Next Flight Out (NFO): What Bumps Your Shipment?

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Chances are if you've been shipping Next Flight Out (NFO) for a while, you've had a shipment "bumped" from a flight.  The reason is something of a higher priority, as determined by that particular airline, took the space your shipment was going to occupy. 

While each commercial airline can determine its own priority for loading NFO shipments, and there are multiple determining factors, the list below should provide you with a general understanding of what gets loaded first or, in the case of a shortage of space, "bumped" last.

 Priority Cargo Loading For Commercial Airlines:

1. Baggage
2. Live Animals
3. Urgent Medical Transplant
4. US Mail
5. Biological Substance (Blood, Bone Marrow, etc.)
6. Medical equipment
7. All other NFO shipments
8. Priority Cargo
9. General Cargo

NOTE: If a live animal is transported, dry ice and dangerous goods shipments might be off loaded. 

While knowing this list doesn't help your NFO shipment from being "bumped", hopefully it helps you in understanding why your NFO shipment was "bumped".

Where do your NFO shipment contents fall on this list?

Air Freight Industry Trends by NGL and Cleveland Research Company

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The leadership team at NGL is always evaluating market conditions in order to provide the best combination of service and price for our customers, which has made us the premier next flight out and same day courier provider for the last 40 years.

We rely on our "friend of NGL" Chris Johnson at Cleveland Research Company and their outstanding research team to keep us up-to-date with trends in the transportation market.  Here are a few key takeaways from this month's report regarding air freight industry trends.

Transportation Universe:  What Has Changed?

The following chart summarizes the results of our survey and proprietary database work over the past thirty (30) days:

Integrated Carrier Air Freight Trends
Monthly Industry Trend Summary and Analysis

Integrated Carrier Air Freight Trends -- U.S. Domestic:

FedEx deployed 4.6% more capacity in its domestic network in March 2012 versus 2011 on a three-month rolling average. It is interesting to note; however, that since 2006 FedEx has been shrinking its domestic air fleet as customers trade down from overnight express services to ground services.

Integrated Carrier Air Freight Trends -- Asia:

During March, UPS deployed 1.3% more capacity on its Asia trade lane versus March 2011 on a three-month rolling average.

During March, FedEx likely deployed 1.8% more capacity in the Asia lane versus March 2011 on a three-month rolling average.  The company is also flying more heavy freight versus small package traffic which is forcing FDX Boeing 777 freighters to make tech-stops in Anchorage versus flying non-stop from Asia to Memphis.

Integrated Carrier Air Freight Trends -- Europe:

During March, UPS increased its deployed capacity in its European lane by 3.6% on a three-month rolling average versus March 2011. As UPS closes its acquisition of TNT in 2H12, deployed capacity will likely increase as UPS grows its market share.

During March, FedEx deployed 21% more capacity in its European network on a three-month rolling average basis versus March 2011. Interestingly, it reduced its capacity sequentially for the first time in four years and second time in second years.

Integrated Carrier Air Freight Trends -- Latin America:

On a three-month rolling average, UPS deployed 12% more capacity to Latin America during March 2012 versus 2011. Sequentially, UPS followed normal seasonal trends and increased its deployed capacity.

During March, FedEx likely deployed additional capacity within the Latin American trade lane sequentially. Compared to March 2011, FedEx deployed 14% more capacity during March on a three-month rolling average basis.

International General Air Freight
Monthly Industry Trend Summary and Analysis

Air Freight Demand Trends:

During March, demand for air freight services was down 1% versus March 2011 driven by weaker export volumes and fewer last minute shipments. Expectations remain soft as most shippers maintained cautious inventory positions.

Air Freight Capacity Trends:

During March, available air freight capacity exceeded demand as carriers offset dedicated cargo flight reductions with belly capacity expansion tied to improving passenger trends.

Air Freight Pricing Trends -- Inbound Asia to U.S.:

Inbound air freight rates from Asia to the U.S. rose m/m as high-tech product launches absorbed capacity and offset softer than expected air freight volumes. Rates have fallen m/m in April. Air freight rates from Asia to the U.S. remain 4% lower y/y as overcapacity remains an issue as shippers trade down to less-expensive ocean services.

Air Freight Pricing Trends -- Outbound U.S. to Asia:

Outbound air freight rates were up 7.3% y/y during March. While exports were up y/y, the growth rate moderated as macroeconomic concerns have lead shippers to be more cautious. Declining base rates have been more than offset by rising fuel prices, resulting in higher y/y air freight rates.

Air Freight Volume Trends -- Hong Kong Imports:

Air freight import volumes out of Hong Kong were down 9.8% during February. Adjusting for the impact of the Chinese New Year, 1Q12 export volumes are down 12.8% versus 1Q11 and down 12.4% versus 1Q10.

Air Freight Volume Trends -- Hong Kong Exports:

Export air freight volumes from Hong Kong’s international airport were up 0.5% in March 2012 compared to 2011. 1Q12 export volumes are down 1.1% versus 1Q11 and down 2.1% versus 1Q10 as shippers trade down out of more expensive air freight to ocean freight due to conservative inventory management strategies.

Air Freight Volume Trends -- Shanghai Imports:

Air freight import volumes from Shanghai International Airport were down 19% in March 2012 compared to March 2011 as shippers trade down out of air freight into ocean freight to save on costs in a lean inventory environment. 1Q12 import volumes are down 16% versus 1Q11 and down 4% versus 1Q10.

Air Freight Volume Trends -- Shanghai Exports:

Air freight exports from Shanghai International Airport were down 6% in March 2012 compared to March 2011 as a softer air freight export environment caused shippers to trade down from air freight to ocean. 1Q12 export volumes are were up 5.5% versus 1Q11 and down 2% versus 1Q10.

Macro Indicators
Monthly Industry Trend Summary and Analysis

Department of Energy (DOE) Weekly Diesel Prices:

The U.S. average price of diesel gallon stood at $4.09 for the week starting April 23rd. The cost of diesel fuel is 1% lower than the same time one year ago. Prices have risen 8% since January 2nd.

What do these trends mean to you?

Biorepositories: Choosing a Same Day Delivery Service Provider

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Logistical efficiencies in any company are an absolute must to ensure steady growth and reduced operational costs, so why would biorepositories be any different? Biorepositories rely heavily on the use of state-of-the-art technology to manage inventory and provide valuable information to researchers across the globe. This technology comes in many different forms and provides several different functions depending on the repository and the needs of its customers.

Due to temperature and time sensitivity of much of these samples, many are transported via Next Flight Out (NFO). Conceptually, most same day providers are the same and may even use the exact same local couriers and airlines to transport biologics. However, performance and functionality vary greatly in this specialized industry. It is important for biorepositories looking for a transportation provider to pay close attention to on-time performance and perhaps more importantly, how that performance is measured and accomplished. A provider may boast high metrics, but without understanding how they came to produce those metrics, they are worthless.  The litmus test for on-time performance measurement is whether or not the deliveries are time-stamped and how.  In order to determine the how, make sure you not only review the front end tracking portal, get a demonstration of how the back end systems work.

Lastly, biorepositories can beef up their transportation operations by selecting a same day delivery provider that takes your customers' needs to heart.  Having the ability to track samples enroute with an easy-to-use interface not only provides value to the repository, but also benefits their customers waiting on the other end. All biorepositories understand the importance of their packages making it to their customers, but not all understand the importance of proactive communication along the way. Imagine the embarrassment of a customer calling the repository to update THEM of their shipment’s status.

What can you do to ensure you and your customers are getting the best out of your provider?

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Is the LTL Spot Quote Coming to an End?

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It's early Monday morning and you need a Less Than Truckload (LTL) quote. You pull up your carrier email group list and start typing "Dear all, I have a request for quote." You enter pickup address, delivery address, weight and freight class and conclude with "This needs to move by 4 PM today!" and you click send.  Your day goes by.  Six to ten quotes come in, all with different prices and transit times. It's now 4 PM. You chose the carrier with the best cost and transit time and book the shipment.  After a successful day at work you check your email one more time to find a quote came in at 4:01 PM which was more cost effective and a day shorter for transit time. Shucks! Sound familiar? This is the spot quote method; a method of booking LTL and TL (truckload) that has existed since the start of truckload freight and is essentially a necessary evil…or is it?

If only there was a way you could find multiple quotes instantly and avoid the hassle of 100 emails continually flowing in with rates. Well there is! It’s called a Transportation Management System. Third party logistics companies have invested in Transportation Management Systems (TMS) which allow them to negotiate rates with over 200 carriers to provide you, the customer, an essential “rate shop” function to booking freight. Not only does this allow you access to over 200 carriers instantly, the rates negotiated with each carrier are applied to all accounts big or small. So for even you small guys that ship once a year, you are getting nearly the same great rates as someone who ships once a day...using a powerful TMS system. So you ask yourself, “Whats the drawback here?” Well to put it plain and simple, there is none! Companies currently utilizing a TMS for their customers have generally had them in place for years and do not charge a fee to either have an account or to book freight.

There are many benefits in addition to the "rate shop" fuction that a strong TMS provides: 

• Multiple shipment management
• Customized reporting and real time auditing
• Visibility of Key Performance Indicators (KPIs)
• Lower administrative costs
• Reduced expedited order costs
• Track carrier performance

Partnering with a 3PL who has a TMS can help alleviate the time and stress spent shuffling through emails to find the best quote.  Now that Monday is over and you've overpayed and added a transit day are you going to give a TMS a try?

Figure – Components of a typical Transport Management System (Source: Magic Quadrant for Transportation Management Systems, 2007, C. Dwight Klappich)

Service Parts Logistics Increases Bottom Lines

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Creative Ways to Drive Bottom Line Growth

I think we can all agree, in today’s world the whole “economy” excuse, however true it may be, it's not the kind of thing a board of directors or a business executive wants to hear. While it’s easy to simply cut heads and find cost savings by turning the remaining work force into hat racks, it’s not necessarily the best long term solution. It’s in times like these that businesses need to dig deep and get creative to find new ways to either drive bottom line growth, or differentiate from the competition to capture more market share.

Enter Service Parts Logistics, or otherwise known as, Premium Warranty Services.

Many companies today are realizing the benefits of having a service part logistics network, especially in the medical device and hi-tech industries. By providing a premium warranty/spare parts management network along with the original product offering, companies are able to effectively differentiate themselves from competitors in the market who do not offer similar services. At the same time companies can use the service as a profit generator, driving growth directly to the company’s bottom line.

The challenge being, of course, how does one set up an effective spare parts network? When considering a logistics partner, let me help you out with a few questions you should ask yourself and others internally, as well as a few things to consider.

Things to consider internally:

1)  How critical is product uptime to my customers? If my product goes down, what negative effects does it have on my customer’s business?

2)  What service levels do we want to provide our clients? 24 hour response? 12 hour? 8 hour? Or do we want to be aggressive with a 4, or even 2 hour response?

3)  Do we want to manage the technical service for part swaps and maintenance? Or just the spare parts distribution center?  Or outsource the whole program?

Things to consider when talking with a logistics partner:

1)  Should the need arise, are they able to adjust to your customer base and turn around a solution in a new market quickly? In the same token, if business moves away are they able to adjust and open/close stocking locations in accordance to what I, and essentially my customer needs?

2)  What type of experience do they have in this field? What other companies have they worked with that are similar to mine? (Remember:  limiting risk by using proven providers is key to identifying a good, long term partner. Flexibility and staying power are imperative.)

3)  What experience do they have working with technicians/field engineers, or better yet, are they currently integrated with any service providers as a one-stop shop to help simplify the process?

Developing ways to drive bottom-line growth can be a real challenge, especially in times like these. It’s important to understand your customers’ expectations as well as feel confident you have the right logistics partner to help you execute on the offering.

What's stopping you from providing a premium warranty service program?

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AOG (aircraft on ground) Shippers: What to look for in a partner

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Today's guest blogger is Julia Muell - Business Development Manager at Network Global Logistics.

"Aircraft on Ground" (AOG) is a term in aviation maintenance indicating that a problem is serious enough to prevent an aircraft from flying. Generally there is a rush to acquire the parts to put the aircraft (A/C) back into service, and prevent further delays or cancellations of the planned itinerary. AOG applies to any aviation materials or spare parts that are needed immediately for an aircraft to return to service. AOG suppliers refer qualified personnel and dispatch the parts required to repair the aircraft for an immediate return to service. AOG also is used to describe critical shipments for parts or materials for aircraft "out of service" or OTS at a location.

Mitigation of AOG status: When an aircraft "goes AOG" and materials required are not on hand, parts and personnel must be driven, flown, or sailed to the location of the "grounded A/C". Usually the problem is escalated through an internal AOG Desk, then the Manufacturer's AOG Desk, and finally competitors' AOG desks. All major air carriers have an "'AOG Desk". This desk is manned 24/7 by personnel trained in purchasing, hazardous materials shipping, and parts manufacturing / acquisition processes.

Who do you rely on to help expedite the parts to the grounded aircraft?  The cheapest provider?  

Here's what you need to look for in an AOG Partner:

• A provider who pre-books their shipments with the airlines to avoid bumps and known delays

• A provider who knows the size (lxWxH) restrictions of each airline, and understands when a wide-body aircraft is needed to move their parts

• a provider that understands most shipments are HAA, so the notification to the mechanic including the Airline BOL number and the Tail # of the aircraft is really important 

• Proactive communication to your AOG Desk and the maintenance crew via web visibility platform

Most shops like to repair their aircraft thru the night so that their aircraft can fly throughout the day. It cost thousands of dollars per hour for an aircraft to be landed and not operational, in addition to some extremely frustrated customers if they're flying on a private jet.

AOG shipments are typically customer routed. Only the manufactures /bigger companies (Cessna, Bombardier, Gulfstream, Boeing, Honeywell, Rockwell, etc.) route it themselves, and often use companies like Network Global Logistics to manage their AOG shipments.

Aircraft safety is something we take very serious at NGL, as we depend on the airlines for the majority of our shipments.  When minutes cost you thousands of dollars, you need to be partnered with experts in the business.

What questions can I answer for you regarding AOG shipping?

Julia Muell
jmuell@nglog.com 

Thinking Out Loud: Impacts of the Panama Canal Expansion Project

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In an era of increasing customer demand, logistics management has become the integral forefront for successful supply chain management. With 2014 marking the completion of the Panama Canal Expansion Project (PCEP), many experts are striving to forecast the “new” canal’s effects on supply chains throughout the U.S.

At this time, the PCEP has exponentially increased the amount of growth and development along the Atlantic and Gulf Coasts. By impacting everything, from port and rail-line infrastructure, to warehousing and terminal development – the East Coast hopes to cannibalize potential business and provide a seismic jolt to traditional supply chain modeling. According to the Journal of Commerce, West Coast ports currently handle 50 percent of the U.S. containerized trade, including 70 percent of U.S. imports from Asia. In a report by the Material Handling Industry of America, it’s predicted that 25 percent of these imports could shift to East Coast ports after the expansion. In doing so, shippers could foreseeably avoid West Coast port-congestion, and utilizing cost-effective forms of rail and sea transportation.

“Supply Chain has a New Sherriff: Third Party Logistics in DFW” presents a unique perspective for growth along the Port of Houston, and distribution opportunities through Dallas, TX.  

But what opportunities, or considerations, are relevant for other ports along the East Coast?

1. The planned expansion/deepening of the Ports of Jacksonville, Miami, Baltimore, Philadelphia, amongst others should be delayed until the investment can be justified.

The PCEP is admittedly a “global game-changer” within the supply chain landscape. In-midst of oil price volatility, the prospective cost-savings of maximized rail and sea transport will make the “new” canal a foreseeable option importing through the Port of Newark-Elizabeth, Port of Savannah, and the Port of Houston. The relative effects, however, will not uniformly increase opportunity for other ports along the East Coast. History suggests that although container volumes have grown, port rankings have remained unchanged for more than a generation. The port of Savannah, however, remains an exception to this case --- as it has emerged as the East Coast’s No. 2 port in the last three years.

2. Product Flow of most trans-Pacific traffic and intermodal cargo will remain unchanged.

From an import standpoint, aside from all-water service to the Port of Houston, most trans-Pacific traffic and intermodal cargo will remain concentrated within the San Pedro ports due to convenience, and other infrastructure advantages. Furthermore, most carriers have already entered long term volume commitments that will prevent immediate rerouting through the expanded canal.

3. Service rates are, and will be, driven by the economy.

The expanded canal hopes to eliminate potential bottlenecks, and assure that volume growth and access will not be constrained for East Coast ports. It is, however, important to understand that: 1. Shipper’s route cargo, not carriers. and 2. Ocean rates are, and will remain market/economy driven. Hence, according to the Journal of Commerce, the ocean industry will likely have “rotations characterized by larger and fewer vessels, deployed through fewer ports, and concentrated along existing routes.” Furthermore, what fees will be associated with re-routing containers through the expanded canal?

What this all means?

The jury is still out on the impact of the PCEP. It is simply too early to tell how the expanded canal will alter product flow into the United States, and increasingly difficult to forecast when potential shifts in West-East business will be seen. In the meantime, however, third-party logistics and transportation management providers must continue positioning themselves for whatever changes the expansion may bring.

For shippers, a competitive edge remains in effective supply chain management. A 3PL model for warehousing and distribution enables companies to take advantage of “pauses” in their supply chain, and add value to products as they await their next destination. With such partnerships comes flexibility. Upon PCEP completion, firms can gauge external environments and tendencies before investing heavy capital into Port cities. If the PCEP can viably transform a competitive parity into a competitive advantage, third-party logistics providers will have the infrastructure and technology needed to strategically capitalize on the expansion.

Are you buying the hype?

How do you foresee the "new" Panama Canal effecting U.S. Supply Chains?

How to Reduce the Cost of eCommerce to Canada

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Today's Guest Blog by:

Kelly O'Loughlin - General Manager - Network Global Logistics - Canada

High shipping costs often cause Canadian's ordering online from USA internet sites to abandon their transaction before completion. Canadians visit an online site, spend time picking out their items that seem reasonably priced only to find out the cost of shipping will be the same or more than the item purchases.  Even though the site advises what the shipping charges will be, they often fail to mention that the consumer is also paying brokerage and taxes on the product being imported. Brokerage fees and taxes charged on every parcel shipment to Canada are passed on to the consumer which inflates the already high cost of shipping.  The funds are usually in US$ as well. There is also the possibility the shipment is held up in customs which results in longer delivery times.

Canadian consumers often run into challenges when they want to return a product on-line.  There are often restrictions and consumers must pay the cost of the return shipping in order to get a refund.  This is often just as expensive as the original shipment charges and discourages consumers from shopping online in the future.

Canadian consumers who online shop outside of their country may not be protected by Canadian Consumer Protection laws and safety standards may be different.  This can also discourage consumers from shopping online.

How can companies alleviate these challenges and make the consumer experience a positive one to increase future sales and potential for repeat purchase?

1. Hire and build a partnership with a reputable 3PL located in Canada to warehouse and ship to consumers within the Canadian market.  Companies will save immediately on brokerage and import fees as they can send truckloads of product across the border instead of individual parcels.  Consumers will be covered on the Canadian Consumer Protection Laws.

2. Pick a 3PL who also has the expertise to handle returns.  A good 3PL works with it’s customers to develop processes to ensure inventory is inspected and return documentation is completed quickly to allow the company to credit it’s customers in a timely manner. A 3PL can often use their volume to capture discounts on shipping charges that are passed on to their customers.

3. A 3PL services more than one customer and therefore can leverage their rate negotiation with courier & freight companies to ensure the best rate structure available.  This savings is passed on to their customers. Shipping within Canada can also speed up delivery time.  It’s a win, win for all involved.  Most importantly the consumer is more likely to have a positive online shopping experience that will ensure they will be a repeat shopper. (you might also read what Google and Amazon are proposing)

3 Mistakes to Avoid When Selecting a Same Day Courier

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No matter if you're using a same day courier to ship organs & tissue, aircraft parts, electronic components, or film reels, you still need a reliable provider that can give you visibility to your shipments when you need it, and the proactive communication to change your plans if there are any unforeseen difficulties in meeting your requested delivery time.  So how do you avoid picking the wrong courier service to provide you with a same day delivery?

1. Don't assume that all same day couriers are the same.  Yes they typically all have access to the same flights if you're looking for a next flight out provider, however it's which flights they choose and how they access those flights that count.  Why is it important how they access flights from the commercial airlines?  Imagine if you checked each airlines website or used a common travel site to pick flights, it takes a lot of time to check each airlines site and not all airlines are available on the Expedia's of the world which means that your important package won't necessarily get on the first flight out utilizing the most direct routes, causing your package to not get to it's destination as fast as it could.
2. Don't automatically go with the cheapest same day delivery provider.  These are the couriers that don't have the systems to automatically pull all flights onto their screen to choose the most optimal route.  They are manually checking the airline sites and typically only use 1 or 2 of the commercial airlines for their counter to counter services.  Not providing you with next flight out services, rather the next flight with their limited resources.
3. Don't make the assumption that if a same day courier has an online customer portal that they have a back end system to support it.  With today's technology any same day courier can manually type in flight and tracking information for you to see online.  Have the provider demo their back end system for you.  Have them show you how they receive your order, select the next flight out, and track shipments internally to ensure on-time delivery.  If they don't have a transportation management system that automates the process then the time it takes them to do it manually is costing you and your customers precious time and money.

What are some other mistakes you should avoid when selecting a same day courier?

Google or Amazon - Who wins the same day delivery battle?

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King Kong vs. Godzilla - Rocky vs. Apollo Creed. 

Will Google vs. Amazon end up on the all-time list?

As a father of 3, the thought of them being able to buy something online and have it delivered the same day is frightening.  However, Google and Amazon are planning to do just that, with the development of a same day delivery service.

Interestingly, this isn’t groundbreaking.  This service has existed for many years, and is one of the core products at Network Global Logistics (NGL), a global provider of urgent delivery services since 1971. Leading companies in high-urgency sectors like life science, healthcare, aerospace, telecom and precision manufacturing count on same day courier services, and have partnered with NGL for on-demand transportation.

So, why is the thought of Google or Amazon providing same-day delivery on orders so miraculous?  It’s not - if you’re NGL.  But, if you’re Google or Amazon and you unlock the magic of the customer behavior cycle, you could very well rule the online shopping universe.  It’s an idea that makes total sense because the regional distribution model already exists.  Clearly, Amazon and Google could benefit from leveraging the infrastructure already in place. Their customers would benfit as well.

It probably won’t be as expensive as you imagine, especially if a proven carrier like NGL handles your purchase. Although this is new territory for Google and Amazon, the network is already built, proven and widely used in the on-demand community, thanks to the pioneering efforts of NGL.  In fact, NGL’s on-demand model is a perfect fit for immediate-delivery eCommerce Retail. The fact that Network Global Logistics won Logistics Management Magazine’s coveted “Quest for Quality” as the Top Ranked Third-Party Logistics Provider?