Freight Hacks: Insights from Izba’s Freight Experts for Logistics in 2023

 

Meet Our Freight Experts

In this interesting look into the world of freight logistics, we are excited to introduce two experts who have done well in the field: Nic Smith and Nick Stachel.

Nic Smith started in finance but shifted to international freight at Kuehne+Nagel. He’s skilled in managing pricing and allocations for businesses on transpacific eastbound trade lanes. Now, he’s an Operations Consultant at Izba, known for his international freight skills.

Nick Stachel began in transportation software, connecting truck drivers with real-time conditions. He later moved into 3PL freight brokering, especially during the Covid crisis. He’s an Operations Consultant at Izba too, working with Nic to help clients navigate logistics operations.

Domestic Freight Basics

Within the US , freight brokers use a margin-based approach such as air freight. Nick Stachel explains two common pricing models: flat rate and cost-plus. These rates are affected by market conditions, especially in unexpected times like Covid. A price surge (one like an Uber or Lyft but on a regional scale) can be found that goes beyond brokers. 

Read More: Understanding Domestic Freight & Brokerage

Navigating Domestic Freight

In the world of domestic logistics, both new and established brands face many challenges. Let’s take a close look at the problems they may deal with.

Common Challenges in Domestic Freight:

1. Infrastructure Issues: Brands, no matter their experience, face problems like crowded highways and old transport systems that can slow down the shipment of goods.
2. Better Routes: Figuring out the best routes to save on mileage, fuel, and delivery time can be tough, which can affect costs and customer happiness.
3. Rules and Regulations: Following all state and federal rules, obtaining permits and licenses is a shared problem that affects transportation.
4. Not Enough Workers: Finding and keeping skilled drivers can lead to delays in deliveries.
5. Predicting Demand: Accurately guessing how much of a product is needed is important for all brands, which can affect supply chains and company profit.
6. Using Technology: Bringing in new systems and digital tools can be a challenge, especially for brands content with doing things the old way.
7. Last-Minute Delivery Issues: Getting products to the final destination in busy cities with lots of different addresses is always a challenge.
8. Managing Inventory: Keeping enough products on hand for customers without spending too much money on storage takes careful planning and execution.
9. Changing Costs: Not knowing how much fuel and workers will cost makes budgeting and decision-making harder.
10. Being Green: Brands need to think about the impact they are making on the environment when choosing vehicles, fuels, and packaging.

Read More: Demystifying Freight Broker Dynamics: The Insider’s Perspective

Unique Problems for New Brands:

1. New Territory: Brands new to the freight world have to learn about new routes, new rules, and people.
2. Better Supply Chains: Making an efficient supply chain with suppliers, centers, and shops can be difficult for newcomers.
3. Selecting Transportation: Choosing between truckload, less-than-truckload, and intermodal transport based on cost and amount can be very confusing.
4. Good Warehousing: Setting up a good system for storing and transporting goods can be hard for newbies.
5. Using Data: Figuring out how to properly use data for optimal planning and tracking is a challenge for brands new to this dynamic.
6. Managing Drivers: Rules about work hours and safety can be overwhelming for new brands in trucking.
7. Clear Communication: Making sure everyone understands each other is key for brands new to this.
8. Getting Bigger: Growing a business while still being efficient in logistics is a challenge.
9. Meeting Expectations: Having good plans and partnerships is important to make sure that customers are happy.
10. Right Prices: Figuring out how much to charge while still making money is a big deal for newcomers.

International Freight: Ocean and Air

Looking into the hard parts of international freight, Nic Smith gives a good view of different things, from pricing to finishing a shipment. Freight forwarders work with contracts that affect their profit, and prices change because of demand and logistics. Partnerships with carriers and trade routes help things run smoothly.

Read More: Understanding International Freight

Challenges in International Freight:

Going into ocean and air freight is tough for experienced people and even more so for newcomers. Below, you’ll find a list of common international freight challenges encountered by every brand, be it a veteran or completely new to the industry. 

Common Challenges in International Freight:

1. Port Problems: No matter how much you know, getting stuck at ports messes up the supply chain.
2. Customs and Rules: Figuring out complex customs rules and following them affects how fast things move and how much they cost.
3. Supply Chain Mess: Things like natural disasters and factories closing mess up when stuff gets delivered.
4. Money Problems: Figuring out how to spend less but still get things where they need to go is hard because prices for transport change a lot.
5. Not Enough Space: Not having enough room on ships or planes makes it hard to book shipments during busy times.
6. Document Mistakes: Getting paperwork wrong makes things slow and confusing for brands.
7. Talking Right: Everyone needs to talk clearly to avoid problems with suppliers, carriers, and customers.
8. Last Part of the Trip: Going through busy cities for the last leg of delivery is a tough job.
9. Managing Risks: Planning for problems like theft and damage during shipping takes careful thinking.
10. Going Green: Brands have to think about being eco-friendly when choosing how to transport and package stuff.

Challenges for Newcomers in International Freight:

1. Not Knowing Much: New brands may have a hard time with new terms , new ways, and new concepts .
2. Building Friendships: Establishing reliable partnerships with suppliers and carriers can be difficult for newcomers.
3. Picking How to Ship: Deciding between ocean and air travel based on cost and speed can be confusing for new brands.
4. Dealing with Documents: Completing the proper shipping papers correctly can be hard for someone new to this field. Read about invoice auditing here.
5. Following Rules: Knowing and following international trade rules can be a challenge for many new brands.
6. Hidden Costs: Not realizing the existence of some costs can make things hard for new brands.
7. Infrastructure Trouble: Setting up reliable and efficient warehouses and shipping networks can be a struggle. .
8. Handling Cargo: Making sure goods are packaged safely during travel can be hard for brands that are new to this.
9. Language and Culture: Working around the world often requires good communication skills and mutual understanding.
10. Using Tech: Learning to properly use digital tools for shipping can be a challenge for brands that aren’t familiar with the technology. 

Read More: Ocean Freight with Nic Smith

Exploring Freight Deals and New Ideas

Nick has some stories to tell, and Nic handles different requests, like Roll-on/Roll-off (RORO) shipping and government contracts that present intricate challenges for brokers and forwarders. 

RORO, involving vehicles and machinery, demands precise scheduling and coordination due to its specialized handling. As for government contracts, their stringent regulations and documentation requirements add layers of complexity. Brokers and forwarders must navigate varying customs procedures, security protocols, and compliance standards. 

These intricacies can lead to delays, fines, and reputational risks. Successful management necessitates a deep understanding of RORO operations and governmental intricacies, highlighting the need for experience to adeptly navigate these complexities to ensure seamless, compliant, and efficient shipping processes.

Read More: Freight Negotiations: How Much Volume Do You Need?

New Trends in Logistics:

Ever since COVID price surges, people have become more interested in understanding supply chains, encouraging increased focus on optimization points such as order accuracy and last-mile delivery. Computers doing things (AI) and learning from captured data (machine learning) help to plan routes and track shipments better. 

Brands also care more about being green and using eco-friendly transportation to meet customer and international expectations.

The Future of Freight:

Freight and logistics are almost always changing. With disruptions in supply chains around the world, people want supply chains that can easily handle problems and are simple to adapt. New technology, like custom portals, CRMs, blockchain and IoT are hoping to make transportation smoother and more efficient.

While portals and high-tech software may seem like value-additions, it’s important to note that competitive costs and traditional email and phone communication are often more reliable and preferred for better relationships. As Aaron Alpeter, the founder of Izba suggests, when you choose between automated freight forwarding platforms and traditional brokers, you get the option to choose two from three options:

•   Low Cost
•   Good Technology
•   Responsiveness

Read More: Space Logistics: The Next Frontier in Global Supply Chain

Brokers and Money Matter:

There are two main ways for brokers to set prices: a flat rate and a cost-plus rate.

The flat rate model involves a fixed price for shipping services, regardless of fluctuations in market conditions. On the other hand, the cost-plus rate model includes the actual transportation costs plus a predetermined margin for the broker’s profit. 

The flat rate offers simplicity but may not account for changing expenses, while the cost-plus rate provides transparency and adjusts to cost variations, ensuring both stability and accurate compensation. Large companies can usually negotiate better prices than smaller ones.

This podcast shows how carriers, brands, and brokers work together to move goods. It also talks about the importance of negotiations, contracts, prices, and how to select the best way to transport items.

Read More: Freight Negotiations: How Much Volume Do You Need?

1. International vs. Domestic Talks: Nic explains how talking about prices is different when transporting items internationally. During busy times, like Covid-19, prices can go up a lot. He also talks about how much profit people make from each shipment, which is usually more for international shipping.
2. Fixed Deals and Talks: Nick and Nic talk about deals where prices are set for an extended period of time. These deals can have good and bad sides. While they provide stable prices, they might also include extra costs for missed shipments. Nic explains that shippers need to consider all aspects before agreeing to these deals.
3. Being a Smart Broker: Nick Stachel talks about how some brokers might try to squeeze more money from brands that don’t know much about logistics. Brands need to learn about the rules and costs to make sure they’re paying the right amount. Nick and Nic say that learning about logistics is important to obtain fair deals and to develop clear and trusted partnerships.
4. Choosing the Right Broker: Choosing a broker or freight forwarder is a big decision. It’s not just about money. Brands need to think about who will be reliable and work well with them. Good communication and trust are really important when selecting a broker.
5. Choosing the Right Way to Ship: Nic Smith and Nick Stachel talk about how to select the best way to ship products . Brands need to think about cost, time, and how reliable the transportation is. Brands can use a variety of methods to send products in order to save money and make shipping best fit their needs.
6. Working Together: Brands and brokers can work together to plan shipping routes and share space in trucks. This helps save money and make things work better. It’s about being resourceful and working as a team.

7. More Than Meets the Eye: In the end, Nic Smith and Nick Stachel say that logistics might seem simple, but it’s really not. There are many complicated things to consider, like how to make supply chains better, how carriers work, and what’s happening in the market. Brands need to understand all of these things to make informed choices and save money.