than load, resulting in sub-optimised use of resource, excess vehicles on the road and most importantly for operatives, lost profits.  Despite the freight market being strong, under-capacity remains an intractable problem without, for instance, software packages that connect business partners and enable greater co-operation to minimise losses.

Jason Beardall, President of Logistics England suggested that if freight brokerages and 3PL’s took up the technology currently available, operators could “…offset the capacity shortage by curbing wasted, empty and out-of-route miles and reducing or eliminating driver detention time.” A good example of this is the connectivity facilitated by an app based freight forwarding system that individual truck owner operators could tap into to pick up the slack of last mile deliveries, for instance.

To maximise the potential of freight management software capabilities and service provider transport, Mark Carroll, director of product strategy for Descartes MacroPoint, suggests that collaborative data sharing among 3PLs can unlock “trapped capacity.”  This is a transformative business model which the immediacy of digital communications facilitates.  Increasingly, competition between companies will be enhanced by partnerships across supply chains. Trust requires transparency that data harvesting with digitised and automated logistics management provides for.

Another traditional source of losses for operatives is during the booking of a truck by a 3PL, when the carrier completes the delivery, “that truck often isn’t matched with the most efficient route to take next because that route isn’t available in that particular 3PL’s network.” Obviously, when partners come together, they can make best use of that vehicle by allocating it to another job in their system.  The detail of fee systems for such new collaborative projects can be easily negotiated, such that each party benefits. Ultimately, the public will also benefit, with less vehicle congestion and the government regulations on pollution are complied with more.

Carroll of Descartes MacroPoint (formerly Descartes Systems) said: “Because we work in a closed environment, the information around that carrier isn’t shared, and the capacity becomes trapped within your four walls.  We believe in open, agnostic networks where we can share information.”

Tom McLeod, CEO of McLeod Software explained how shippers are outsourcing more, given the convenience of interconnected freight management software. However, this is not squeezing brokers, as one might expect, given that manufacturers, wholesalers and retailers

“… have no core competency in maintaining relationships with wide numbers of carriers. This is something that freight brokers do extremely well, and this is the key to having reliable capacity.”

Connectivity between brokerages and their clients merely enhances transportation operations and potentially helps more goods move faster, benefitting all concerned.

The conference will become an annual event in order for stakeholders to remain abreast of technical developments and associated industry developments.  The TIA wants to help its members understand what is at stake, which technologies are appropriate for them and to embrace the opportunities now available to them, according to Ramona Hood, vice president of operations strategy and planning at FedEx Custom Critical and chairman of TIA’s technology committee.

She commented: “You hear about disruption. You hear about transformation. And the goal of the committee is to give you the information and the insights so you can be an early adopter” and create a “competitive edge for your business.”

Following this well-attended event, there is sure to be a rapid uptake in freight forwarding software and new logistics management technologies, particularly in view of the UK’s imminent exit from the European Union which will bring its own transport and logistics transformations.

 

 

 

 

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Technology Supports An Ethical Supply Chain

Apple is one of the world’s leading technology powerhouses, harnessing the power of supply chain IT systems to improve their business ethics.  What happens with Apple’s success can impact confidence in the whole tech market, and influence industry practice generally. Supply chain management (SCM) is increasingly driven by SCM systems that allow companies more insight into supplier practices.

Having recently come under some criticism recently by charities for sourcing some of its precious metals from the Democratic Congo, where child labour is a big problem, now the industry leader is turning things around and achieving credit for its efforts to reduce slavery in its supply chain.

This November, Apple was awarded the ‘Stop Slavery Award 2018’ for implementing greater supply chain transparency through its SCM systems.  Powerful tracking and data management systems to manage supply chains better limits opportunities for unethical third party suppliers to exploit child labour in poorer countries, far from view of consumers.

The prestigious news agency, the Thomson Reuters Foundation hosted the Award ceremony, intended to recognise more ethical companies that take real steps to stop forced labour in toxic supply chains.  Given the increasing pressure brought to bear by international charities on companies who do not take their corporate responsibilities seriously, smarter businesses increasingly understand how more effective use of supply chain automation and IT systems can help expose problem areas for industry.

For instance, where the transport and logistics industry is concerned, human trafficking, smuggling and theft are real challenges. Systems that at once simplify administration also add greater scope for scrutiny and identification of problems faster.  Automated weighing at ports together with data transfer of manifests, or other documentation can immediately flag up anomalies to managers observing from user-friendly dashboards.

Those companies who optimise their SCM systems and harness the big data they offer to achieve ethical ends are not just potential winners of this award, they also demonstrate ‘integrity, courage and innovation in cleaning their supply chains’ to all stakeholders, not least business partners and customers, who increasingly demand high standards in business practice.

Apple will hold their year-long licence to show the Stop Slavery Award logo on all of their marketing assets.  Apart from rebuilding consumer confidence possibly lost in the brand of late, participation in the scheme also helps raise awareness on the issue of forced labour in sectors winners of the award work in.

Of course, it is not just positive PR that companies from benefit from when they use their business insights to eradicate modern day ethical problems, there will no doubt be other knock-on impacts in encouraging competitors to clean up their act too and address unfair and illegal labour practices in their supply chains, monitor for risks of people trafficking at vulnerable locations, more effectively mitigate cargo loss and more.  Compliance is made much easier where every stage of the supply chain generates data.

Upon receiving their award, Apple’s head of retail, Angela Ahrendts

told Reuters: “Though we’ve only just started, we see a tremendous opportunity to be a beacon of hope for trafficking survivors by integrating them into our worldwide retail teams.”

Apple produced their ‘Supply Chain Progress Report 2018, in which they explained some of their positive supply chain management impacts made possible through effective SCM systems management.  For example they reveal:

  • their data helped them name the world’s top company for responsible sourcing of conflict minerals, as part of the ‘Enough Project’, which is a non-profit established to end crimes against humanity;
  • Apple were top of the Corporate Information Transparency Index of the Institute of Public and Environmental Affairs;
  • the company carried out 756 assessments in 30 countries, (i.e. 95 percent of Apple’s total spend). Over one quarter of these were first time assessments;
  • they increased the number of high-performing suppliers by 35%; also low-performers decreased by 71%.

 

Having an ethical policy is one step towards transforming business practice. However, what makes the real difference, is being able to prove that improvements are consistently happening.  This is only made possible with realistic bench-marking, possibly in partnership with industry regulators, or NGO’s.  From here, supply chain automation means that data can be generated and analysed at every point in transactions.  Many companies are finding that independent audit is made easier by effective SCM systems.  Together with easier compliance, improved PR, job satisfaction for personnel, improved efficiency and profitability, the benefits of transitioning to modern supply chain management methods are proven to be the way forward for businesses of every type.

 

 

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Benefits of On Demand Trucking Delivery Systems for Owner Drivers and Customers

On-demand trucking delivery services have really taken off in recent years, as businesses and individuals want greater convenience in ordering parcel courier services and better rates for delivery.  The growth in freelance truck delivery service providers was an inevitable business growth sector after ride-hailing, as the freight industry struggles with lack of full coverage, especially satisfying demand for express and last mile deliveries.

It is now easier than ever to use independent, owner truck drivers via a digital on demand trucking system like the Ubers and Lyfts of the ride hailing world.

For freight brokerages seeking third party suppliers, an on demand truck delivery service can be great transportation alternatives and for local furniture removals of single items, the ‘man with a van’ can be a cheap way of getting that sofa no longer needed by a friend.

For individuals who need help with moving bulky or awkward items, the owner-truck driver is a blessing compared to paying for removals companies, renting a pickup truck or van and relying on friends to help.  Scheduling a delivery or even calling on a buddy can add up to hassle, disappointment, or injury.

Despite the headline news of employment rates being stronger than they have been for a number of years, there are still many people struggling to make ends meet and running between multiple jobs to keep up a good standard of living. Becoming the local Uber for trucking is growing in popularity. Between smaller delivery jobs for people needing some extra muscle for an hour or two and regular pick up of slack for local truck delivery services, the on-demand truck delivery service provider has a way to earn a living from their vehicle, while providing a vital local service.

The Truck Owner Seeking To Grow A Business

Most stores offer delivery services for new items, such as furniture, bulky or heavy items, or other purchases, with the likes of Ocado picking up and delivering for supermarkets.  Nevertheless, the on-demand truck delivery service niche is still in its early days, leaving room for the entrepreneurial truck owner to grow a booming business around urban centres in particular.

It isn’t just that other van, lorry and truck owners will want a piece of the pie, local retail businesses can benefit from more affordable deliveries by outsourcing.  With a comprehensive digital system that allows for ratings, retailers can also guarantee high standards of delivery service.

A Convenience Industry Rolling Faster

A quick internet search reveals the increasing number of trucking start-ups based on the idea of the ride-hailing economy we are all now familiar with. On-demand delivery helps local people and businesses to connect to van and truck owners who want to earn extra cash.  Once a customer places an order for a delivery, an app-based, on-demand trucking system can broadcast out to a network of local drivers who can respond to the job faster than other delivery providers might otherwise be able to; the job is typically done within hours of the request going online.  Payment for successful delivery is handled within the app and the recipient is able to rate the speed and quality of service for future users.

Of course, pricing will vary, depending on mileage, difficulty of handling and any parking fees. A sophisticated courier management system will be able to automatically calibrate price, based on factors significant to the owner drivers.

Legal Requirements

Insurance of vehicle for commercial purposes is key. App registration will require proof of coverage, so that customers can be confident that any loss or damage will be covered.  Local authorities may demand commercial licenses, but the software allows for transparency in this regard.  GPS tracking devices also mean that drivers will be accountable when necessary, so customers and retailers or brokers using their services will know expected time of arrival for pick up and drop off.  Anyone seeking to build a network of owner-drivers for their own courier company will need to carry out some background checks on owner drivers.  Some on-demand delivery system models will cover all of the necessary legal issues, so the entrepreneur can be up and running quickly.  For specific features and benefits available with a suitable courier management system, check out more information here.

 

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Mega Chinese Online Retailer Expands Into Logistics Market

Just when you thought that the supply chain management and transport logistics sector was saturated and not worthwhile investing in, a Chinese online retailer moves into this massive package-delivery service market, harnessing their SCM systems to maximise returns on their IT investment. Not put off by the competition from the many other private express parcel transportation logistics companies, according to Jennifer Smith of the Wall Street Journal, the company is seeing the value of a lucrative business to complement existing operations, despite immediate economic slow-down. The company is taking the long term view of an upward market trend in deliveries.

JD.com, retail rival to the massive AliBaba, netted $17.7 billion in the second-quarter of 2018. No doubt, the company hopes to capitalise on cost savings of bringing its logistics in-house, while building on its technical expertise and offering its logistics network for consumers and businesses needing parcel shipments, independent of products sold on their online platform.  Effectively, this adds another revenue stream to already healthy revenue streams.

The company offers an app to customers to organise deliveries, or alternatively, they can post pickup requests via the South Asian social-messaging app, WeChat.

Like many transportation and logistics management companies, the company is currently targeting densely populated cities, such as Beijing, Shanghai and Guangzhou.  Individuals and organisations will, for the time-being, be able to send their items domestically only, but the retail-come-delivery company intend to expand their courier service to cover residential and business deliveries between two points in mainland China. It’s remains to be seen if they eventually seek to take a greater share of the overseas shipping market, given the complexities of supply chain automation in exports.

Expansion into deliveries is a logical business expansion that helps them maximise returns on existing resources, such as their warehouses and fleet vehicles already used to move e-commerce goods. “This marks the next step in leveraging the nationwide logistics network that JD has built over the past decade,” said Zhenhui Wang, Chief Executive of JD Logistics.

Room For More With Powerful Supply Chain IT Systems

The company claims they can reach 99% of the population and successfully delivers over 90% of website orders in one day or less.  This makes them confident of taking a slice of this economic powerhouse’s current logistics market leaders.

JD.com will be competing with companies like China’s ZTO Express Inc.and SF Express, as well as bigger express parcel carrier companies such as United Parcel Service Inc. and FedEx Corp.  JD.com and Alibaba have been increasingly competing in logistics capability, as each fight for market dominance in the world’s second-largest economy.

Amazon.com Inc. too is preparing to launch their own business delivery service in the U.S. The behemoth has already invested heavily in branded trailers and air cargo operations, boosting its extensive network of distribution centres. JD.com, however, will rely less on outside carriers for package deliveries than its American counterpart.

It’s possible that JD.com’s huge revenue growth may be subsidising some interim losses as the company invests in highly automated warehouses and other technology.

Certainly, to compete with Alibaba, who are owned by logistics company, Cainiao Network, long-term thinking by JD.com is necessary, which means capitalising on their sophisticated SCM systems.

Alibaba bought a nearly $1.4 billion stake in express-delivery firm ZTO in May and they too have plans to invest billions in technology in order to brings its logistics operations into maximum capacity and profitability.  Alibaba relies on outsource carrier companies, including ZTO and SF Express, (China’s biggest package-delivery business).

JD.com’s strength lies in its supply chain IT systems and extensive distribution network, which currently includes:

  • 15 logistics sites,
  • over 500 warehouses,
  • almost 7,000 delivery and pickup stations,
  • 250,000 delivery vehicles, some of which are partner operated;
  • air freight is outsourced to commercial airlines;
  • the company also deploys drones in remote areas of China.

 

Certainly, both companies are leading the way in demonstrating the power of supply chain IT systems that effectively co-ordinate complex business models.

Learn more from the logistical IT system professionals here.

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Government Funding For IT Upgrades For Customs Intermediaries And Traders

A government press release on 4th December has just announced an £8 million funding scheme for customs intermediaries and traders, which could mean more business investing in a fit for purpose freight brokering system or freight management software, smoothing supply chains in trade.  Applications for government support are now being taken.

The HM Treasury and HMRC grants are being made available for IT improvements and training in the industry, we assume to reduce trade obstacles ahead of the UK leaving the E.U.

A ‘customs intermediary’ is any businesses or sole trader that is obliged to complete customs declarations; eligible organisations therefore include:

  • customs brokers
  • freight forwarder companies
  • fast parcel operators.

 

Of course, eligible bodies will have to meet particular requirements to qualify for government support, according to the specific grant they apply for.  In particular, grant applicants must be based in, or have a branch in the UK.

If your company completes customs declarations, government grants will support investing in IT systems that will make your administration more efficient.  To maximise effectiveness of any new freight management system software, the costs of staff training can also be covered by the government’s £8 million investment fund.

This grant initiative is the product of government officials consulting widely with industry professionals and “…key providers of customs broker services – including freight forwarders, fast parcel operators and independent customs brokers…”.  This now means that government departments are in a stronger position to understand the challenges our industry faces and our clients are now able to benefit more easily from investing faster in off the shelf freight management software packages. This will in turn benefit their existing and new clients, increasing transparency, speed of transactions and much more. Bespoke packages cannot be accommodated by this funding, but Logistician will help businesses use this financial support to improve the productivity within the criteria.

The £8 million government supports brokerage agency training and enhanced automation of freight systems to increase sector capacity ahead of the Brexit deadline of 29 March 2019 – assuming this goes ahead as expected. Of the total grant funding available to import and export companies, £3m will be allocated to training provision.

HMRC and the Treasury have worked with training providers to extend availability of relevant training courses in the short term, while new courses are being developed.  It is expected that training coming on stream will support customs broker training to cope with anticipated rising demand.

Financial Secretary to the Treasury, Mel Stride, said:

As part of this investment, £5 million in funding is now available to help businesses, based in, or with a branch in, the UK to meet the costs of employee training and IT improvements. Businesses who will benefit from the funding are encouraged to apply early. Applications will close on 5 April 2019, or earlier once all the funding is allocated.”

Businesses can apply to PwC, who are administering grant applications for support to develop IT infrastructure, training or both, specifically:

  • £2 million is available for 50% of the cost of training for intermediaries and traders completing customs declarations.
  • £3 million is available for IT improvement for small and medium sized businesses in the customs intermediaries sector (i.e. freight broker companies) who manage customs declarations on behalf of importers and exporters. In particular, funding is weighted towards automation and productivity tools for completing customs declarations.

 

The online application page is available here on GOV.UK.  Please contact Logistician directly to find out how our freight management software meets government criteria and how it could transform your efficiency and productivity to future proof you for coming trading arrangements.

 

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How Vehicle Telematics Could Be Your Future Witness and Protection

Data harvesting in the transport and logistics sector is not just about finding efficiencies and maximising resource, it’s also about compliance and accountability.  The more information generated automatically by an integrated transport management system, the less burden of proof required by individual staff members, or even by companies facing legal action.

Whether operating as an owner-driver, or managing an entire multi-modal fleet, telematics is the practice of gathering and analysing up to the moment data about operations in the field. When accidents happen, central control can be essential to minimising risk for operators, clients and management personnel.

Vehicle telematics is about “… gathering, storing, and transmitting information about the vehicle for tracking purposes. This information can be used to analyse vehicle performance, vehicle conditions, driver performance, and more.”

News has just come out about Midland Red facing a £2.3 million bill for failing to act on data, resulting in public fatalities, including a baby and an elderly person.  As the police begin to allocate more resources to investigating digital information, fleet managers can expect that any serious transport incident in the future will result in the police requesting transport management software telematics data to identify possible causes for transport related crime and for the CPS to apportion blame.

Future compliance will mean that every car vehicle will have its black box, just as aircraft already do. Similarly, dashboard cams and app-based data will reveal details of poor driving or vehicle management habits which contributes to either a potential crash or theft from their vehicle.  By the same token, vehicle drivers can also be protected by technologies that can completely exonerate them.

Those transport and logistics companies putting off investing in TMS systems hosted by third parties will not be able to avoid legislation in the pipeline following high profile cases, such as the Midland Red case, that have used data to prove liability.

Burying one’s head regarding investment in tech is common across industries, as companies fear imminent obsolescence as hardware and software develop rapidly.

However, companies could be deemed negligent for not applying their health and safety policies effectively. It is beyond denial that digitally connected vehicles produce vast quantities of data, which could be readily accessible to the authorities when required, while also helping to optimise systems, through systematised analysis.

As this most recent case in the news highlights, it is better to endure the perceived disruption and discomfort short term by investigating all technical solutions in safety management and –proofing your company than paying the cost of poor implementation of policy from ignoring information already available which could avoid catastrophe.

Understanding the benefits of quickly viewing real time transport management software data and how this can underpin a coherent health and safety policy gives management, drivers, external stakeholders and even shareholders peace of mind that they are involved with a responsible company that cares about improving performance standards and can minimise the likelihood of accidents.

It is worth knowing that the police have been granted Government funding to survey dashcam data. Individuals can now share video evidence of others’ poor driving behaviour, making public accountability even stronger. North Wales Police have used such data for the past couple of years, issuing fixed penalties, increasing prosecutions and obliging driving retraining courses.  It is a matter of time before RTA’s or load spillages also become subject to police scrutiny at an unprecedented level.

With the ubiquity of vehicle based technologies among the general public, data obtained from witnesses’ cars will be correlated against a company’s vehicle data to assess liability.

The AA has undertaken research showing that 20% of drivers already have dashcams fitted, with more drivers planning to install them to protect themselves in the case of insurance claims. In the future, it will be verifiable public evidence versus the data of fleet and delivery vehicle operators.

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5 Steps To Building a Successful Trucking Company

The on-demand trucking business can be very profitable for both owner-drivers and the trucking companies and brokers who contract them. Independent van and truck owner-drivers add value to their existing courier delivery services with last mile and express deliveries, so inevitably the niche is highly competitive. However, many truck owners try to break into this business every year, but fail to build a profitable business without tapping into online networks and apps.

The truth is that great truck drivers but are not necessarily good business owners, because a trucking business involves more than knowing how to drive a truck well and choosing appropriate routes to take.  Fortunately, as a driver, on demand trucking system providers are coming to the rescue for those who have the drive, but perhaps lack expertise.

There are, nevertheless, seven pointers, which when combined with the power of online networks can not only help you find more work as an individual owner-driver, but see the opportunity to tap into the wider network of owner drivers to establish a viable delivery company, able to compete with the big rollers. This article is aimed to prepare you to become a successful truck delivery business owner.

1. Find Your Delivery Service Niche

As in any competitive market, finding a niche can mean you steal a march on others, building a reputation that helps you corner that sector. Whether setting up as an owner-operator, or fleet owner and third party delivery service, identifying a market niche where return on time, resource and investment delivers results helps establish a solid business foundation on which to build.

Your ideal market determines the equipment you invest in, the rates you can charge, and the freight routes you can cover. Of course, you may also identify a potential market gap, while serving others too, albeit, generally owner-operators can profitably focus on markets that the large carriers avoid, such as last mile logistics and more personalised service for local businesses. Another idea might be hauling specialist loads, such as toxic or hazardous waste. Even if food deliveries from supermarkets seems to have been cornered by the likes of Ocado, it offers year round, recession resistant work and income consistency if you can build the retail connections.

Remember, the larger parcel carrier companies and other owner-operators will already be covering the ‘easier’ loads, so going niche can save wasted time and angst.

2. Delivery Rate Charging

Owner-operators key early decision will be the appropriate freight rates to charge clients. This should form part of your business planning prior to any investments, as the figures need to stack up so that your business operates with decent profits.  A full and realistic assessment of all your operation costs means that you can decide the level of up-front cost you are able to bear, then plan towards break-even and beyond.

In order to establish professional credibility, you need to be totally clear about your rates before you promote your service to shipping customers and begin deliveries. Reliability and consistency are key to reputation building. While you need to be competitive with what brokers charge their clients, a lack of preparedness in costs and under-capitalisation will drive you off the road.

Comcapfactoring.com suggest a method to calculate your break-even point, thus:

  1. Select your preferred daily route out
  2. Go to an online trucking load board
  3. Find 10 deliveries that are on route to each other
  4. Call a few brokers to find out their various rates of pay
  5. Get the average fee, then add 10-15% which gives you the price they charge shippers
  6. Repeat this process for the direction back home to maximise earnings

 

Understanding the costs of a round delivery trip over a particular distance means you can roughly calculate costs and earnings for alternative routes, assuming equal variables. Being able to factor in detours with GPS alerts, tariff zones and parking fees develops your business acumen.   This article: ‘Trucking Company Rates Per Mile’ takes you through the process in more detail.

Knowing your detailed operating costs is essential to turning a profit. This means considering fixed and variable costs. Fixed costs remain the same regardless of how far you drive, such as insurance, loan repayments, special licences or permits, etc.

Variable trucking business costs are determined by the number of miles you drive and associated fuel consumption.  They could also include localised issues, such as toll bridges, variable parking rates, tariff zones, albeit these could just as well be calculated as fixed costs.

The combination of fixed and variable business costs help determine your total ‘cost per mile’. This figure is important in calculating delivery rates. If you subtract this total from your rates, this gives your estimated profit and your real earnings.

3. Build Relationships with Regular Shippers

Delivery brokers can offer regular sources of income, so are significant to your on demand business when you have an empty or ‘less-than-load’ truck. However, their ‘middle-man’ rates eat into your profits. Brokers can keep anything between 10% to 20% of the load fee charged to the customer. Their commission pays for providing you with a service of connecting you to shippers and back office administration. They too are running a business, which is fair enough, but if you want a greater share of profits to be made, then building your own network of contacts is your most valuable resource next to your rolling asset.

To earn more per mile, it is vital to eventually minimise working through brokers and online delivery request boards. A list of reliable, regular shippers will keep you busy, but this takes time. Obtaining market share is the name of the game here. Charging a fee that is competitive to the brokers means that you can undercut, while still profiting more.

Here’s some further help you grow your shipping business network:

 

4. Back Office Efficiency

Administrative efficiency saves headache and angst later, come tax calculation. Not only that, having a regular eye to cash-flow and paperwork helps keep your trucking business cost calculations accurate.  Efficiency of your back office administration becomes even more important as you start to build your trucking empire, adding leased drivers to your operation.

You options are as follows.

  • Do it yourself. It is possible to run your business from the cab of your truck with a smartphone. With a Wifi internet connection, a mini printer and accounting software, you can run your business when still small scale. Truckbytes offers a free entry-level accountancy software package.
  • Outsource administration to a dispatcher. This option can be expensive, however, but if interviewed thoroughly, with references received, your team are another fundamental business asset. Conversely, a poorly performing dispatcher can be your biggest business risk. Running an online competition via a freelancer website can help simplify your recruitment of someone else who can concentrate on handling this side of the business.

 

5. Cash-flow Management

Trucking is a particularly cash flow-intensive business given the number of transactions handled daily, together with fuel and truck payment outgoings. Some clients you work with will have longer payment cycled than others.  Established shippers and brokers can pay invoices anywhere between 15 to 45 days; smaller individual clients may pay immediately. These cashflow delays can crease operations, especially in the early days of the business. This underlines an earlier point about under-capitalisation being one of the greatest threats to an ‘uber for trucking’ start-up.

One possible solution is to use freight bill factoring, which can advance a large part of your invoice, often the date of submission. The remaining proportion of the standard delivery rate, less a small fee, is rebated once a shipper pays (e.g. 95%/5%). Comccapfactoring.com suggest: “Many factoring companies provide fuel advances, cards, and other services as well.” They have a form on their website for such services.  However, before undertaking any transactions whatsoever, it goes without saying that as a business person, you should always seek legal and professional advisors to ensure you are operating on a sound footing.

The other consideration in cash-flow management is ensuring that you are using software that helps you keep track of your daily earnings goals by recording your deliveries made and associated earnings. Seeing potential earnings from accepting a despatch from an on demand trucking system means you can anticipate outcomes and plan your load management accordingly.

If you are managing a fleet of vehicles and drivers your courier management system will be a vital asset for tracking drivers and your business earnings.

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Plan Your Supply Chain Automation, Automate Your Plan

In order to maximise business cost efficiencies, it is essential to optimise supply chain automation with an eye to hands-on analysis of outcomes for customer service in order to keep the human touch that is the basis of trusted relationships.

Given that personnel is one of the greatest costs to business, it is understandable that businesses increasingly invest in autonomous hardware, such as, picking robots, RFID tagging technology and transportation tracking systems.  However, supply chain management (SCM) systems must be viewed as a complement to technology.  Systems planning will help identify where the balance of responsibilities could lie.

It is important to remember that transportation and logistics has traditionally relied on building of customer relationships between people, so reducing human interactions is not always possible according to, Ignacio Felix, talking to Supply Chain Dive.

This is because the bottleneck for many supply chains is in the planning of any supply chain automation. Complexity of process and diverse staff roles all have to be included into an automated business model.  From front line drivers and customer service staff, through to back-office purchasing and finance departments, “…you really have a lot of manual pass-throughs of the same information,” says Felix.

Legacy IT systems can, he says, be an additional barrier to SCM systems planning.  Integration with existing communications platforms, or transition to completely new, comprehensive systems potentially slows productivity, for instance.  While this is a short to medium term issue, implementation if an effective supply chain management system ultimately transforms performance, making it an investment for longer term competitiveness and longevity.

Planning can seem tedious, but given current technological capacity to automate many repetitive business processes, however, the leveraging of automated data management and transfer and harnessing solutions that refresh supply chain planning processes can produce measurable and unanticipated efficiencies, potentially creating a virtually ‘touchless system’, driven by data. Human error, often based in boredom, or crisis management is minimised.

The Best Approach to Supply Chain Automation Planning

 

lnvestors in Kraft Heinz were told this year that with automated systems, the company establishes “… transparent and challenging targets and coordinate global KPI tracking, and with a global, end-to-end supply chain perspective, we remove capacity constraints and bottlenecks from the system.”  In other words, they could plan objectives that could be easily measured against tracking data.  This clarity of business processes enables this conglomerate to identify areas for making efficiencies, as well as remaining accountable to shareholders and other stakeholders.

Ultimately then, technological investment is best practice in customer service.  Their centralised ‘Global Center of Excellence’ in the Netherlands controls and monitors operations, plus shapes this multi-national company’s overall vision and direction, including digital planning.  SCM systems ‘dashboards’ help managers devise tactical programs based on issues highlighted in data analysis, which in turn supports for “…cross-functional collaboration”, says Craig Guillot of SupplyChainDive.com

Marco Rodrigues, head of Kraft Heinz’s Global Center of Excellence believes that there are opportunities for efficiency savings and areas for improving effectiveness everywhere in organisations.  They take the attitude that “… no area is off-limits.”

Of course, readers may argue that an international company of their size has the necessary resources for identifying and implementing efficiency measures. However, it is in the margins that companies ultimately find the edge.  Now more than ever before, as the SCM automation systems are available, smaller companies can save time and money, building their market share with hardware and software, deployed and managed centrally, that equips them to compete.

With leadership who can access centralised information quickly and easily,  senior staff can split test strategies and tactics for optimal performance to create cumulative improvements to operations across departments.  The innovations opened up, together with an empowered governing infrastructure helps supply chain management and transportation logistics companies better develop staff talent and performance management practices that ultimately builds robustness.

Investment in “…machine learning technologies, advanced analytics and process design” is a must for automation to become optimised, according to Supply Chain Dive.   This automation supports decision makers to experiment with new solutions to apparently intractable conditions.  Governance becomes increasingly about iterative development, founded on data management infrastructure that objectively measures systematically applied performance management practices.

Central data management, says Felix, can support companies to “…pilot fast, fail fast…” and thereby move towards success faster also.

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Making the Business Case For Freight Management System Investment 

Investments in innovation can feel like one of the riskiest decisions any business can make, particularly when a company lacks in-house IT expertise in this niche, or the technology under consideration is still evolving, as is the case with freight systems. However, like many difficult development decisions, considerations go beyond short term financial cost, or even technical capacity, but impact every aspect of business operations, from efficiency of shipping, through best practice in customer service to compliance and more.

Customer Added Value

When you are in the service delivery business, customer is king, as they say. In particular, how you communicate and the value of what you communicate is what engenders trust and return custom.  Any IT developments that support customer focus are, therefore, an investment in lasting, profitable relationships and business longevity.

A smart freight management software program can deliver on customer satisfaction performance indicators, together with business transformation across diverse operations for companies shipping goods.

Democratisation of business decision making, through tracking capabilities,  integration of customer feedback and promoting stakeholder interests through information transparency is not only good practice, it makes sound business sense. If the customer feels in control and benefits from quality of service, the quantity of return custom and business referrals will follow.

Shipping can be an operational nightmare for goods manufacturers, whose business expertise is in product innovation and development.  Simplifying the process of logistics management relieves companies of the stress and complexity involved in freight systems.

Freight Systems Relief for The Freight Management Industry

By the same token, those transport and logistics providers and freight brokerages involved in the mind-boggling minutiae of shipping goods around the global blood supply also can benefit from simplifying, smart freight management software.

In particular, removing the enormous basic shipping function weight from the shoulders of logistics teams also lets them:

  • Cost Savings. Identify cost savings to invest into other development objectives, such as R&D and product innovation, staff training, recruitment, marketing and so on. This creates virtuous circles of increased customer reach and improved revenues.
  • Staff Productivity. Staff relieved of repetitive and mundane daily tasks can be redeployed to more strategic concerns, such as creating efficiencies within their own job roles and teams that they previously had no time to focus on. Furthermore, greater job satisfaction from more challenging work develops in-house expertise and moral, which has a knock-on effect on talent retention and reduced recruitment costs.
  • Supply Chain Improvement. Flexibility and agile operations are the key to satisfying customer demand and brand growth.Supply chain management is a key aspect of continual improvement in this respect.  When software allows for time-savings, focus can shift to developing and enhancing a flexible supply chain to meet the diverse needs of suppliers and customers.  This too creates positive impacts, including improved customer service and boosted sales.
  • Operational Feedback Loops. The breadth and depth of business data accumulated over time in an intelligent freight management system helps more sound management decision making. Analytics that can be interrogated quickly, producing a variety of report formats mean managers can identify patterns, problems and potential profitable avenues for development.  This creates that hoped for cycle of continual improvement and best practice to enhance how companies do business and remain compliant with diverse regulatory environments.
  • Culture Change. Running a business can often feel like fire fighting, especially during growth spurts. What many business owners aspire to is creating a culture where innovation, challenge and creativity are the daily reality for staff. At this stage, logistics and other departments transition from being considered a cost centre to a profit centre, as Dan Clark of Kuebix observes.

 

The Bottom Line 

The future of the transportation management industry is already here, whatever further developments arise in hardware and software.   More businesses involved in transport and logistics are already enjoying the proven control and visibility offered by TMS freight management software, together with the evidence of or prospect of greater future profitability.

Leveraging the power of big data, flexible reporting across departments and predictive analytics are enabling not only better business decision making,  faster, but changing logistics management in real time.

Using best-of-class cloud technologies, with options for modular solutions, or comprehensive custom software, that continuously upgraded by a strong technology partner can create innovative, intelligent freight systems for companies of all sizes.

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