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Thanks to the shortage of truck drivers, shippers are having difficulty securing capacity for their freights. However, this shortage so much more affects shippers who need tanker drivers because tankers often require specialized training and expertise. 

As a result, shippers hoping to transport time-sensitive liquid bulk loads have to begin their search for capacity long before their products are even ready. Even so, many shippers still fail to secure capacity for their freights. 

Not all hope is lost, though. Total connection has been exploring a creative option in dedicated trucking, with which we have helped shippers seamlessly secure constant capacity for their freights.

Although it’s more expensive on the surface, here are eight reasons to consider dedicated trucking as a shipper:

1. Guaranteed Capacity

The first thing you get from dedicated trucking is guaranteed capacity, which many shippers can’t boast of during this capacity shortage. 

And suppose yours is a manufacturing company that depends heavily on the smooth transition of your chemical products from plants to consumers. In that case, capacity isn’t something you want to wait for. You want to have it ready and at your beck and call. 

This is where dedicated trucking could be of massive help to your company. You only need to contact your dedicated carrier to secure capacity. And when your dedicated carrier is as reliable as we are at Total Connection, you can simply rest easy knowing your freight will be where you want it to be.

2. Predictable Manufacturing Schedule

As a company that manufactures time-sensitive products, your supply chain needs to be precise to the last minute. This means you must have the right deliveries, in the right delivery equipment, being made at the right time, and to the right places. 

To achieve such a high level of precision, though, you need to be able to predict your manufacturing and shipping schedule to make planning easy. And only with dedicated trucking can you achieve this. 

Since dedicated trucking places your tanker trailer needs at your beck and call, you know you can easily plan a manufacturing schedule that works the way you want it. Even when you want to adjust schedules to make an early or late delivery, dedicated transportation makes such plans work out.

3. Guard Against Cost Volatility

Let’s face it. The cost volatility in the shipping industry will not end soon. We’ve had it before, and we’ll continue to have it in the future. 

However, cost volatility could hurt your business in many ways. First, you don’t know how much your next shipping fee is. That’s uncertainty, which is terrible for business planning.

Secondly, if history is anything to judge by, the chances that the volatility would lead to an increase in price are higher than the chances of a price reduction. So you face cost volatility that almost always goes up and rarely down.

The way dedicated trucking helps you guard against this costly cost volatility is that you and your carrier can agree to a specific cost for the duration of your contract. So, regardless of what’s happening in the market and how volatile things get, you have nothing to fear because your shipping costs are volatility-proof and constant. 

4. Acts As Alternative Private Tanker Trailer

Dedicated tanker trailers also come in handy as an alternative to private tanker trailers. And this can be enormously helpful for shippers who don’t want to take up the huge financial and administrative responsibilities of managing a transportation fleet.

With dedicated trucking, you not only lock down a carrier’s tanker trailers for the use of your business alone, but you also secure access to the sets of equipment with which your freight is shipped. 

This alternative to private transportation can save you a lot of money, time, and resources, especially if you negotiate with Total Connection. Then you can have more time for your business without taking on responsibilities you don’t have to.

5. Easy Scalability

Scalability is also another important reason to consider dedicated trucking as a shipper. As a business, you want to be able to scale at short notice. 

But without dedicated trucking, you may find it even harder to secure capacity for your entire freight. You may even have to work with various carriers, each of which would charge you different rates for the same trip. 

When you consider dedicated trucking instead, it’s all about negotiating with your carrier. If you contact us at Total Connection, we simply dedicate more tank trailers to you, and just like that, you have more capacity.

6. Long Term Cost Savings

We will not lie and tell you that dedicated tank trailers are cheap. You most likely would pay more than a shipper who uses the spot market on a single trip. But in the long run, you would get enormous returns for your money.

For instance, carriers on the spot market may raise their rates when there are more shippers than carriers. That’s more money out of your pocket. When you need an urgent shipment, you incur extra charges. And when you fail to make deliveries to customers on the agreed time because a carrier messed up, you’ll lose money and reputation. 

When you calculate these extra expenses, you’ll find that they’re way more than what a dedicated transport service would cost you. While it may appear more expensive in the short term, it is nowhere near the cost of failing your customers or your plant personnel who work hard to deliver finished products on time.

And with the good deals Total Connection offers on dedicated tank trailers, you can be sure of saving even more cash!

7. Mutual Gains For Both Shipper and Carrier

Having a dedicated tank trailer with a carrier is a great way to build a much-needed relationship with them. Don’t forget that relationships and networks can help you fast-track your supply chain immensely. 

And it’s not like driver shortage or capacity scarcity will end soon. So, building relationships with your shipper is a way to guarantee consistent capacity for your business. 

But where the relationship comes into play is that you’re now able to negotiate more capacity in a short time. You may even be able to negotiate more competitive rates.

8. Increase In Customer Happiness

When your customers are happy with your services, you are more likely to retain them and even get referrals. It’s a no-brainer.

But imagine how happy your customers would be when you can’t deliver their freight because you couldn’t secure capacity. Imagine how excited they would be when you lose your customer’s business some money because of late delivery. 

They don’t look thrilled, right? Now imagine what that customer unhappiness would do to your business. Not only would the customers stop doing business with you, but they may also even drop bad reviews online for your business, which could hurt it. 

Scenarios like that are what dedicated trucking helps you prevent because deliveries to your customers would always be on time. And so, dedicated trucking with Total Connection places you among the elite shippers who know how to satisfy their customers by being flexible enough to make timely and last-minute deliveries.

Total Connection: Your Best Bet For Dedicated Trucking

While dedicated trucking may seem expensive on the surface, it is the best bet for any shipper who relies on a precise and uninterrupted supply chain for survival. This is where Total Connection shines best!

Total Connection has over two decades of experience guiding our customers through the delicate process of coordinating dedicated tanker projects.  From general chemical cargo to hazmat freight, Total Connection can support your project, regardless of its requirements and intricacies. Some of the dedicated tanker projects we seamlessly handle include:

• Tanker deliveries due to down rail cars
• Packaging projects
• Emergency liquid bulk tanker campaigns
• Remote and oilfield onsight deliveries
• And so many more.

Dedicated trucking is the next best option to having your own trucking company, and Total Connection would be happy with the opportunity to support you. 

You can simply contact us through the brief quote form below, and our team of experts will get back to you ASAP.

The primary premise of shipping involves moving freight from one location to another. As straightforward as that may appear, it becomes much more intricate when factors such as distance and quantity are considered.

Taking manufacturing companies, for example, these organizations transport raw materials and manufactured goods in large quantities. In such a scenario, they tend to work directly with shipping operators or “freight forwarders”, and depending on the cargo’s quantity, a ship or container may be employed. While these costs are pretty high, large companies can quickly recover them.

However, not all businesses have the luxury of engaging shipping lines or freight forwarders since they do not need an entire container. Small and medium-scale businesses find it cost-ineffective to engage these large-scale shipping operators. As such, there’s a need for peculiar shipping agencies to accommodate these businesses.

One such agency is the Non-Vessel Operating Common Carriers. NVOOCs ameliorate the entire transportation process for small-scale businesses by ensuring it’s much more cost-effective. Hence, we provide a complete guide to understanding NVOOCs and how they function.

What Are NVOCCs

Non-Vessel Operating Common Carriers are agencies fully licensed by the Federal Maritime Commission and engage in freight transportation for businesses and people; however, rather than owning a transport vessel, these agencies rent spaces in a container. As a result, NVOCCs are tasked with the entire pre-transportation process, including consolidation and loading.

Having leased a container space, NVOCCs, in turn, sell these spaces to their customers. Aside from pre-transportation processes, these agencies also undertake the delivery of cargo to the recipient at the destination. To maintain a fair rate, most NVOCCs work directly with freight forwarders.

Aside from being non-vessel carriers, NVOOCs don’t typically run a warehouse. Nonetheless, some of these agencies engage in broad operations requiring a warehouse and several containers. Other services offered by NVOOCs include delivering goods to freight stations, proper packaging, consolidation and deconsolidation, and all the processes with customs at the destination.

The ability of NVOCCs to carry out these responsibilities for businesses and individuals makes them an ideal option to ease the entire freight transport process, especially over the ocean. That is perhaps why these agencies continue to be a critical aspect of the shipping industry.

How NVOCCs Operate

Typically, NVOCCs act as middlemen between businesses and shipping lines. As such, their operations incorporate all processes involved in legally shipping cargo from one location to another. Unsurprisingly, to engage in this effectively, NVOCCs also have legal requirements that impact their method of operation.

Firstly, to undertake cargo transportation, NVOCCs obtain a House Bill of Lading through transport vessel operators to undertake cargo transportation. An HBL is a document containing the shipper, freight forwarder, and consignee information. Another critical document is the Mater Bill of Lading, issued to the freight forwarder by the shipping line. The MBL evidences the presence of a “less than container” shipment.

Since NVOCCs are middlemen, there is an agreement between these agencies and shipping lines. These agreements specify how much businesses NVOCCs can provide to them over a specified period. This could also alter the rate non-vessel careers pay for a space.

Additionally, there is no specific body representing NVOCCs. They function as independent entities. They are, however, regulated by Maritime Regulations Act and recognized by federal bodies such as the International Chambers of Commerce.

Benefits Of NVOCCs

While we’ve mentioned a few benefits of NVOCCs, there are many more reasons to engage a non-vessel operator, especially for small and medium-scale businesses. Thus, here is an overview of NVOCCs’ benefits.

Convenience

The ease and flexibility offered by NVOCCs to small businesses still serve as the standout benefit of these agencies. They engage in all the processes for these businesses and provide different options to choose from.

The stature of a business ensures how much bargaining power it has over shipping lines. Small businesses typically have limited bargaining power, making it difficult to get profitable deals directly from vessel operators. NVOCCs come in to legally break down the complex protocols and processes of freight transportation.

Highly Recognized

Different federal and local bodies highly recognize NVOCCs. As we mentioned, they are regulated by the Maritime Regulation Act and recognized by the International Chamber of Commerce. Aside from these bodies, non-vessel operators also maintain a good relationship with other local bodies, such as trucking associations, trade unions, and customs.

This influential network aids in a more hassle-free and convenient transport process. The risks of trucking or port issues and other “collateral damages” peculiar to shipping lines are also primarily reduced.

Personalized Services.

Shipping lines deal with a large number of customers. With so many orders to take, these operators offer generalized services instead of a personalized option most customers relish. This is another reason why businesses opt for non-vessel operators. They consistently provide personalized service to customers.

NVOCCs are assigned all logistics responsibilities, including consolidation, loading, deconsolidation, and customs clearance at the destination. Customers also get to choose from a wide selection of transport options since NVOCCs work closely with several shipping lines.

Cost Effectivity

More often than not, non-vessel operators are better placed to offer better rates than actual shipping lines or freight forwarders. Most people in the shipping industry view NVOCCs as customers of shipping lines. They enter agreements specifying how well they can provide businesses. Thus, they are charged reduced rates.

Consecutively, NVOCCs charge businesses less than they usually pay directly to shipping lines. This makes for a more cost-effective process, primarily considering the fact that these businesses do not fill up a container.

Some Drawbacks Of NVOCCs

No process is without its issues, and some drawbacks are associated with non-vessel operators. Firstly, being viewed as customers to shipping lines, they could sometimes be under the heel of these companies. This means they have to comply with abrupt alterations in schedules and delays.

Customers are also late in receiving information regarding delays and schedule changes which could have critical consequences. Under these situations, very few non-vessel operators can cope without adversely affecting customers’ businesses. Hence, businesses should always opt for NVOCCs that have a solid, dependable partnership with shipping lines.

Explore the Best and Most Dependable NVOCC Operations with Total Connection

Having identified the drawback of NVOCCs, it’s pretty evident how easily it can be overcome by opting for a dependable NVOCC operator. Luckily, Total Connection has solid and reliable connections making us the best NVOCC operators. We offer quality services at very competitive rates and with little risk of delays and schedule changes.

Contact us today through the brief form below, and our representative will get back to you as soon as possible.

It is important to keep your freight shipment costs as low as possible. But the cheapest freight costs aren’t always the best for everyone. 

Sometimes, your freights are more suited to the volatile truckload shipping market. Other times, you need guaranteed capacity, regardless of the cost. As a result, there are two major pricing structures for truckload freight shipping; contract rates and spot rates.

This article describes the differences between spot rates and contract rates after it defines what each is. It then offers you a way to enjoy the best of both contract and spot rates with Total Connection.

What are Spot Rates?

Spot rate in truckload freight shipping is the current price for a freight shipment over a single lane at a single time. Because of the high volatility in the truckload market and how quickly the balance can shift between demand and supply for trucks, spot rates are usually unpredictable and volatile.

Spot rates reflect short-term pricing, heavily influenced by the supply and demand for trucks at the moment of the pricing. For instance, the spot rate goes up when there are more loads than trucks. But when there are more trucks than loads, the spot rate goes down.

Apart from supply and demand, other factors that affect spot rates are:

• The delivery time: Faster or urgent deliveries cost more.
• Backhaul availability: Carriers tend to charge more if there’s a low chance of securing a backhaul load from the delivery destination.
• Value of freight: More valuable loads attract higher rates.
• Weight of shipment: Heavier shipments are costlier to ship at the spot market.
• Freight shipping Requirements: HAZMAT shipments, for instance, cost more than nontoxic shipments because hazardous cargo often requires trained personnel and specialized equipment.

What Are Contract Rates?

Contract rates in truckload freight shipping are prices that a carrier and a shipper agree to ship cargo on a freight lane. 

The parameters of this contract are often based on factors such as the projected volume of freight being shipped, shipping requirement for the freight, and the most recent spot rates. Other factors contributing to contract rates are the value of freight being shipped, lane, and shipment frequency.

This contact often lasts from a few months to one year. Although a shipper can negotiate for longer durations, carriers rarely want to commit to contracts where rates could get too far from spot rates. However, there’s always the option to renew the contract if both parties enjoy their partnership.

Contact rates are needed, most significantly, for the predictability and stability that they bring to the usually volatile truckload market.

Do Contract Rates Guarantee Capacity? 

Most contract rate agreements allow shippers to secure capacity at a specific rate for their shipment for the contract duration, which is why they prefer it. This arrangement does not only benefit the shipper, as carriers like the idea of predictable revenue that contract rates provide. 

Thanks to these guarantees and more, about 80% of the trucking market uses contract rates. Another reason the majority of the trucking industry sticks dearly to contract rates is that the contracts aren’t always binding. You can negotiate with your carrier at any time to adjust the rates.

However, there are instances where contract rates only lock in the price and not capacity. In other words, the carrier only agrees to transport freight at an agreed rate for the contract duration. But capacity is awarded on a first come first serve basis.

What Happens if a Party Breaks a Contract?

There are times when a party is forced to break a contract due to unforeseen circumstances. And while the goal of contract rates is to provide a scenario where the shipper and carrier go home happy, this is not always the case. And when contract breaches happen, some of the potential consequences include:

• Fines
• Lawsuits
• Dissatisfied partners, which may lead to a bad reputation for the shipper or carrier. 

Sometimes, if the parties have had a good relationship in the past, an adjustment is just made to the contract, and things go smoothly.

Benefits of Contract Rates

Most shippers prefer contract rates to spot rates because they enjoy the following benefits:

1. Better Planning and Budgeting

How easy can it be to plan and budget when your cargo shipment costs are all over the place? You don’t know if a pandemic scale event could happen next week, driving freight shipment costs to the roof. But with contract rates, you’ve got your plans and budget covered for the duration of your contract.

2. Option to Build Strategic Carrier Relationships

The more a carrier works with a shipper, the stronger their partnership. And this could come in handy on many occasions for both parties. 

For instance, a shipper may want a discount or quickly move some shipments up the timeline without resorting to the spot markets. Because both parties already have a productive work history and relationship, they are more likely to be able to work things out between themselves.

3. Higher chances of securing capacity

While not all contracts guarantee capacity, most of them do. And as for those that don’t have guaranteed capacity, the carrier might be willing to work things around to help you secure capacity.

4. Easier performance tracking

It also becomes easier to track your performance as a business when you have a stable cargo transport service. Contract rates ensure that your shipment costs are stable and that you can have an easier time calculating how your business is performing.

You’ll find more benefits of contract rates here:

Major Differences Between Contract Rates and Spot Rates

The major differences between contract rates and spot rates are:

• Duration

Contract rates often last from three months to a year. There may be several price readjustments between the carrier and the shipper during this time, depending on what’s going on in the spot market. 

Spot rates, on the other hand, are for a specific shipment. Shippers on the spot rate market have to learn to negotiate the best rate for every shipment.

• Pricing

Most times, contract rates at a particular time are often higher than the spot rates for that same time. However, when you accumulate the contract rates over time, they are often lower than what spot rates would have cost you over the same time.

However, there are times when the spot rate is higher than the contract rate for that time. It all depends on what season we’re in and the dynamics between supply and demand at that moment.

• Volatility

Contract rates aim to protect shippers and carriers from the volatile world of truckload shipment. But this volatility is what spot rates expose them to, as the dynamics between demand and supply for capacity change. 

• Coverage

Spot rates only cover a one-time shipment and nothing more. While offering their spot rate, the carrier considers the volume of shipment, the lane, backhaul chances, and truck to load ratio, among many others.

Contract rates, on the other hand, cover a specific lane. For instance, a carrier agrees to ship a particular volume of a particular commodity between two specific locations. If the need arises for the carrier to go through another lane for the shipper, adjustments have to be made, and appropriate compensations may follow.

• Performance Measurability

Measuring metrics, such as KPI performance, is easier with contract carriers than with spot carriers. And such metrics offer a shipper a performance overview of their supply chain, allowing them to know what to tweak to get it more efficiently.

• Who Benefits The Most

While both contract and spot rates are designed to benefit both parties as best as possible, the shipper is the party that benefits the most in a contract arrangement. This is because carriers are willing to offer stable rates for the possibility of long-term partnership and predictable revenue.

But where the carrier holds the longer end of the rope is in the spot market, where they mostly dictate how much to charge depending on the factors surrounding the shipment.

Which is Cheaper? Contract Rate of Spot Rate?

Contract rates are often lower in the long run. Because the truckload shipping market is very volatile, spot rates often see sharp spikes that could accumulate. Spot rates for urgent shipments can also add to the number. Contract rates, on the other hand, only change slowly over time.

That said, contract rates at a particular moment may be higher or lower than the spot rates at that same moment. 

How Often are Contract Freight Rates Renewed? 

Contract freight rates are often renewed, and a contract can last from a quarter to a year, depending on the shipper’s needs. 

However, carriers don’t always want to get into contracts that last longer than a year because the market is volatile, and they don’t want to be left too far behind the current spot rates.

How Much Freight Volume Do You Need to Get Contract Rates?

The freight volume rarely has a significant bearing on whether or not you get contract rates. So, you don’t have to wait till your freight volume is “large enough” before considering contract rates. 

However, you do need three essential things to secure contract rates. These three things would make it easier for you and the carrier to arrive at a mutually beneficial rate.

• A good estimate of your freight volume

• Consistent shipping lane
• Your timeframe

That said, contract rate should still not be your first option if your freight volume is very low. It just isn’t cost-effective.

Contract Rate Vs. Spot Rate: Which Is Better? 

The better option between contract rates and spot rates is hugely dependent on the shipper. 

For instance, if your shipment volumes are sporadic, spot rates may be better for you because you and your carrier may not find a contract rate that benefits you both. Also, if your company is not big enough to handle the costs of a contract rate, it may be better for you to stick to the spot market. 

But on the flip side, if your company is big enough to outsource its freight transportation but not big enough to own its transport equipment, the contract market may be better.

And depending on your company’s needs, you may dedicate a portion of your shipment to contracts with carriers while leaving the rest to the spot market.

A business may have to rely on both contract and spot markets as the need arises. For instance, if a company uses spot freights, it is recommended to remain abreast of contract rates around you to see if you’re losing or gaining. And if you’re into contract rates, keep close tabs on the current spot market rates.

Secure the Best of Contract and Spot Rates with Total Connection

As a business, choosing between spot rates and contract rates ultimately comes down to which one best benefits you. This decision is not usually straightforward because there are just so many things that have to be factored into the decision.

Fortunately, Total Connection makes things very easy for you by offering you the best rates for the best services, regardless of whether it is spot or contract. In addition to that, we’re always willing to offer expert advice on which pricing structure best suits your freight and business.

You can contact us through the brief quote form below, and we’ll get back to you ASAP.

A lot of dynamics are involved in the shipping of cargo from a buyer to a seller. There are so many responsibilities, who gets to cover the cost of transportation, customs clearance, loading and unloading, and so many more. Supply chain issues will occur if these responsibilities are not well defined and clearly shared between buyer and seller. 

These problems are even more compounded when there’s a language barrier between the buyer and the seller. Some words or context may get lost during translation even when they use translators, resulting in a failed supply chain.

Fortunately, these problems are significantly mitigated through the use of shipping Incoterms. And in this article, we discuss all the 11 Incoterms, their benefits, and how to choose one that works best for you.

What Are Incoterms?

Incoterms is short for International Commercial Trade Terms. They are terms used by buyers and sellers to communicate who gets to do what responsibilities and tasks in transporting cargo. 

Depending on the Incoterm agreed by both buyer and seller, each party must bear the responsibilities defined by the Incoterm. And this helps to ensure that the cargo leaves the seller and gets to the buyer hitch-free, eliminating the risks of miscommunication.

Incoterms are not made-up acronyms to confuse buyers or sellers. An organization, the International Chamber of Commerce (ICC), is in charge of creating these terms, managing them, and updating them once they get outdated. 

ICC convenes every decade to update the Incoterms to keep up with the modern responsibilities and cargo shipping requirements. The latest set of Incoterms is Incoterms 2020, updated on the 1st of January 2020. And we expect the next updated set of Incoterms would come in 2030.

Areas of responsibility

There are four significant areas of responsibility that every Incoterm describes. 

1. Point of delivery

This section defines where the buyer and seller have agreed that the cargo’s final delivery point should be. It is also the section that marks the point during the shipping process that the complete responsibility of the shipment falls into the hands of the buyer. 

2. The party responsible for transportation costs

This section of the Incoterms contains agreements about who gets to pay the transportation costs of the cargo. If the transportation cost is going to be shared, both parties should also specify it in this section. Finally, this is the section where the responsibility of who handles each stage of transportation is shared.

3. Import and export requirements

The documentation and formalities of the shipment are specified here. For instance, this section defines who represents the cargo at the customs, what documentation the load should have, and what duty payments must be made.

4. The party responsible for freight insurance

You’ll find in this area who is responsible for the insurance of the freight during transportation. 

The 11 Incoterms You Need To Know

This section describes what you need to know about the 11 Incoterms.

CFR (Cost and Freight)

According to the CFR Incoterm, the responsibility of shipping the cargo to the destination port lies with the seller. That means the freight cost, export clearance, and any costs related to loading the shipment on the ship are the seller’s responsibility. 

Although the seller contracts, at its own expense, the carriage of the cargo to the port of destination, the risk of ownership falls on the buyer the moment the freight is aboard the vessel and en route to the port of destination. As far as the seller is concerned, they can tick the cargo off as having been delivered as soon as the load is aboard the vessel.

CIF (Cost, Insurance, and Freight)

The CIF Incoterm places the responsibilities of shipping cost, insurance, and other clearance for export on the seller. These responsibilities don’t end until the cargo gets to the buyer’s agreed port or destination. 

At this port of destination, the buyer then assumes responsibility for the cargo, such as clearing the cargo for import and transporting it to the final destination. But the risk of ownership is the buyer’s the moment the load is aboard the cargo.

Even at the destination port, the seller may still have to pay for unloading the cargo unless otherwise agreed. But the import clearance of the shipment is all on the buyer.

Another responsibility the seller undertakes is contracting insurance for the cargo up to the port of destination. The insurance must be a minimum of Clauses (C) of the Institute Cargo Clauses. 

CIP (Carriage and Insurance Paid to)

According to the CIP Incoterm, the seller assumes responsibility for the transportation cost and the export clearance of the cargo up to the port of destination. In addition, the cost of insurance of shipment against damage also falls on the shoulders of the seller. The only thing the buyer does is handle the import clearance and any further transportation to the final destination. 

However, the CIP Incoterm is like the CIF Incoterm. The responsibility of ownership of the cargo belongs to the buyer the moment the freight is on the vessel en route to the port of destination.

The insurance should conform with Clauses (A) of institute Cargo Clauses or any similar clause. It should also cover the cost of the contract at the very least.

CPT (Carriage Paid To)

CPT Incoterm specifies that the seller handles the transporting of the cargo up to an agreed destination, where the buyer’s carrier then takes the shipment to the final destination. The seller bears the export clearance and charges, and freight costs to the agreed destination. 

This final destination could be the port of destination, where the buyer has to handle the cargo clearance or the buyer’s own premises. The buyer assumes responsibility for the cargo when the cargo gets here.

DAP (Delivered at Place)

Under the DAP Incoterm, the seller bears the cost of transporting the cargo to the place of destination of the buyer. The seller, however, is not responsible for unloading or clearing the cargo for import. As soon as the shipment gets to the destination, it becomes the buyer’s responsibility. 

Also, insurance is not required for any party under the DAP Incoterm.

DDP (Delivered Duty Paid)

The DDP Incoterm gives the most responsibility to the seller. Not only does the seller prepare and cover the cost of transportation and export clearance from the place of delivery, but they also have to clear the cargo for import at the place of destination and prepare it for unloading.

DPU (Delivered at Place Unloaded)

The DPU Incoterm is new, and the ICC added it to replace the abolished DAT (Delivered at Terminal) Incoterm. DPU Incoterm exonerates the buyer from undertaking responsibility for the cargo until it is unloaded at the place of destination. The seller bears all the cost and clearance responsibility up to that point. After which, the buyer handles the import clearance.

EXW (Ex Works)

The EXW Incoterm imposes the most responsibilities on the buyer. The seller’s only obligation is to prepare the cargo for shipment at an agreed place of delivery. Often, this place of delivery is the seller’s premises, but it could also be a warehouse or a factory. But beyond that, the buyer takes over.

According to EXW Incoterm, the buyer contracts the carriage from the agreed place of delivery handles the export and import clearance of the cargo, all at the buyer’s expense. 

FAS (Free Alongside Ship)

The FAS Incoterm requires that the seller get the cargo to the delivery port where the vessel contracted by the buyer awaits. They also clear the load for export and cover any related charges. As soon as the cargo gets here, the buyer bears all other responsibilities, including the cost of transportation to the port of destination and the thereon.

FCA (Free Carrier)

According to the FCA Incoterm, the seller handles the transporting of the cargo until it is delivered to the buyer’s carrier at an agreed location. This agreed location could be a shipping terminal where the load is prepared for export, a warehouse, or within the seller’s premises. 

The seller shoulders the cost of transporting the cargo to the agreed destination. There are some cases where the buyer has to handle the export clearance. But as soon as the shipment gets to the hand of the buyer’s designated carrier, it is no longer the responsibility of the seller. And as such, the seller has no obligations to clear the cargo for import.

Also, if the agreed location of delivery is anywhere within the seller’s control, such as the seller’s premises, it becomes their obligation to load the cargo into the buyer’s carrier. But everywhere else, the seller sheds the responsibility of unloading and loading the cargo into the buyer’s carrier. 

FOB (Free on Board)

The FOB Incoterm specifies that the seller’s responsibilities end the moment they load the cargo onto the ship contracted by the buyer. 

Up to that point, however, the seller handles every other responsibility, including clearing the cargo for export and covering the costs of getting the shipment to the port of delivery. But soon as the delivery is made to the ship, the seller marks the cargo off as “delivered” in their books.

Benefits of Incoterms

The Incoterm rules are very extensive. And they help to bridge the communication gap between sellers and buyers. But what other benefits do shipping Incoterms have?

1. Avoidance of Confusion and Miscommunication

The ultimate benefit of using Incoterms is that they help avoid miscommunication between buyers and sellers concerning freight shipping. Once an Incoterm rule is agreed upon, each party follows the rules stipulated by that Incoterm. These rules are unambiguous and reduce the risks of miscommunication.

2. Supply Chain Efficiency

Incoterms also help to improve the efficiency of any supply chain. Every party knows what to do and when, making the freight transport from the shipper to the consignee as smooth as possible.

3. Cross-border Communication

Thanks to the Incoterms, you can easily communicate shipping details with sellers or buyers in countries where they don’t speak your language. Once both parties agree on an Incoterm, the chances of miscommunicating important shipping details are very slim.

What Don’t Incoterms Cover

Thanks to Incoterms, buyers and sellers can make headway in figuring out the best way to transport freight from seller to buyer. However, these Incoterms are limited. Some instances are:

• Incoterms don’t identify the goods being shipped. They also don’t declare the contract price.
• They also don’t specify what documents should be provided by the seller to ease the custom clearance process for the buyer.
• While Incoterms help avoid disputes over responsibilities, there isn’t much on dispute resolution.

Because of these limitations, we advise both parties to reach contractual agreements on what to do in those instances. 

Choosing an Incoterm For Your Shipment

DAP and FCA are the two most commonly used Incoterms because they cover international and domestic shipments. Both Incoterms require that the seller handles every transportation detail ‌until the point of export, while the buyer handles everything from import until the shipment gets to the final destination. 

But what works for everyone may not always work for you. Therefore, you have to do your own research on what Incoterm works best for you. But don’t forget that the other party has to agree to it.

Also, if you think you want to be in complete control of your shipment from the moment you purchase it from the seller, you might want to use the EXW incoterm. The EXW is the Incoterm that gives buyers the most responsibilities over the shipment, hence, the highest level of control. But remember that this would cost you the most as the buyer.

Ultimately, you must choose the best incoterm for your shipment to ensure that there are no ruffles on your supply chain down the line. If you’re still unsure what to do, partnering with an experienced carrier, such as Total Connection, can help relieve this burden, as they know what’s best for you.

Relying On Total Connection For All Shipping Incoterms

The Incoterm you choose can affect how your shipment goes. It can affect how fast your shipment gets to you and what condition. 

But there are 11 of them. It may seem overwhelming for an inexperienced shipper or consignee as they try to figure out which one works best for them. One sure way to solve this problem is to rely on an experienced carrier to advise them on the best course of action. Total Connection is a perfect example of such a carrier.

With over two decades of experience handling all kinds of incoterms, Total Connection has built expertise in all aspects of shipping, including knowing what Incoterm works best for any type of cargo.

You can also ride on our extensive supply chain network to get the best set of people working on your supply chain while maintaining complete cargo control.

Contact us through the brief quote form below to access our one-of-a-kind domestic and international shipping services. 

Refrigerated transport or “Reefer transport” is an important aspect of the entire logistics industry because of how crucial refrigerated transport cargoes are to human lives. For instance, fruits and vegetables are integral parts of our meals, whether fresh or processed. Pharmaceuticals are also critical to keeping us in good health and cool temperatures help preserve their integrity through the supply chain.

In this article, we discuss the things you need to know about refrigerated transport as someone in charge of a refrigerated supply chain.

What is Refrigerated Transport?

Refrigerated transport is the means by which perishable items are moved, often (but not limited to) across long distances in temperature-controlled environments. The temperature-controlled environments are called reefers, and they can be truck trailers, rail cars, or shipping containers. Examples of cargoes that require refrigerated transport services are foods, pharmaceuticals, and temperature-sensitive animals. 

Reefers have structures built into them that keep their content at a constant temperature or a range of temperatures. And this temperature maintaining function ‌keeps whatever cargo that they hold safe and in the best conditions during transit.

Refrigerated transport is not limited to truck trailers, rail cars, or shipping containers alone. Warehouses with temperature control structures are also an important part of refrigerated transport. 

Sometimes a temperature-sensitive shipment has to remain in a warehouse before the next phase of its transport. If the warehouse has no temperature monitoring structures, and temperature is allowed to rise, you may lose the shipment.

What Types Of Freights Ship In Refrigerated Trailers?

Fruits, vegetables, and other food items are not the only kinds of shipments that are reserved for refrigerated transport. Others include:

1. Pharmaceuticals

Many pharmaceutical products are shipped through refrigerated transport because the products often contain substances that don’t respond well to temperature fluctuations. Glaucoma eye drops, for instance, should always be kept below 45 degrees Fahrenheit. Insulin also has a limited temperature fluctuation tolerance.

In fact, one of the earliest recordings of refrigerated transport can be traced back to 1940 during the World War, when they were used to ship medical products and food items to combat troops.

2. Temperature-sensitive livestock

Temperature-sensitive livestock that must have their locations changed also require refrigerated transport. Examples of such animals are honeybees

Honeybees produce large amounts of heat. In the absence of proper ventilation and refrigerated transport over long distances, the heat could affect the honey production systems of the bees.

3. Cosmetics

The cosmetic industry also depends on refrigerated transport to maintain the quality of its products. Lipsticks, for instance, could melt when exposed to heat. Perfumes could also lose their fragrance under the same conditions. Hence, the need for refrigerated transport for these items and other similar cosmetic products. 

4. Arts

OIl paintings don’t like heat. And the damage may set in when their transit temperature is not controlled.

Choosing The Best Refrigerated Transport Company For Your Business

Refrigerated transport companies are an integral part of refrigerated transport. And their actions determine what quality conditions your products are in on arrival to their final destination. 

So, here are some factors you need to consider when choosing the best refrigerated transport company for your business: 

1. Your Needs

The first factor you need to consider when choosing a refrigerated transport company for your business is your needs. Consider what you need to ship and how soon you need to ship it. 

Not all refrigerated transport companies ship all kinds of shipments that require refrigerated transport. And in the same vein, some companies are better at shipping one kind of shipment than they are at others.

For instance, one company’s refrigerated transport expertise may be limited to fruits and vegetables. The logical thing would be to use this company to ship your fruits and vegetables. And a company that specialized in moving temperature-sensitive animals may not be the best to turn to when you want to transport pharmaceuticals.

2. Company Experience

It is one thing for a logistics company to have experience shipping all kinds of products. But it is another thing for a company to be well versed in refrigerated transport. We’re talking about specialist-level experience here. And this is what you should be on the lookout for when choosing a refrigerated transport company.

Using Total Connection for Your Refrigerated Transport

Total Connection is a third-party logistics company with specialist-level experience in refrigerated transport. Our reefers are equipped with the latest technologies that ensure that there’s not even as much as a degree change in the temperature of your products without us giving the nod. 

See, we’re asking you to ship your temperature-sensitive products with us because you won’t find many companies that offer the quality that we offer out there. There aren’t many companies that offer the perfect mix of professionalism, friendliness, and competence.

You can start by filling out the brief quote form below. Our experts are waiting to supply you with the necessary information you need to start your refrigerated transport.

Drayage is a common term that gets thrown around often in the logistics world. This service is so essential that the logistics landscape could break down without it. 

This article describes what container drayage is and why it is so important. 

What does Container Drayage Mean?

Container drayage is the transportation of cargo containers across short distances on trucks, often in between intermodal shipping. The distance could be from a shipping port to a warehouse or a rail hub to a shipping port. Essentially, it connects the cargo from one stage of transportation to another. 

Drayage is an integral part of any supply chain, especially those that have to pass through rail, water, or air. 

Role of Drayage In Intermodal Shipping

The understanding of container drayage can only be complete when you know what intermodal shipping is. 

Intermodal shipping is when cargo has to go through many stages of transportation, from its location of origin to its final destination.

Imagine you want to import some precious metals from a mine in the UK to the US. The metals first have to be loaded into trains to take them to a shipping port. There, they are loaded into a container, which is then placed on a ship coming to the US. 

As soon as your cargo lands in the US, you still need a truck to pick it up at the shipping terminal and transport it to a warehouse where you prepare it for the last transportation phase that brings the precious metals to your destination. 

That’s what intermodal shipping is about. The cargo went from train to ship, then to truck. Drayage plays a massive role in intermodal shipping, as it connects those significant means of transportation. 

For instance, through drayage, your cargo goes from the shipping port to the warehouse; or from the warehouse to your destination.

You’ll find many transportation companies niching down on this aspect of shipping, which shows just how vital drayage is to the entire shipping services.

Classifications of Container Drayage

Drayage comes in various kinds, depending on the ‌cargo being shipped and its shipping conditions. The Intermodal Association of North America (IANA) classifies drayage into six classifications:

1. Expedited drayage

Expedited drayage is reserved for when you need to ship the cargo on time. Time-sensitive shipments, such as fruits and vegetables, often go through expedited drayage.

2. Door-to-door drayage

Door-to-door drayage is the direct transportation of cargo from the port straight to the final destination. Another name for door-to-door drayage is retail drayage.

3. Inter-carrier drayage

Inter-carrier drayage involves the transport of cargo from one carrier to another. An example is the moving of freight from rail to ship.

4. Intra-carrier drayage

This kind of drayage is the moving of cargo from one hub owned by a carrier to another hub owned by the same carrier. Intra-carrier drayage is similar to inter-carrier drayage, only that there’s only one carrier involved in intra-carrier drayage.

5. Pier drayage

Pier drayage covers cargo moving from a rail hub to a port or pier. 

6. Shuttle drayage

Shuttle drayage is reserved for quickly moving cargo containers from one hub to another, mainly because the originating hub is filled up.

Types of Drayage Containers

Drayage containers come in various kinds, depending on the ‌cargo being shipped. Some of the variations occur in sizes and functions. 

For instance, a standard container is ‌20 feet or 40 feet long. The heights are ‌ six or eight feet. And most of them are made from aluminum or steel. 

The types of container drayage include:

• Standard Containers
• Flat rack container
• Open top container
• Hardtop container
• Platform container
• Reefer container
• Insulated container

You may use our complete guide to container freights to know more about drayage containers.

The Importance Of Container Drayage

You probably have some vague ideas about why drayage is so essential by now. We’ll only be making them more explicit here:

Why is it essential to secure container drayage?

1. Container shortage

The shortage of cargo containers is one reason ‌ drayage is so essential. To help you understand why there is a container shortage, let’s give you more context.

As soon as the pandemic struck, countries were forced into lockdown. While this limited the spread of the virus, it also meant that economies came to sudden halts. The logistics space was not left out. 

So, containers were stuck at shipping ports, inland ports, and on ships. As economies began to open up, new shipments arrived faster than the old ones could be cleared and a heap of containers formed.  

Container manufacturers, having sensed a shortage in containers, have increased the price of their products. A container that used to cost $1600 now costs about $2500.

Therefore, until there is enough drayage to help us free up these containers, container shortage will continue to be a problem. And this may impact shipping long term, as there won’t be enough containers to ship new cargo.

2. Port congestion

Port congestion, just like container shortage, can be traced to the pandemic. As ports are filled with loaded containers awaiting drayage, ports are all congested. Even warehouses outside the ports are getting filled up, leading to congestion. 

Drayage is the answer to this. The more drayage we can secure, the faster we can ease port congestion.

3. Increase in intermodal shipping

The volume of intermodal shipping has also soared in recent times. Driver shortages, freight delays, and growing fuel costs have contributed to many shippers resorting to intermodal shipping through rail. This then stretches container drayage, which was already thinly spread.

Rely on Total Connection For Drayage To Keep Your Supply Chain Running

You can’t risk entrusting your container drayage services into the hands of incompetent carriers. That could be the undoing of your supply chain; and, in extension, your business. So, the logical business decision would be to find a reliable carrier to partner with. Fortunately, this is what Total Connection is.

Total Connection is a third-party logistics company with renowned expertise in drayage services. Regardless of where you want to ship your cargo from and to, Total Connection has you covered. We even have warehouses where you can store your shipment temporarily and safely. 

You can join hundreds of customers who now sleep in peace because they trusted us to handle their drayage services. You only need to fill out the brief quote form below, and our experts will get back to you in no time.