Within the free market, the numerous different industries work in synchrony to support and supply one another. Local coffee shops and restaurants, who belong to the hospitality industry, work with grocers and distributors who supply them with goods that are eventually consumed by the masses.
The companies which provide the equipment and machinery used for commercial, as well as industrial purposes, are a part of the machinery and equipment industry and comprise another integral part of the supply chain. Even though these entities may appear to stand alone given a cursory glance, they are all key cogs in an extended supply chain that work in harmony to keep the economic machine humming. In short: they all rely on one another.
Generally, we are familiar with the concept and function of each entity toward the end of the supply chain; that is to say, those toward the consumer end. We all know that there is a loading dock somewhere toward the back of the restaurant where produce is unloaded before it is prepped for consumption. However, we are far less familiar with the distribution centers which support delivery services, and even less familiar with the entities which support them; the freight shipping industry.
The freight shipping industry is the industry that transports every sort of commodity; cargo, merchandise, equipment and material from one place to another, nationally and internationally. The commodity is commonly referred to as freight, and the modes of transport include trucks, trains, airplanes, and ships. The process, while relatively simple, is carried out on a vast scale before our very eyes each day; necessitating unparalleled cooperation and an equally impressive mode of communication to fulfill. Below are some of the most common freight shipping term and freight shipping abbreviations along with descriptions of how each fits into the larger context of the freight shipping industry.
The shipper is responsible for coordinating the outbound logistics of their freight. The consignee is whoever is paying for the freight to be moved. A shipper is often the consignee but not always. Everything involved in getting the freight ready to ship falls under the umbrella of outbound logistics.
The term Consignee refers to the party that will pay for freight to be shipped. Often, the consignee of a shipment will be the shipper themselves.
In the industry, it is common for a shipper to store their freight in a warehouse until it is ready for shipping; referred to as warehousing. Typically, this is where shippers will package freight, and it is also where the freight is picked up. Before freight is ready to be shipped, the shipper must first determine how much freight is being shipped, determine the freight class, and coordinate for any accessorial.
An accessorial is a term used to define any additional steps for the carrier once the freight has arrived at its destination. This would include deliveries in gated areas, unloading and so on.
All of this information determines which type of carrier to choose and is included in the Bill of Lading (BOL); the order, or the contract between shipper and carrier.
Bill of Lading (BOL)
The BOL is a document which provides the driver and the carrier with all the details needed to process the freight shipment and to invoice it properly. It includes the amount of freight and an invoice detailing the contents. It also includes the freight class, the pro number or tracking number placed on the freight upon pickup, the name of the shipper and receiver, and any specifics for an accessorial. The accessorial will include any other specifics regarding the freight from the moment it is picked up, until the moment it is dropped off. Once the freight is dropped off, the BOL acts as a receipt and a report for the receiver.
If the shipper and the receiver are not aware of one another, the freight shipment is called a blind shipment. In these cases, the BOL lists the party that paid for the shipment as the shipper or receiver of the freight shipment.
“Embargo” generally refers to any event which prevents freight from being accepted or handled. Typically, an embargo is put in place due to international conflict, but it may also include weather events such as floods, tornadoes, or other occurrences such as congested highways. All of these exceptions and complications are accounted for in the BOL.
The freight class is determined according to a formula which takes into account many different factors. The size (weight, length, height), density, value, stow-ability, handling and liability of the freight are the most important factors used to determine freight class.
There are 18 different types of freight class ranging from Class 500 to Class 50. Freight classification is a specialized skill within the industry and is only really relevant if a shipper is considering using an LTL carrier. As defined in depth below, an LTL carrier is the industry abbreviation for carriers that specialize in ‘less than a truckload” (read: small) shipments.
NMFTA and NMFC
These classes are defined by the National Motor Freight Traffic Association (NMFTA) and made available through the National Motor Freight Classification (NMFC). In other words, the NMFTA created the different ‘classes’ of freight and shippers use this standardized formula created by the NMFC to assess the class of their freight.
Examples of Freight Class
- Class 500: is for freight whose weight range per cubic foot is less than one pound (ping pong balls or bags of gold dust). This is the most expensive
- Class 92.2: is for freight whose weight range per cubic foot is 10.5-12 pounds (computers, monitors, refrigerators).
- Class 55: is for freight whose weight range per cubic foot is between 35-50 pounds (bricks, cement, hardwood flooring).
3rd Party Logistics Providers and Brokers
Third party companies have built an industry of their own, acting as intermediaries between shippers and carriers. Their customers are the shippers themselves, and they profit by managing contracts amongst a network of different carriers. These companies are tapped into a much broader network of carriers than a shipper would have access to by themselves, so they can save shippers time and resources by acting as intermediaries.
The larger and more established the shipping company is, the less likely it is to use a 3rd party. Larger and more established companies often facilitate this function in-house, often prioritizing their own carriers and therefore have no need for a third party operator.
Once the outbound logistics of the freight has been handled, a shipper or their broker is left to pair what is best for their freight, with the right carrier for the job.
Types of Carriers:
- Less than Truck Load (LTL)
- Truckload (TL)
- Air Freight
- Rail Freight
Less than Truck Load (LTL)
An LTL will carry as many different orders of freight as it can manage and deliver them in whichever order best suits the journey. If a shipper hires an LTL, they are essentially hiring a carpool service for their freight. Depending on the freight class, it is often the cheapest option for shippers. However, this method also tends to have the longest linehaul of all carriers.
A linehaul refers to the route of the freight itself or the ‘line’ of its transportation. It is also the mileage used to calculate the rate since most carriers charge a specific fee per mile of transport. The linehaul from Los Angeles to Albuquerque, for instance, is approximately 800 miles from point A to point B.
Considering LTL for Freight Shipment
A shipper would consider using an LTL for their freight shipment under the following conditions:
- The load is not large enough to require its own truck
- The load is not fragile enough to require special handling
- NO time critical or time-definite restriction on the transit time of the freight.
- Time Critical: delivery is set to the earliest possible delivery time to accommodate particular shipping requirements
- Time Definite: guarantee that the delivery will occur on a specific day or time of day.
- Transit Time: the total amount of time from freight being picked up to freight being delivered.
Line Haul of an LTL
An LTL will typically collect all freight shipments from a general area and then return back to an LTL ‘hub,’ or place of business, where they unload all freight, sort it by its destination and then load it once more on to its corresponding LTL truck. If the freight is being transported within a city, it is referred to by the industry as Cartage.
This transfer of the freight from one carrier to another is called an ‘interline.’
An interline occurs when the initial carrier of a freight shipment transfers the shipment to another carrier to get to its final destination. This can mean a transfer from truck to truck or a transfer from truck to rail et. When an LTL returns to its “hub,” it is transferring the freight from one carrier to another.
The term ‘carrier,’ can get a little confusing here. An LTL Carrier is a company that offers LTL services. Each truck performing an LTL service is also called a ‘carrier.’
Handling of Freight
To maximize the space available on an LTL, different orders of freight can get nested or stacked inside of each other and are often secured in the truck with wooden planks or ropes known as blocking and bracing freight.
Bulk freight includes freight such as raw materials, commodities or goods that are not packaged. Bulk freight is not usually carried by LTL’s since they specialize in the shipment of freight that can be moved around often, which usually requires it to be packaged. However, there are always exceptions.
As LTL companies carry all type of freight, a Hazmat Certification is required for all employees who are handling it.
Hazmat Certification stands for hazardous material certification. Anyone handling freight, especially Motor Carriers, otherwise known as the drivers, must be Hazmat Certified.
Common Equipment Types LTL
LTL’s are most commonly transporting freight that can fit on palates. It must be able to be stacked, compressed and shifted. Due to the variety of the freight class on deck; LTL trucks are usually Dry Van’s. A dry van could be confused for an extra-long semi-truck.
Another common type of equipment used across the board is called an Air Ride. An Air Ride is another way of saying, that suspension is being used. The suspension can be attached to all sorts of carriers and is used for a less bumpy ride.
Truck Load or Full Truck Load (TL)
A Truckload or Full Truck Load (TL) carrier is a company offering a pick-up and drop-off system for freight requiring its own truck.
Considering LTL for Freight Shipment
A shipper would consider using a TL for their freight shipment under the following conditions:
➢The load is large enough to require its own truck
➢The load is fragile enough to require special handling
➢ Time-sensitive shipment; the shipment has time critical or time-definite restrictions on the transit time of the freight.
Since there is only one freight shipment on each truck, TL’s can offer services that other carriers cannot.
TL’s can cater to the fragility of freight. If the freight requires a lot of space, air conditioning, bubble wrap and so on, a TL carrier can accommodate these special needs.
Seal or No Touch Service
Once the freight is loaded onto the truck it should not be handled again until it has reached its final destination, ‘no touch.’ TL’s can provide a sealed trailer. Once the freight is loaded onto the truck, and the doors get shut, a seal is placed over the doors as a guarantee that the freight will not be handled until the doors open at the end of the line haul.
Linehaul of a TL
A TL is usually performing a direct line haul. This means that the freight is being taken directly from point A to point B. If a shipper is in a time sensitive situation, a TL can guarantee the fastest route.
Common Equipment Types TL
Not all freight being shipped by L’s can fit through double doors or be loaded from the back of a truck. There is a variety of equipment used to meet the needs of this sort of freight. Keep in mind that all trailers can be ‘air ride,’ or suspended.
A reefer is the industries term for a refrigerated truck. If freight needs to be kept cool in transit, like food, it will travel in a Reefer.
A flatbed is a flat and open bed trailer that attaches to the head of a truck. A flatbed is most commonly used for shipping large manufacturing and construction equipment that has to be loaded from the side or from up above.
Step Deck or Drop Deck
These look similar to a flatbed except that their bed, or deck, is closer to the ground. There are regulations on how tall a truck can be on the road, so by virtue of being lower to the ground, these decks give more room for taller freight.
A container refers to the large storage units you see stacked onto cargo ships. They look like truck trailers (the body of a truck) with no wheels. This is best used for cargo that will be traveling, truck-rail-truck, or requiring more than two modes of transportation.
Air Freight & Rail Freight
A shipper would consider using air freight or rail freight for an order traveling cross country or internationally. Most freight shipments that ship by ocean, air or rail are a part of intermodal shipping in which an LTL or a TL are involved in delivering freight to the next mode of transportation.
Intermodal Transportation occurs when freight is being shipped using two or more modes of transportation. Typically, it refers to truck-rail-truck shipments but may also include truck-to-air or truck-to-boat shipping.
An LTL drops off some freight at a warehouse. That warehouse was waiting for this freight to send their complete order to Montreal. Now that they have their full order complete, a TL picks up the completed shipment and loads it into a container. The TL is now driving the container to a train station (for freight of course). Then, the container gets loaded onto the train.
Common Equipment Types for Air Freight or Rail Freight
A container refers to the large storage units you see stacked onto cargo ships. They look like truck trailers (the body of a truck) with no wheels.
This is a rail shipping term that refers to a frame with wheels on which a container is mounted for over-the-road transport. It could be compared to the flatbed trailer that attaches to a truck, except this one attaches to a train.
A rail shipping term that refers to a frame with wheels and locking devices to secure a container during shipping.
The receiver is responsible for all inbound logistics of freight. Receivers act as the counterpart to shippers on the other end of the supply chain. In many cases, the receiver is a local distribution center that services the businesses in a particular area from day to day, but may also be an individual business itself. Shipments on this end are inspected and added into inventory, and the freight shipping process is complete, barring the event of a backhaul.
A backhaul is essentially a re-loading of new freight onto the same truck that recently delivered an order. This new haul is loaded and then taken back to where the previous load originated; in other words, taking a new shipment from point B back to point A. Often, carriers will offer a discounted rate for backhauling in order to avoid an empty trailer. Not only is this efficient regarding time, but it is also a financial win for all parties involved since the carrier can recoup travel costs on an otherwise empty haul while shippers can save on carrier costs for these particular loads.
While the concept of freight shipping itself–moving large shipments of goods from point A to point B–may not be particularly complicated, the particulars of doing so most certainly are. For those who wish to utilize such services, it is essential to become familiar with the various functions of freight shipping and the terminology associated with each in order to manage the process efficiently and keep business moving.