Nothing is more annoying to a shipper than the idea of spending a lot and not getting anything in return. Just ask Dave Qualls, logistics manager with ThyssenKrupp Elevators, one of the country's major elevator companies.
“We ship to construction job sites,” Qualls explains, “so getting there on time is critical for us because we bring in construction crews to meet the truck and off-load it, and we have to pay union scale by the hour. It's critical that the truck be there when it's supposed to be there. Otherwise, we start paying a lot of money for nothing.”
ThyssenKrupp's entire elevator product is manufactured in Middleton, Tenn., about 60 miles east of Memphis. Major elevator parts are created in a large plant and electronic components in a smaller facility close to it. When completed, the electronic components are shuttled to the larger plant.
Qualls explains that the company is divided into two groups — manufacturing and a field organization that handles sales, installation and other construction services. Some of the company's larger branch offices have warehousing, but there's not sufficient warehousing at any particular location to accommodate the amount of business with which it deals.
In the past, ThyssenKrupp used full truckload carriers for delivery, having them make multi-stops. An advantage was that truckload carriers weren't restricted to going to a terminal; instead they could proceed directly to a job site. The company uses intermodal service to the West Coast, the Northeast and Florida.
“That worked very well for us,” notes Qualls, “until the change in hours of service (HOS) went into effect [at the beginning of 2004]. That has created some real problems. Fees that are being charged for stop-offs are really high. If you don't get the driver freed up fairly quickly and he has to lay over, you get into some real excessive layover charges, as well.” What changes might result as a consequence of the suspension of the new HOS rules (see cover story) remains to be seen.
ThyssenKrupp loads its own trailers. Once a trailer is loaded, a fax is sent to the carrier that then picks it up, so there's no wait time. Any delay is on the delivery side of the equation.
A solution for Qualls has been to make greater use of his less-than-truckload (LTL) providers, including Yellow Transportation, ABF Freight Systems, FedEx Freight and Averitt Express. He even uses LTL for some expedited shipments, sometimes having to change the mode of shipment while it is already in transit.
In reaching out for greater shipping coverage from his LTL carriers, Qualls explains he needed a program that includes tracking and tracing capabilities as well as the ability to set a delivery time for his field staff, and to have the carrier make delivery within a 30-minute window at a moderate up charge.
The company is currently conducting trials with ABF under its By Request program. According to Qualls, the LTL carrier has been delivering “100% on-time for a modest up charge.”
Qualls feels truckload had a lot of leverage for about six months. “When you're in a manufacturing environment, you have to move your products,” he explains. “You can't put it all in the LTL carriers because we would overload them, and we ship out 200 elevators each week.” His program with ABF has helped ease some of the burden. “We've got rates negotiated with ABF based on our needs,” he says.
The only problem Qualls has with his LTL carriers is that if they don't move his product correctly — if it's stacked instead of flat on the bed of the trailer — it can be damaged.
“Our product is fairly heavy and bulky,” he explains. “One elevator takes up about 22 feet of trailer. When we load a small pup — a 28-foot trailer — we are going to take up just 22 feet of that. A terminal manager may load freight on the back of that pup and run it to its destination city. Sometimes when they get ready to deliver, they'll want to stack stuff all around our shipment or double-stack it. You can't do that with our product because it can be easily torn and if it's not flat on the trailer floor, it creates real unloading problems for our crews.”
Qualls understands that damage claims are part of the business and works closely with his carriers in trying to eliminate them.
Qualls is very pleased with ABF's By Request service. Lately, he's been experiencing problems in getting freight picked up from some truckload carriers that have been servicing ThyssenKrupp for a long while. “The LTL carriers have been able to step up to the challenge,” he says. “If I hadn't already had these LTL relationships, I couldn't have gotten them even if I needed them. What also helps is that a lot of our LTL contracts came up for review in January, so they already got their increases.”
Major national LTL carriers are aware of the kinds of problems that logistics managers like Dave Qualls are experiencing. Since the last quarter of last year, business has been increasing — and is actually booming — for LTL carriers, and that has caused ramifications for the shipping community.
According to Chris Baltz, vice president marketing and pricing for ABF Freight Systems, “Capacity is tightening at ABF and across all modes of this industry. LTL carriers, one after another, are seeing some good numbers. The bottom line is that if shippers have a good value-based relationship with their carriers, the carriers will take care of them. It's important for shippers to invest in that kind of relationship.”
Leo Suggs, chairman & CEO of Overnite Transportation, feels that with regard to capacity issues, his business is elastic. “We can expand our capabilities rather quickly through use of substitute service to handle overflow freight,” Suggs says. “That means we would contract out to either truckload operations or, in some isolated cases, to intermodal.”
In terms of adding new equipment to ease the capacity crunch, ABF is following its normal rollover cycle of equipment with no grand expansion plans in that area, Baltz notes. Suggs, meanwhile, says Overnite is buying a substantial amount of new equipment as well as holding on to some of the units it would have retired. He feels that as regards equipment Overnite can work its way through peak shipping periods.
Both executives agree that the main constraints or pinch points as a result of capacity are in bricks and mortar, at hub terminals. “Bottlenecks many times don't happen with trailers and tractors, or even drivers,” says Baltz.