Nepal Earthquake Logistics Make Relief Efforts More Difficult

The 7.8 magnitude earthquake that struck Nepal on Saturday has done massive damage to an already poor country. While aid workers are rushing in, relief efforts are largely complicated by a number of logistics issues.

Nepal Earthquake Logistics Challenge #1: Road Access

Nepal has a meager road network, with the whole country connected by only two main roads. This means that if they have been damaged or blocked, which is likely, travel will be severely limited.

Aid workers have also run into many roads blocked by landslides. According to Uddhav Timilsina, chief bureaucrat in the Gorkha district, aid workers were running into 8 – 10 landslides between villages, preventing them from even reaching survivors.

Nepal Earthquake Logistics Challenge #2: Airplane Access

Aftershocks have been severe, with one aftershock reaching a magnitude of 6.7. Due to the constant threat of the aftershocks, air traffic controllers were evacuated from Nepal’s only international airport, meaning that planes couldn’t land at the airport. Aid organizations such as South Africa’s Gift of the Givers had to then make alternative arrangements to land in India.

The airport has since re-opened. Still, the fear of aftershocks has prevented many flights from running. The New York Times reported on Sunday that less than 20% of regular flights were running.

The large numbers of incoming planes carrying relief workers and family and friends arriving to search for loved ones has also created major delays at the airport.

Nepal Earthquake Logistics Challenge #3: Helicopter Access

Many of the country’s most isolated and devastated regions can only be accessed by helicopter. But they will need to wait, as Nepal only has 12 functioning helicopters, with an additional 6 donated from  India.

Mountaineers stranded by avalanches on Mount Everest will also need to be rescued via helicopter. However, landing a helicopter on the peak is risky, since it’s not clear whether a snowy surface is supported by underlying rock or nothing at all. Flying a helicopter at that altitude is also difficult due to the thin air. The pilot must constantly calculate how much power they need and how much power they have at the current temperature and air pressure.

Other Challenges to the Nepal Earthquake Relief Effort

The capital city, Katmandu is densely populated. This means that there is little physical space for people forced to leave their homes.

According to Lila Mani Poudyal, Nepal’s chief secretary, workers such as electricity company staff and laborers needed to clean up the streets are refusing to work, instead opting to stay with their families. This is a factor that has further slowed recovery.

Access to clean water was already limited in Nepal before the disaster, so the problem is now exasperated. Survivors trying to contact their family also need to work around spotty cell phone and internet coverage.

While disaster relief is always a race against time, it is even more of an issue for Nepal. The rainy season is only weeks away, and once it hits, it will severely complicate relief efforts.

Want to help? Donate to the Red Cross’ relief effort in Nepal.

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Prevent Cargo Theft Due to Fraud

Cargo theft is a growing problem in the supply chain industry. While cargo theft may occur at a stop en route where the load is temporarily unattended, load thieves are increasingly sophisticated. In this article, we’ll discuss how thieves can use fraud to steal freight. We’ll also discuss how to prevent cargo theft and what to do if you become a victim.

Basic Cargo Theft Strategy

First, a new carrier will contact a broker to take on a load. The carrier then fills out the paperwork to be listed with the broker and sends a driver to pick up the load. The driver then leaves with the load and subsequently disappears.

Upon investigation, the carrier and the paperwork is found to be fraudulent. This is an incredibly simple strategy, but it works.

Delaying Report of Cargo Theft

In addition to the basic theft strategy, many thieves use strategies to prevent cargo theft from being quickly reported. For example, it is more common for thefts to occur on Fridays or weekends, because this may delay reporting and investigation.

In another strategy, a carrier may pick up a load and claim that delivery has been delayed. They then keep in touch with the broker/consignee/shipper for a few days before cutting off contact. Thus, the theft isn’t reported until several days after the theft occurred.

Prevent Cargo Theft

Fortunately, there are several proactive steps you can take to prevent cargo theft, at least, to protect yourself in the event that it does happen.

  • Take care in verifying the identity of all carriers. Carefully review and verify all paperwork.
  • Collect as much information as you can about your carriers and drivers, such as
    • Photocopies of drivers’ licenses
    • Video footage of the truck being loaded
    • Tractor & trailer make, model, year, & color
    • Tractor & trailer VIN
    • Trailer & trailer license plate number
    • Carry your own insurance, and understand what your insurance policy does and does not cover. A fraudulent carrier’s insurance company won’t pay a claim when their client provided fraudulent information, so ensure that your own insurance will protect you.

Reacting to Theft

After the theft has happened, take these steps to increase the odds of recovery:

  • Act quickly. The faster you notify authorities, the more likely they will be to catch the thief and recover your cargo.
  • Follow up with police often. Be persistent in order to keep your case from dropping from their priority list.
  • Consider hiring a private investigator to  track down the freight.
  • Keep all documents and evidence organized in case they are needed for court.
  • Contact any relevant federal agencies, depending on what was stolen. For example:
    • Dangerous cargo or hazardous products – contact the FBI
    • Food – contact the department of agriculture

Following these steps will help you prevent cargo theft and minimize the loss to your company. For more information, see our source, TIA’s excellent 54 page piece on fraud in the supply chain.

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The Do’s and Don’ts of Freight Rate Negotiation

Shipping costs represent a major supply chain expense, anything you can do to lower your freight rates will help. Here are the do’s and don’ts of freight rate negotiation.

Don’t Pay for What You Don’t Need

Be clear on what is important to you in a carrier, and what isn’t. If you can compromise on speed, you can negotiate lower rates. Or maybe your product has a relatively low value by weight – in this case, you can negotiate a lower price for lower carrier liability levels. Tell your carrier what is and isn’t important to you when you ask for a quote, and they’ll be able to trim extras that you don’t need.

Do Sell Yourself

You’re probably used to asking potential carriers “why should I work with you?” in an effort to lower prices. But consider what can make you a better shipper for them, and use it to your advantage. According to Inbound Logistics, small parcel carriers prefer air shipments and shipments with high delivery density. Do you have the cash flow to pay faster than required in exchange for a lower rate? That could be a powerful negotiating chip.

Don’t Skip the Fine Print

Make sure to read it…and all of it! Inspect the documents for hidden fees or inflexibilities that won’t work with your needs. Are there charges for demurrage? Charges to offer C.O.D? How much time do they allot for pickup and delivery? Are there extra charges for evening or weekend deliveries? The carrier’s quote may sound good initially, but the extra terms and fees in the contract need to be taken into consideration. The fine print is also a good place to negotiate. For example, many carriers will accept a liability around $25 per pound, rather than the usual low FAK liability. You can also negotiate various accessorials and charges.

Do Calculate Your Cost Per Mile

Once you’ve found any additional or hidden fees in the contract, use them to calculate the carrier’s cost per mile. This will help you to compare prices with other carriers, and to get a more realistic understanding of your total shipping costs.

Don’t Be Hard to Deal With

The word “negotiation” might invoke the image of digging your heels in and refusing to budge. But don’t forget that your carrier will play a key role in your supply chain, and you want to build a positive relationship. This is especially important when you consider that the supply & demand balance between shippers and carriers is always shifting. While you might have your choice of carrier now, you could be scrambling to find capacity at high rates later.

Do Ask for Bids on All of Your Business

Asking for quotes on all of your business rather than a small subset increases the motivation for carriers to offer you competitive pricing. Working with one carrier or broker can have other advantages as well – if a carrier knows everything that you need shipped, they can make recommendations on more cost-effective ways to combine or route your shipments.

Don’t Underestimate the Value of a Good Carrier

Consider how important reliability and flexibility is to you. Understand that a higher priced, reliable carrier may cost less overall compared with a low priced carrier that loses freight or makes late deliveries. Keep that in mind if you have a fantastic carrier who isn’t willing to negotiate lower prices. 

Do Leverage A Freight Association

If you’re shipping small parcels, freight associations can help you to access group buying prices. Check at any associations that you currently hold membership with. It may even be worth joining an association just for access to parcel shipping savings.

Do Create a Carrier Master Agreement

A Carrier Master Agreement is a private agreement between you and your carrier. This is important for two reasons – first, it will put everything that you negotiate in writing. Second, because this is a private agreement that only applies to you, your carrier does not need to offer it to their entire shipper base, as they do with terms written in their tariff.

When you implement this agreement, make sure to specify that the Master Agreement will take precedence over the carrier’s tariff, and that they may not change their tariff or any terms with your agreement. This way you won’t ever be taken by surprise – and your work negotiating will not go to waste.

Looking for extra help writing a Carrier Master Agreement or negotiating with carriers? Read how our Freight Claim Assistance Program can help.

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Where to Find Salvage Prices Before You Sell for Salvage

As a shipper, you have a responsibility to mitigate the carrier’s loss in the event of damaged freight. A common way to do this is to sell damaged products for a salvage price. Typically, the carrier will reduce their payment on your claim by the value of the salvage. We discussed in a previous post that sometimes it is unreasonable to salvage. But even when it is reasonable to do so, before you accept a lower claim payment, it’s important to do some research into salvage prices to find out what your salvage is worth.

Now the question is – where to go to find salvage prices? That’s why we’ve found two websites that allow you to research salvage prices quickly and easily: Scrap Monster and Scrap Register.

Researching Salvage Prices on Scrap Monster & Scrap Register

Each site offers salvage prices for various types of scrap products, each broken down by geographical region. Both sites also offer buying and selling tools which may be useful if you choose to sell your salvage yourself. Here is a comparison chart showing the salvage price categories offered by each website.

Item Scrap Monster Scrap Register
Metal scrap broken down by type of metal X X
Plastic scrap Extensive Little to none
Electronic scrap X X
Paper Products Prices X
USA prices broken down by coast/region X X
China prices X X
Japan Prices X
India Prices X X
Europe Prices X
Subscribe for live prices X X

The metal pricing for each type of metal is further broken down by product type. For example, you can see the salvage prices for an aluminum radiator, as well as the prices for aluminum car wheels. For several categories, Scrap Monster offers a larger break-down compared to Scrap Register. In the Aluminum category there was an especially large difference, with Scrap Monster offering salvage prices for 22 different aluminum products, and Scrap Register only offering prices for 15.

Need Current Salvage Prices?

Now here’s the catch – the publically available pricing information is not fully up to date – on both sites, the information you can see for free is one month old. If you’re looking for today’s market salvage prices, you’ll need to register for a subscription plan. Here are the subscription plan costs for each site:

Plan Region Scrap Register Price Scrap Monster Price
America pricing plan $199/year $40/month
China pricing plan $149/year $30/month
India pricing plan $99/year $30/month
Japan pricing plan $99/year NA
Europe pricing plan NA $30/month
Combo offer (all above regions) $299/year NA

Note that Scrap Register prices are per year, whereas Scrap Monster prices are per month.

Scrap Monster also offers plans for plastic salvage prices:

Plastic Plan Region Scrap Monster
Asian pricing plan $1200/year
Europe pricing plan $1000/year
U.S.A. pricing plan $1000/year

Ideally, your shipments will always arrive in perfect condition, or your carrier will pay the full value of your claim. However, if your carrier ever wants to reduce your claim payment by the salvage price, you now know where to check market salvage prices and ensure that you collect a fair payment.
 

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The 4 Freight Claim Programs You Need to Be Running

Freight claim management involves more than just filling out a few forms. Ideally, your company will have a number of procedures in place in order to minimize losses and ensure maximum recoveries. Here are the top 4 freight claim programs you should be running.

No More Customer Giveaways

If a customer hasn’t received their shipment, your customer service department will typically credit them for the price of the missing product, or send them a new product free of charge. In order to reimburse your company for this loss, the next step is to file a claim against your carrier. However, what happens if the customer does end up receiving their shipment, after you’ve credited their account? In this case, the carrier will reject your claim. This is where most shippers lose track of the claim. The key here is to keep track of credited customers and rebill those who did end up receiving the product. This way, your company is still made whole.

Don’t Limit Claims to Carriers

Carriers frequently deny claims because they are legitimately not responsible for the damages. If this is the case, don’t abandon the claim without further investigation. If your supplier sent a damaged or poorly packaged shipment, then you can file a claim against them, instead of your carrier.

Keep Suppliers in Line

While you should be prepared to file claims against your suppliers when necessary, ideally you’ll help your suppliers to avoid mistakes that lead to damages. You can do this by implementing a program to provide detailed instructions to suppliers regarding proper packaging and shipping. While this will prevent some damages, it will also help you to recover losses from suppliers in the case of non-compliance.

Review the Data

Of course, the best thing you can do is to prevent freight damages entirely. You should be regularly reviewing your reports to find trends in your claim data. Which products are damaged most often? Are there certain carriers, warehouses, or shipping routes that are most prone to damage? Use this data to revise your processes and retrain personnel.

While many of these programs consist of relatively simple ideas, actually implementing them is an area where most companies struggle. For help implementing these programs and other freight claim management processes, read about our Freight Claim Assistance Program.

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Your Graphic Guide to The Effect of Selling Terms on Distribution

How do your selling terms affect who pays for shipping, who finds insurance, or who files the freight claim? This infographic explains everyone’s responsibilities in each situation.

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What Happens When Santa’s Shipment is Damaged…On Christmas Eve?

North Pole Ltd. has a unique business structure. The non-profit is a large manufacturer and also maintains all of its shipping and logistical responsibilities in house. The president and founder Santa Claus started the organization in order to deliver Christmas toys to deserving children around the world. Like any shipper, they struggle with freight damages. However, Claus knows that it only takes one damaged package to ruin a child’s Christmas.

Ensuring No Child’s Toy is Damaged

In order to avoid this issue, Claus checks each and every one of his gifts for damage after they are placed under the tree. (He currently holds the patent for AntiGrinch, his handheld damage detection system.) However, once he finds a damaged gift, it needs to be replaced.

The damaged package is scanned with their RFID system, and the order is sent to the nearest Major Expedited Replacement & Repair Yard (MERRY). “We make extras of the requested toys, specifically as replacements in the case of damage,” says Claus. Supplementary teams deliver the replacement toys to the houses that need them so Claus can continue on his route. They will even repair the toys in the home, where possible.

While the extra inventory of replacement toys works most of the time, sometimes they run out, and sometimes toys cannot be fixed. There’s also the issue of rarely requested toys that they don’t make replacements for. This is where Expedited Lean Fabrication (ELF) comes into play. “We have a team that will make the necessary toys from scratch.” This is all in the name of ensuring that no child wakes up to a broken toy.

The Cost of Replacing Damaged Toys

“A 5% damage rate doesn’t sound like much, but when you average 10 billion toys per year, that’s 500 million toys,” says Claus. “Of course, we try to be as generous as we can, but we do have a budget, and the damaged toys eat into that budget.” And the costs are huge, since the cost of MERRY’s process is sometimes twice the cost of the average toy, and toys made through ELF can be as high as 10 times. “If I had a 0% damage rate, I could give out an extra 1 billion toys, easily. But that’s what I need to do to ensure that no child opens up a damaged toy on Christmas morning.”

“It seems the most popular toys are also the ones that are most prone to damage. Electronics, paints that are prone to leaking, craft kits with breakable little pieces.” Claus sighs. “I never have an issue with clothes. Kids don’t want clothes, but I send them anyway because they don’t get damaged.”

Tracking and Preventing Damage to Toys

It was only two years ago that Claus started using MyEZClaim Freight Claim Management System to help him track damaged gifts. “The data I gained from the system was incredible,” says Claus.

Down the Chimney

A key feature is that the system allows custom fields. It was the first time MyEZClaim had ever listed a field called “Chimney”, but it was essential for Claus to track.

“I quickly realized that 10% of my damages came from houses with chimneys. While it was once my most effective delivery method, chimney construction has changed over the years, and it turns out the gifts are more likely to be damaged when delivered this way.”

A Bumpy Sleigh Ride

Then there’s the ability to sort damaged toys by route. “The system shows a map with all my shipping routes, and it was clear that some of them have higher damage rates than others,” Claus explains. “It turns out that some routes put the sleigh through some pretty strong turbulence.” And to correct the issue? “Now I use extra dunnage bags and straps on those routes to keep the toys from moving.”

Feliz Navidad

Another key feature that Claus found useful is the ability to sort shipments by multiple fields. At a glance, electronic gifts did not have a noticeably high damage rate. However, when toy type was sorted by region, a pattern emerged.

“Electronic toys delivered to the tropical regions were being damaged by the high humidity. When you spend all your time up North, and it’s so cold and dry, humidity just isn’t something that you think of.” Since realizing this, Claus has adjusted electronic toy packaging based on the region. Electronics going to tropical regions are given more drying agent packs, or utilize fully sealed plastic packaging instead of cardboard. “But I can keep the packaging costs lower in dryer regions, because humidity damage just doesn’t happen there. And now we know that.”

Goodbye SCROOGE

MyEZClaim also allowed him to identify issues by individual plants. “When I noticed a difference in damage rates for china dolls coming out of two of my plants, I didn’t understand why. It turns out, one of the managers had implemented a SCROOGE initiative (Simple Cost Reduction Out Of General Expenses) and they had switched to a thinner grade of foam. I’m a huge fan of lean initiatives, but now we know that it was costing more in damages than it was saving.”

The Results Are In

So what is the end result? “Thanks to the data I got from MyEZClaim, I was able to reduce damages by 20% last year. That means that this year, I don’t need the same budget for replacements. Instead, I can give out 200 million more toys.” He smiles a big smile. “And this year, I don’t have to give out clothes!”

Not a Believer Yet?

Mr. Claus isn’t the only provider of Christmas gifts who uses MyEZClaim.
Click here to download our case study with Best Buy.

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How Logistics is the Cause – And Cure – Of the Ebola Outbreak

The Ebola outbreak in West Africa is not the first Ebola outbreak the world has seen, but it has been the widest spreading and the deadliest. In the past, outbreaks have burned out quickly, but the current Ebola outbreak is spreading with a rapidness that some are calling an international crisis.

And the reason for that is our improved logistics system.

The Spread of Ebola

With faster, increased travel between communities and countries, Ebola has been able to spread quickly. CTV has created a timeline of the progress of the disease. Here are the key dates that illustrate how Ebola has spread:

March 23rd: Ebola is confirmed in Guinea

March 28th: The disease spreads from a remote area of Guinea to the capital

March 30th: Ebola is reported in Liberia

May 30th: Sierra Leone reports deaths from Ebola within their borders

July 25th: Ebola reaches Nigeria

Aug 29th: The outbreak expands to Senegal

Note: Ebola has also been reported in the Congo, but this appears to be a separate case and is not due to spread from West Africa.

The patient who brought Ebola to Nigeria nearly brought it to the United States as well. He was planning to fly to Minnesota to visit his wife and children. The severe, quickly acting symptoms are what make the disease so deadly, but also what prevent it from spreading more quickly; the man was quarantined and soon died before he was able to leave Nigeria.

The Role of Logistics in Stopping Ebola

At a glance, it would seem that travel restrictions would be the best way to contain Ebola, which several countries and carriers have initiated. The CDC has declared a Warning, Level 3 travel notice for travel to Guinea, Liberia, and Sierra Leone. A Warning Level 3 advises Americans to avoid any unnecessary travel to these countries. The CDC has also declared an Alert, Level 2 travel notice for Nigeria and the Congo, meaning that travelers should take extra precautions if traveling to these countries. British Airways, Kenya Airways, Arik Air, and African airlines ASKY have stopped flights to Ebola stricken regions.

However, there is a delicate balance between restricting travel enough to stop the spread of Ebola, and restricting travel so much that supplies and medical personnel cannot be shipped in – thus making the outbreak worse. The WHO has already had difficulties travelling to and from affected regions, and they report that further restrictions could create a “humanitarian emergency”.

For these reasons, it is crucial that airlines and other carriers cooperate with health officials to limit the spread of the disease while continuing to provide transit for medical personnel, food, fuel, and other essentials.

Transporting Vaccines

Another important area of logistics with regard to Ebola is the transport of vaccines. In fact, Winnipeg, Canada developed an experimental Ebola vaccine and offered to donate it to the WHO. However, weeks after offering the vaccines, they were still stuck in Canada due to logistics problems.

Transporting a vaccine is challenging. One of the issues is that the vaccine must be kept at a cold enough temperature to keep its effectiveness. This can be especially difficult when transporting the vaccines to areas with underdeveloped or unreliable supply chains and storage facilities.

Moving Forward

Overall, the international supply chain will continue to play an important role alongside health care officials in stopping the spread of the Ebola outbreak, as well as transporting vital people, supplies, and vaccines to aid in recovery.

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Securing Your Freight – Part 2

Here are some additional ways to prevent freight damage through proper freight securement.

Friction Mats

Friction mats reduce the risk of your freight sliding around. They are especially important when using slippery plastic pallets.

When using friction mats for several pieces of freight, use one full length mat for all of the pieces, rather than cutting the mat into individual pieces for each unit of freight. The mat should extend beyond the edges of the freight for proper effectiveness.

Dunnage Bags

A dunnage bag, or airbag, is an inflatable bag used to fill the space between two pallets or between the pallet and the wall of the dry van. This helps to prevent the pallets from moving or tipping during transit. When using dunnage bags, keep these tips in mind:

  • Do not use the bags between the pallet and the door; changes in temperature or altitude can cause the dunnage bags to expand. This can cause the doors to open forcefully when unlatched, potentially causing injury.
  • Use the right sized dunnage bag. The dunnage bag should not extend beyond the edge or top of the cargo. If it does, the dunnage bag may pop out during transit.
  • Follow the instructions and do not overinflate.

Blocking & Bracing

Blocking are pieces of wood that are nailed to the floor of the trailer or container to prevent freight from sliding around. They are positioned behind and in front of the freight, and/or the sides. Bracing are pieces of wood that extend from the ceiling to the floor or walls to prevent cargo from tipping. When using blocking and bracing, ensure that you use quality wood without rot, knots, or signs of splitting.

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Securing Your Freight – Part 1

As we’ve stated on this blog several times before, the best way to reduce freight claim costs is through prevention. An excellent way to reduce damaged products is by ensuring that your freight is properly secured in the trailer or container. Here are a few tips and methods to help you protect your freight from damage.

1. First Things First

If you get nothing else from this article, just remember this: do not assume that your carrier will secure your freight. If you are loading the trailer or container yourself, make sure that you secure your shipment. If the carrier is responsible for loading, make a point of asking them to secure the load. Not all dry van drivers will take the extra time to secure freight within the dry van, so make sure you specify that they need to do so.

2. Pre-Check

Before loading, check the trailer or container for anything that could harm your freight. Are there wood shards or nails left from the last shipment’s pallet? Is there anything protruding out of the floor, ceiling, or walls of the trailer or container? Small but sharp objects like these can be especially harmful if you are shipping boxes filled with bags of liquid products.

3. Straps

Straps can be used on both flat bed trucks or within dry vans to ensure that freight does not move around. In order to determine the strength of the straps that you need to use, look up their working load limit. This is the maximum amount of weight that the strap can hold. You can then use the working load limit of each strap to find the aggregate working load limit, which is simply the total of the working load limits for all of your straps or securement devices used to secure a section of freight. The aggregate working load limit should be at least one half of the weight of the freight that you want to secure. If the aggregate working load limit is too low, add more straps.

4. Edge and Tarp Protectors

Although securing your freight is meant to prevent damage, you may run into a situation where the act of securing your freight actually causes damage! Straps pulled tight across cartons may begin to crush the carton edges. Even a tarp pulled over a load can damage carton corners on some of the more delicate packages. To avoid these issues, you can use edge protectors and tarp protectors. Edge protectors spread the tension of the strap over a wider area of the carton to reduce the risk of the carton being crushed by the strap. Tarp protectors work in a similar way to protect delicate corners from being crushed. These tools will also ensure that your straps and tarps last longer.

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