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Intermodal 101:Commitment Pricing

Posted 7 years ago

Intermodal 101: Advantages of Commitment Pricing

Use of the Door to Door, transactional programs from the railroads might seem like the best way to take advantage of pricing that may go down at any given time.  Locking in at a rate for a year’s commitment might not seem like a promising idea when the rates could drop next week.

However, it is important for the shipper to remember, what goes down will eventually come back up.  Rates in intermodal have not fluctuated a lot in recent years, but the trend is to take them higher.  Locking in your rate for the next year will enable a level of certainty for the shipper.

Due to its transactional basis, Door to Door pricing typically does not include capacity commitments between the shipper and the railroad.  Locking in with certain programs will allow all parties to commit to each other.  The Shipper commits a certain number of loads on a scheduled basis, the railroad commits to providing capacity to move those shipments.  With expectations set, it is easier for both parties to perform their part of the commitment.

Budgeting is simplified for the shipper when they know the rate they will be paying to move freight in each lane.  When the shipper is creating the budget for the next fiscal year, if they know they have to move 100 shipments from point A to point B, and the rate for the year will be $1,000 per move, they must budget $100,000.  Doing this against all lanes is the best way for the shipper to accurately calculate their transportation spend for the year.

Finally, the operations within the shipper as a company are simplified.  Each person in payables will know the rate they need to pay, which could allow a level of automation.  The personnel in the order tendering department will know who the order is going to, which allows them to focus on shipments that aren’t committed and locked in.

Understanding the two different approaches will enable the shipper to maximize shipping dollars and get product delivered to the customer.  Typically, though, the shipper is not in the transportation business, so their focus is not on minimizing rates.  Use of a 3PL or even a 4PL will allow the shipper to focus their attentions on their core business and leave the program selections to the experts.

In the next update, we will discuss the advantage of bringing in a 3PL to assist with shipping.

 

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LTL 101:Freight Classification Details

Posted 7 years ago

LTL 101: Freight Classification Details

Remember the National Motor Freight Classification® (NMFC®) is a standard that provides a comparison of commodities moving in interstate, intrastate and foreign commerce. Commodities are grouped into one of 18 classes—from a low of class 50 to a high of class 500—based on an evaluation of four transportation characteristics: density, stow-ability, handling, and liability. Together, these characteristics establish a commodity’s “transportability.”

These characteristics can be defined as follows:

1.Density (Weight, Length, & Height): Density is the space the item occupies in relation to its weight. The density is calculated by dividing the weight of the item in pounds by its volume in cubic feet. Your item’s volume in cubic feet is Length x Width x Height/1,728, where all dimensions are measured in inches. The density of your item = Weight/Volume, where Weight is measured in pounds and Volume is measured in cubic feet.

2.Stow-ability:Most freight stows well in trucks, trains and boats, but some articles are regulated by the government or carrier policies. Some items cannot be loaded together. Hazardous materials are transported in specific manners. Excessive weight, length or protrusions can make freight impossible to load with other freight. The absence of load-bearing surfaces makes freight impossible to stack. A quantifiable stow-ability classification represents the difficulty in loading and carrying these items.

3.Handling:Most freight is loaded with mechanical equipment and poses no handling difficulties, but some freight, due to weight, shape, fragility or hazardous properties, requires special attention. A classification that represents ease or difficulty of loading and carrying the freight is assigned to the items.

4.Liability:Liability is probability of freight theft or damage, or damage to adjacent freight. Perishable cargo or cargo prone to spontaneous combustion or explosion is classified based on liability and assigned a value per pound, which is a fraction of the carrier’s liability. When classification is based on liability, density must also be considered.

Sub-NMFC Codes

Yes, there is more! There are also Sub-NMFC codes which are noted with a dash after the code (i.e. 41024-04). Make sure to confirm that the Sub-NMFC code matches the correct freight class. Carriers sometimes overlook this, but it’s also not uncommon for them to charge you at the higher class; whether it be the class that was listed, or the class corresponding to the Sub-NMFC codes on the BOL. These can often be disputed, but usually require a manufacturer’s specification sheet and a packing list proving the correct class. That’s more work for all parties and can be avoided by simply double-checking to make sure your class and NMFC code match.
Don’t forget we are participants of the National Motor Freight Traffic Association which means we have access to multiple ways of obtaining the correct NMFC number/code for your shipments. If you have any questions or doubts regarding your product’s freight class, please reach out to the LTL Team at ltltms@suntecktts.

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Training Tuesday:Managing Stress

Posted 7 years ago

Training Tuesday: Stress Management to Improve Success

Selling offers more highs and lows than most other professions. Most salespeople suffer through periods of stress that are direct results of their sales jobs, but salespeople who succeed in the long run never let disappointments get the best of them. They know rejection goes with the territory and learn not to take it personally and instead, they view mistakes and failures as lessons that will help them improve. On the other hand, some very promising sales careers have died premature deaths due to stress. Stress sometimes causes sales people to lose confidence and then fill their day with nonessential activities and hide from their customers or prospects. We’re also faced with lots of rejection on our daily search for success. If you dwell on the negatives, they’ll bury you. You have to lighten up and look for ways to lessen the stress caused by your job.

Below are our top 10 tips to reduce stress:

1. Focus. Focus on what’s truly stressful to you about a situation and why – the idea being that understanding the stress lessens it and gives you some control over it.

2. Put stressful situations in perspective.

3. Postpone thinking about problems until an appropriate time. Successful people learn how to compartmentalize their thinking.

4. Take a deep breath. Size up stressful situations and decide which are worth worrying about.

5. Take vacations and occasional time off. 

6. Don’t be afraid to laugh at yourself.

7. Talk to others about job pressures.

8. Expect the unexpected. Allow time and reserve energy to deal with the inevitable stressful events that occur daily.

9. Do something for yourself.

10. Volunteer or do something in the community that is rewarding to you.

 

Check back next week for more sales training and tips.

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Intermodal 101:Mutual Commitment Pricing Programs

Posted 7 years ago

Intermodal 101: Mutual Commitment Pricing Programs

Rail controlled door to door shipping does have several advantages, as discussed in previous weeks, but it also has its drawbacks.

Many shippers have a transportation budget that gets created once per year.  This budget relies on some level of consistency when estimating pricing.  Utilizing the door to door pricing, which is subject to change on very short notice, does not afford them the opportunity to properly budget.

Shippers must be able to add in transportation charges to the cost of their products.  They are not typically able to change their pricing to their customers every time the railroad decides the balance of equipment in each location is out of kilter.

But perhaps the largest reason an intermodal shipper might want to avoid the transient pricing opportunities of door to door is the ability to lock in capacity at a given price.  Many of the equipment providers who offer the door to door service options will also commit to providing capacity if the shipper will commit to a price for year-round business.  They can execute a plan on capacity because they are able to plan based on the shipper’s commitment.

These mutual commitment programs (MCPs is a generic term as used here) provide the stability needed by the shipper for their long-term planning.  Getting a cheap price from spot-market rates is nice, but it does not provide the consistency needed by most shippers.

When should a shipper look to door to door and when should they look to MCPs?  In our next update, we will discuss how shippers should take advantage of one or both of these rate types.

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Training Tuesday:Balancing the Sales Pitch

Posted 7 years ago

Training Tuesday: Balancing the Sales Pitch and Silence

Often the most important part of your sales pitch is when you are completely silent. We often rush through all the great benefits of why a customer would buy, without really listening to them tell us what they need and why they might buy from us.

Most people hate mimes. Why do they exist? Are they evil? If a tree falls on a mime does he make a sound? But, silence is the one important sales attribute that mimes demonstrate in abundance. So, on your next sales call, be a mime, at least for part of the call. Silence just may turn out to be the most important piece of the sales puzzle. 

Why is it that so many salespeople think they must tell everything they know before allowing the prospect to talk? Why is it that some think the sales process involves a lot of talking when, in reality, the most successful salespeople do more listening than talking? It’s a fact that the more we listen, the more we can learn about our prospects and the easier we can find their “hot buttons.”  It’s not what we say that makes the sale, it’s what we can get the prospect to say.

Begin With Questions

Think about how many times you launch right into your presentation thinking you know what the prospect wants. Sometime later, often too much later, you find you’re on the wrong track. The prospect has an entirely different need – one you might have uncovered by asking open-ended questions that required more than a yes or no response. Then you could have focused on what the customer wanted instead of what you had to sell. Stop thinking so much about what you are going to say and concentrate on what the prospect is telling you.

It’s a paradox: the more we try to tell the prospect up front, the more barriers we create to the purchase. However, the more we listen to why he or she wants to buy, the more we can tailor our delivery to providing very specific information concerning how our product or service fits his or her needs.

Ask More Questions

The opening question is merely the first in a series of questions that guide the dialogue. It’s an approach as old as the art of miming. If we want to involve someone – the first step in convincing that person – every comment we make should end with a question that solicits more information. The person asking questions is the person controlling the direction of the dialogue. The one who is talking is providing information that helps the other adjust the direction.

After you ask a question, however, don’t be too anxious to fill the silence. Let the silence work in your favor. Too often we answer the question for the prospect by jumping in and providing him with an objection:

“Perhaps you don’t like the price,” or, “Maybe you don’t like the resources it would involve.” 

Beware of the very real temptation to fill in the silence with a product weakness – the one we are most worried about.

Don’t Rush In With Answers

Salespeople have a terrible tendency to try to get their point in as soon as the customer stops talking. Think about how often you find yourself stepping on your prospect’s last words, rushing in right after the prospect has finished making a point.

Salespeople can break themselves of this self-defeating habit by training themselves to wait several seconds after the customer has stopped talking before they begin. That gives you ample time to think about your response and answer in a way that reflects the customer’s concerns.

Get in the habit of paraphrasing what the prospect has said. This will accomplish two things. One, it reduces the likelihood of misunderstanding what was said, and two, it boosts the prospect’s ego. People like to hear their thoughts repeated – it makes them feel like what they said was important.

Learn to Listen

Don’t listen with just with your ears. Listen with your eyes and your entire body. Use body language that shows you are paying more attention, and your listening habits will automatically improve. Lean forward intently, look the prospect in the eye, and focus on the valuable information you are hearing.

And finally, listen for buying signals. You’ll never notice a buying signal from the customer when you’re doing the talking. Sure, we want to talk so the prospect will learn how smart we are. But the prospect only really knows how smart we are when we’ve “listened” to the information he or she wants to share.

 

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Training Tuesday:Asking Questions

Posted 7 years ago

Training Tuesday: Asking Questions

Asking good questions can make the difference between making a bad sales call and engaging the prospect in a worthwhile conversation. Here are some important tips to remember:

Use ‘assumptive problem’ open-ended questions
Instead of saying, “Do you have any problems with moving your product now?” say, “How are you handling problems that occur while transporting your product?” If you know your industry well enough, you’re aware of the problems that everyone seems to have. You are asking your prospects to quantify and explain the implications and consequences of those problems.

Use ‘instructional statements’
Don’t ask for information; tell them to give it to you. Use phrases like, “Tell me a little about……….”; “Share with me……….”; “Give me some idea of……….”; “Detail the way………” and, “Let’s talk about how you……….”

Ask yourself questions before you make the call
Think about the call before you make it. Ask, “What do I want them to do as a result of this call?” This will determine your primary objective. Then ask, “What information do I need from them?” This will provide whatever qualifying or information-gathering questions you must ask. Finally, ask, “What do I need them to think and believe in order to take the action I desire?” The answer to this question provides the points you’d ideally like to get across….without actually making the points yourself. They are ideas for them to discover through your questions. The reasoning is that people always believe more of what they say and think than of what you say. One of the surest ways to give yourself a fair chance at making a sale is to ask the right questions.

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Intermodal 101:Equipment Availability

Posted 7 years ago

Intermodal 101: Equipment Availability

In our last post, we discussed the impact long-term rates had on the railroads as a contributing factor to the creation of rail controlled, door to door product.  But there are other reasons the rails have created this service.

Equipment availability in a given area varies at different times of the year. There may be extreme variation in equipment that result in an area being completely out of equipment for some months and having an excess of equipment in other months. A good example of this would be the empty equipment supply in Los Angeles, CA.  During fall peak season, equipment is very tight out of California due to all the import freight coming in from Asian markets that must deliver in the interior of the country so it is available for the holiday shopping season.  During January and February, there has typically been a lull in shipping from the west coast, so they become over-supplied.

To take advantage of this fluctuation in equipment supply, the rails decided they needed to have more control. To do this, the rails had to begin offering a service that was more transactional in nature, something they could change to reflect more current flows and to have more control over the flow of the boxes.

Rails began taking on the operational requirements that had been the domain of the IMC.  By working with drayage carriers they were able to cobble together a complete door to door offering.  The rates put together are spot market rates, which allows the rails to consider their network and box supply to raise or lower prices based on a day by day rate basis.

There are other contributing factors to the rails deciding to offer door to door service, but rates and equipment supply are obviously at the top of the list.  The rails have come up with a way to maximize their revenue.  But the door to door offering doesn’t address every need, every day.  There are still opportunities for the shipper and the IMC to participate.  Next time, we will go over some of the advantages that can be realized by the shipping community.

Check in on the 1st and 3rd Wednesday of every month for more information on intermodal and how it can benefit you!

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Training Tuesday:Addressing Problems

Posted 7 years ago

Training Tuesday: Handling Problems

It doesn’t take long for anyone in the transportation business to realize that occasionally bad things happen to good people. You name it, it can and occasionally will happen.

When customers aren’t happy, whether it’s because a shipment is late, damaged or lost, five things can happen—and four of them are bad:

THE CUSTOMER DOESN’T LET US KNOW THEY WERE UNHAPPY WITH SUNTECKTTS’ SERVICE. NOT GOOD.

THE CUSTOMER CHANGES CARRIERS IN SILENCE. NOT GOOD EITHER.

THE CUSTOMER TELLS HIS OR HER FRIENDS. WORSE.

THE CUSTOMER TALKS TO THIRD PARTIES. WORST OF ALL.

THE FIFTH OPTION IS COMMUNICATION.

The best possible outcome is that your unhappy customer talks to you.  This gives you a second chance to understand their needs, identify and correct problems, and convert your dissatisfied customer into a happy customer – one who’ll keep coming back.

Here are the proper procedures to best help your customer.

1.Inform the customer as soon as you can—they’re absolutely going to find out—no news travels more swiftly than bad news.

2.Get to the point quickly by saying something like, “You’re not going to like hearing this”

3.If your customer approaches you with a complaint, don’t interrupt.  Don’t become defensive.

4.Take complaints seriously, no matter how trivial the issue may seem to you.

5.Don’t create distance from SunteckTTS by referring to it as “they.”  Use “we” instead, and proudly stand behind our service without making excuses.

6.Apologize sincerely.

7.Avoid focusing on fixing the blame; instead focus on fixing the problem.

8.Let your customer suggest alternatives.  Every customer has some idea of what they want as a solution to every problem.

9.Do something extra. Correcting the problem isn’t always enough.

10.Trust the customer’s sincerity.  It’s better to err by believing too many people than by not believing enough people.

11.Never just say, “I don’t know.” When you don’t know an answer, simply say, “I’ll look into the matter,” and then look into it, soon.

12.Empathize with the customer.  If you can’t relate to the complaint itself, at least relate to the process of complaining.

13.If the timing is appropriate, ask for future business—let the customer know this does not represent SunteckTTS’s usual high quality of service.

14.Follow-up.   Make sure the customer is truly satisfied.

15.Don’t let it affect your interaction with the next customer. And most importantly:  Most customers will accept occasional mistakes.  How you deal with the problem and how you resolve it is what will distinguish you as a real professional.

16.Always remember that listening to your customer is the best way to help in an uncomfortable situation.  Some people want to be listened to even more than they want their problems solved.

Check back next Tuesday for more tips on Selling SunteckTTS. The full playlist of videos can be found on our YouTube channel.

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LTL 101:Billing

Posted 7 years ago

LTL 101: Billing Accuracy

Many shippers have expressed concern about accuracy of LTL carrier’s billing practices. Having pushed the LTL carriers to be more vigilant with making corrections for weight and other aspects of shipments for proper revenue capture, SJ Consulting researched the validity of such perception by conducting an extensive survey with several large LTL shippers, 3PLs, and freight audit and pay firms, with particular thanks to Williams & Associates. The freight charges on LTL shipments by these companies exceed $8 billion over a 12­ month period, representing 22 percent of the total industry revenue. For decades, the LTL industry has relied on an honor system for shippers to provide true characteristics of their shipments, required to accurately bill the customers for their shipments.

The survey found the range of billing accuracy was 94 to 99 percent depending on the carrier, with the average being 97 percent. The most interesting revelation of the survey was that what shippers perceive as a billing error actually is due to shippers providing an estimated weight or freight class for dimensional attributes of their shipment that are corrected on more shipments as more LTL carriers deploy scales and dimensional machines. Given that about 50% of bills of lading have errors in weight or description of the shipment, it’s no surprise that a correct invoice from a LTL carrier can get perceived as a billing error.

Despite shippers’ perception, the LTL industry has an impressive record in billing accuracy, and it is finally converting rapidly from an honor system.

 

Check back every 2nd and 4th Wednesday each month for more inside information on LTL through our Multimodal Wednesday Series.

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Training Tuesday:Delivering Great Customer Service

Posted 7 years ago

Training Tuesday: How to Deliver Great Customer Service

Many customers are suspicious of freight salesmen. They think that we’re there at the time of the sale but not when they need us if something goes wrong. Many people get buyer’s remorse. When they get that follow-up email or phone call, or they experience the other customer service techniques discussed here, it makes them think, “Yes, I made the right decision.”

Constant communication is the key to building a lasting relationship with customers and prospects.  You must stay in touch.

Let’s define SERVICE as anything that builds trust and confidence in the company and the services you provide to the customer.

Following is a list of services that are specific and measurable. You can use this checklist to make service a more specific part of your sales planning.

1.Write thank you notes as part of your service system. Carry cards in your car and fill them out at the end of the call while still in the customer’s parking lot.

2.Schedule a visit of upper management to your client. This is a symbolic and information gathering visit.

3.Conduct agency or corporate office tours on a regular basis. Clients need to see the agency or corporate office, especially large shippers, so that they can see the depth of the professionalism and dedication that goes into moving their freight.

4.Hold round table discussions about business trends and opportunities with key clients.

5.Throw a client appreciation party, cookout, or breakfast.

6.Invite your customer to accompany you to seminars, speeches, and functions.

7.Return all phone calls immediately. The simple act of returning a phone call can differentiate you from the competition.

8.Vary your modes of contact. A call, package, or email will have more impact if it’s reinforced with another form of contact.

9.Make buying fun. Selling doesn’t have to be all serious business. You don’t have to sacrifice professionalism to make buying an energizing, enjoyable experience that will keep your customers coming back.

10.Make sure internal employees are well-trained in good customer service techniques. 

11.Most importantly, do what you promised, do it when you promised, and do it more often than the competition.

 

Check back next Tuesday for more tips on Selling SunteckTTS. The full playlist of videos can be found on our YouTube channel.

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