Best Strategies for Reducing Freight Costs in Canada

When freight rate bids are yielding diminishing returns on savings, you’ve probably exhausted all the savings you’re going to derive from competition among carriers and transportation companies. At some point the carriers have gone as low as they can with their freight rates. So what now?

You have to take cost out of the system. This is harder. You have to work at it. Not only do you have to work with the carriers and transportation providers, but you also have to work with internal people to realize savings. Not every solution is applicable to every shipper, but here’s a guide to point you in the right direction to analyse your shipping activities.

  1. Become a Shipper of Choice:

Reducing uncertainty for carriers can result in cost savings because the carrier doesn’t have to guess at what costs they may incur. To become a shipper of choice consider the following

  • Prompt Loading/Unloading: Appointment times are great and generally speed up unloading, but you should also have a mechanism to deal with the occasional late carrier. If the carrier misses their window and has to wait 6 hours to get unloaded this will eventually factor into your cost of freight.

  • Comfortable, Friendly Atmosphere for Drivers: Many shippers don’t consider the impact their facility has on their cost of freight. Drivers like to pick up at locations where they are treated with respect and loaded/unloaded promptly. Typically, runs are doled out to drivers based on seniority. The best, most experienced drivers want to pick up at the best shipping locations. The best, most experienced drivers make fewer errors and will pick up and deliver promptly — driving down your costs in the long run.

  • Re-consider Fines: There are lots of elements of uncertainty for a carrier when he is bidding on freight. Many of which are out of his control like weather, traffic, and random breakdowns. If you add a fine to the scenario, the carrier now has to add this to his costs. Fines in the long run are paid by the shipper in their rates.

  1. Break Out Assessorial Charges:

Uncertainty only increases costs. When the carrier has to guess, prices go up. For example, let’s say your tender says, “price all inclusive with fuel”. Now the carrier has to guess at what the fuel price is going to be 12 months from now. He’s going to guess high so he doesn’t lose his shirt in the deal. Who knows, if fuel has a huge spike, you may come out ahead, but more likely you, on average, are going to pay a higher “all in” price. Develop a fair fuel surcharge table, standardize and have it fluctuate with the price of fuel. It’s just like a mortgage for your house. In the long run, people who have variable rate mortgages pay far less than people who lock in a rate. This is the cost of uncertainty being factored into the price.

  1. Share information:

Again, uncertainty equals cost in your freight rates. If the carrier doesn’t know exactly how long your freight takes to load and/or unload, he has to guess. Also, timing and frequency play important roles. For example a carrier may need a PM pick up to work with a nearby AM delivery in order to have a low cost solution by matching a head haul with a back haul.

  1. Share the cost of the unexpected:

Border delays, production delays, weather, traffic, etc. all turn into costs for the carrier. These costs have to be factored into rates. It’s much like comprehensive insurance coverage on your car. If you have zero deductible, the rates are very high. However, if you share the cost of any unexpected occurrences with your insurance provider and bump up your deductible to $500, your rates are significantly reduced. A carrier who knows a shipper is reasonable to deal with around delays and unexpected events will get lower costs in the long run.

  1. Consider a 3PL Logistics Company

Working with and managing a large carrier base takes time and effort. If you have multiple priorities and responsibilities and never seem to have the time to work on the areas above where savings can be realized, perhaps it’s time to consider outsourcing. For 25 years DSN Chemical Transportation has worked with customers to develop cost-effective solutions which include appropriate aspects of the above best practises. We would welcome the opportunity to review your existing supply chain challenges and do the same for you. Contact us any time for a no-obligation consultation.

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Liquid Bulk Trailers: 101

At DSN Chemical Transportation we’ve been transporting chemicals for 25 years. The most often misunderstood and inquired about transportation service that we provide is our Bulk Transportation Service. There are many options available to ship different types of products in different types of equipment. Below, is a brief summary of the common types of liquid bulk trailers that you find in the market today.

The Chemical Trailer: Sometimes called a stainless steel tanker, or Bulk SS Tanker. This is the workhorse of the bulk liquid chemical transportation industry. Sometimes also called a DOT 407 tanker, this tank is designed to move chemicals, some corrosive materials and flammable products. This would be the equipment of choice for many hazmat carriers. Because the tank is made from stainless steel, it could handle some very mildly corrosive products it washed properly. However, corrosive products are typically shipped in an FRP or rubber lined trailer.

The Corrosive Trailer: The corrosives liquid bulk trailers, sometimes called TC -412 can be one of two general types. It can be a rubber lined carbon or stainless steel tank, or an FRP Trailer. An FRP trailer is Fibreglass Reinforced Poly tank. FRP tankers are ideal for transporting highly corrosive materials. Today the FRP tanker is also the choice of many hazmat carriers. It’s both light and versatile and can haul many types of commodities other than corrosives which help bulk carriers fill their back hauls and drive down costs.

Hot Products Tanks: The hot products tanker sometimes called Non-Code tankers can haul products like hot sulphur or asphalt. They are designed to withstand the temperature and pressure of high temperature products.

Food Grade Tanks: Sometimes called Sanitary Stainless Steel are designed for the transport of food products. Note also that a stainless steel 407 tank or a FRP tanker can also haul food grade products if they have a food grade wash prior to loading. Some shippers may have specifications to only use sanitary stainless steel tanks. Another specification that typically comes up for food grade shipments is a Kosher trailer. A food grade trailer goes though a special wash process and is inspected and blessed to be able to ship Kosher food products. Because this is a special wash, it is often at an additional cost.

Petro-Chemical Tanks: This liquid bulk trailer is often made from Aluminum, the DOT 407 trailer is designed to move crude oil products.

Petroleum Tanks: Often made from Aluminum, the DOT 406 Gasoline Truck and Trailer is designed to deliver fuel to high density populated areas and designed for easy maneuverability and optimum flow of petroleum for off-loading. They typically have a vapor recovery system as well to recover flammable vapors from the fuel tanks they are filling. A common feature of petroleum tanks is a “scully system”. This is an electronic safety device that ensures that the designed-in safeguards are in place and functioning before it will allow the flow of material.

Multi-Compartment: A multi-compartment tank wagon is simply any of the above tanks designed to have separate compartments inside the tank to carry multiple products at the same time. A major consideration is temperature. Loading products with significantly different transporting temperatures can be hard to maintain in transit due both to cooling and temperature bleed from one tank to another.

To make sure you have the right equipment available to move your products, call a DSN Chemical Transportation representative where one of our experts will match your product to the appropriate equipment type to ensure an easy shipment.

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DSN Chemical Transportation Officially Launches Newly Expanded Bulk Liquid and Dry Transportation Service

January 2, 2013

MISSISSAUGA, ON – DSN Chemical Transportation, today officially launches it’s newly expanded bulk liquid and dry transportation service within the United States and Canada, bringing their transportation brokerage expertise to a new level to service a growing market. Due to high demand from their customer base and the market, for bulk liquid transportation and dry bulk transportation,  DSN Chemical Transportation seized the opportunity to expand it’s network of qualified bulk carriers to service the needs of their target market: the North American chemical producers, distributors and users.

DSN Chemical Transportation, as a proud Supplier Partner of the Canadian Association of Chemical Distributors (CACD) and Affiliate Member of the National Association of Chemical Distributors (NACD), is leveraging their chemical expertise and expanding the services offered to the chemical industry as a whole.

About DSN Chemical Transportation

DSN Chemical Transportation, a North American provider of Third Party Transportation Services, is celebrating 25 years in business as a well respected provider of superior safety, service and spend solutions for the chemical industry.

Visit DSN at http://www.chemicaltransportation.com or call 1-800-388-3487 to learn how DSN Chemical Transportation can help your organization with it’s transportation needs.

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HAZMAT Trucks Banned in Boston

Starting June 13, 2012 HAZMAT shipments will be banned from Boston during the hours of 6am and 8pm.   Click here to read more

http://boston.cbslocal.com/2012/05/11/state-bans-hazmat-trucks-from-downtown-boston-during-day/

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DSN Learning about the Safety Train

DSN Chemical Transportation was at L.V. Lomas last week to learn about bulk rail transport of chemicals with the aid of the Safety Train hosted at L.V. Lomas’ site.  You can learn more about the Safety Train at the  CIAC website.  Big thanks goes out to LV Lomas and Canadian Association of Chemical Distributors for arranging the tour.

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New Definition of Tank Vehicle in the US Starting to Enter Enforcement Phase

On May 9, 2011 the FMCA expanded the definition of a Tank Vehicle to:

Tank vehicle means any commercial motor vehicle that is designed to transport any liquid or gaseous materials within a tank or tanks having an individual rated capacity of more than 119 gallons and an aggregate rated capacity of 1,000 gallons or more that is either permanently or temporarily attached to the vehicle or the chassis. A commercial motor vehicle transporting an empty storage container tank, not designed for transportation, with a rated capacity of 1,000 gallons or more that is temporarily attached to a flatbed trailer is not considered a tank vehicle.

Implication1: A shipment of IBC’s that individually have a capacity of more than 119 gallons and a total capacity of greater than 1000 gallons is now considered an Tank Vehicle, even if it’s in a van.

Implication2: The driver will now need a tank endorsement on their CDL (Commercial Drivers License)

Best Safety and Compliance Practise: Ensure that if you are shipping IBC’s to/from the US on a shipment that meets the definition of a Tank Vehicle, that the driver picking up the shipment has a Tank Endorsement on his CDL, much like shippers are verifying the Hazmat Endorsement and FAST card requirement for Hazmat Shipments.

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5 Incredible Things You Probably Didn't Know About Carrier Fraud

 1.  It’s easy!

A fraudulent carrier just has to show up at your dock and say, “hey, I’m here to pick up that load going to Texas”. If you don’t have controls in place, he gets loaded, drives away and you never see him again. You’re shipment is stolen and there’s very little you can do about it. Many shippers don’t understand the potential for fraud and their shipping/receiving departments are not properly trained to understand the potential.

2.  It’s not illegal!

A smart fraudster can set up a scam so that it’s not even illegal. Here’s how. A fraudulent party will buy a bankrupt carrier for peanuts. Then, go out and solicit to pick up freight. Let’s say you normally pay $1800 from Chicago to Toronto.

The fraudster calls you and says,
“hey, I really need to get my truck home, I’ll do it for the cost of fuel, how’s $1000 bucks sound?”
You think, “Great, what a deal!”.

The fraudster then faxes you over a license and authorities that have been active for years and they check out. He sends you an insurance certificate that looks good. Everything checks out. You give him the load. So now the fraudster goes to work. He contracts with another carrier to move your load for $2000, which he has no problem doing since the going rate is $1800.

You might be thinking, how does this make sense?
Just wait.

Once the load is picked up and delivered and you’re very happy with your $1000 dollar shipment, the fraudster calls and says,

“Hey, do you guys offer a discount for quick payment?”
“Sure, you say, 5% discount if we pay early.”
“Wow this just keeps getting better!” your thinking.

So you pay the guy $950 bucks. I mean, you have a valid proof of delivery and you can verify everything went smoothly, right? Now here’s where you get stung. 30-60 days later, the carrier that actually moved your shipment comes looking for money. The other guy closed up shop and is long gone. You end up in a really messy situation and may have to pay the other carrier’s freight bill to boot! How is this not illegal? Surprisingly, it’s not. You contracted with the guy to perform a service, he did and you paid him. As long as, he performs work under the contract, it’s not fraud (by definition) it’s a civil matter and you have to sue to get your money back. Good luck!

3.  The Police won’t help you.

Because the scenario doesn’t meet the legal definition of fraud, the police tell you it’s a civil matter and not their problem. When this happened to me once, I was told, it’s my own fault for doing business with the guy. I guess it was, it just hurt to be told so.

4.  It’s very profitable!

Let’s say our fraudster has 2-3 loads a day on the go. Pretty easy for someone to manage. Typically, they don’t go for $1000 loads either. They pick a really good paying one. Toronto to California, or Georgia to Vancouver. Full loads, long miles. They could fetch $5000 – $6000 per transaction x 3 per day x 45 days (before anyone comes looking for money) = about $500,000 for a month and a half’s work. All in cash! 100% profit. No overhead. Sometimes I think, wow! What a great business. It’s totally legal and profitable! As long as you hide the money away and have no assets, no one will bother suing you to get it back. Heck, now a day’s you can even do it from another country with a local Skype number. No one will know the wiser.

5.  It’s super easy to prevent!

The above scenarios are easy to prevent with a little bit of diligence. Listed below are some best practices aimed at reducing the potential for theft and fraud related to transportation

1.  Have a system to give unique pick up and delivery numbers to every shipment. Give this number only to an authorized representative of the transportation company you are dealing with. If a driver does not present a valid number, you shouldn’t load him or unload him.

2.  Know who you are doing business with:

  • Check insurance policies are valid by calling the carriers agent to verify
  • Check online resources like the FMCSA to confirm the carrier is authorized to move freight and has a valid license to do so.
  • Check the phone numbers on the website vs. FMCSA vs. the guy you’re talking to. This will prevent someone posing as a “real” carrier from calling you to solicit freight, only to steal it.
  • Google the carrier’s address. A trucking company is pretty obvious from Google on satellite. If the carrier’s address turns out to be a strip mall, PO box, or a residential area, you may want to ask a few more questions.
  • Call the carrier from the number on their website. Ask for the person you are talking to. This confirms they work there and are a valid representative of the company you think you are speaking with.
  • Ask for references of other customers, and call them! Make sure the references given haven’t just started doing business a couple of weeks ago. This should be a red flag. You’re looking for longtime customers.
  • Do a credit check. Do you really want to give $100,000 worth of your product to someone on the verge of bankruptcy. Probably not. Check! It’s important. Plus, how likely do you think a carrier on the verge or bankruptcy is going to be to pay a claim.
  • Google the carrier. You’d be surprised what you might find out. There are lots of blogs and complaint websites about fraudulent carriers. They may have already committed fraud somewhere else.
  • Develop an in-house “do not use list”. If you’ve disqualified someone once. Don’t give them the opportunity to try and fool you again. Keep a list.

Hopefully, this will help keep the industry safe and clean for everyone. If everyone is a little more diligent we can prevent bad things from happening. If I had one more piece of advice to offer it would be to be extra diligent on that 4pm on a Friday afternoon rush emergency shipment. The fraudsters wait for these. They know when time is of the essence that all the checks and balances sometimes get thrown out the window. Don’t let it happen to you.

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5 Incredible Things You Probably Didn’t Know About Carrier Fraud

1.  It’s easy!

A fraudulent carrier just has to show up at your dock and say, “hey, I’m here to pick up that load going to Texas”. If you don’t have controls in place, he gets loaded, drives away and you never see him again. You’re shipment is stolen and there’s very little you can do about it. Many shippers don’t understand the potential for fraud and their shipping/receiving departments are not properly trained to understand the potential.

2.  It’s not illegal!

A smart fraudster can set up a scam so that it’s not even illegal. Here’s how. A fraudulent party will buy a bankrupt carrier for peanuts. Then, go out and solicit to pick up freight. Let’s say you normally pay $1800 from Chicago to Toronto.

The fraudster calls you and says,
“hey, I really need to get my truck home, I’ll do it for the cost of fuel, how’s $1000 bucks sound?”
You think, “Great, what a deal!”.

The fraudster then faxes you over a license and authorities that have been active for years and they check out. He sends you an insurance certificate that looks good. Everything checks out. You give him the load. So now the fraudster goes to work. He contracts with another carrier to move your load for $2000, which he has no problem doing since the going rate is $1800.

You might be thinking, how does this make sense?
Just wait.

Once the load is picked up and delivered and you’re very happy with your $1000 dollar shipment, the fraudster calls and says,

“Hey, do you guys offer a discount for quick payment?”
“Sure, you say, 5% discount if we pay early.”
“Wow this just keeps getting better!” your thinking.

So you pay the guy $950 bucks. I mean, you have a valid proof of delivery and you can verify everything went smoothly, right? Now here’s where you get stung. 30-60 days later, the carrier that actually moved your shipment comes looking for money. The other guy closed up shop and is long gone. You end up in a really messy situation and may have to pay the other carrier’s freight bill to boot! How is this not illegal? Surprisingly, it’s not. You contracted with the guy to perform a service, he did and you paid him. As long as, he performs work under the contract, it’s not fraud (by definition) it’s a civil matter and you have to sue to get your money back. Good luck!

3.  The Police won’t help you.

Because the scenario doesn’t meet the legal definition of fraud, the police tell you it’s a civil matter and not their problem. When this happened to me once, I was told, it’s my own fault for doing business with the guy. I guess it was, it just hurt to be told so.

4.  It’s very profitable!

Let’s say our fraudster has 2-3 loads a day on the go. Pretty easy for someone to manage. Typically, they don’t go for $1000 loads either. They pick a really good paying one. Toronto to California, or Georgia to Vancouver. Full loads, long miles. They could fetch $5000 – $6000 per transaction x 3 per day x 45 days (before anyone comes looking for money) = about $500,000 for a month and a half’s work. All in cash! 100% profit. No overhead. Sometimes I think, wow! What a great business. It’s totally legal and profitable! As long as you hide the money away and have no assets, no one will bother suing you to get it back. Heck, now a day’s you can even do it from another country with a local Skype number. No one will know the wiser.

5.  It’s super easy to prevent!

The above scenarios are easy to prevent with a little bit of diligence. Listed below are some best practices aimed at reducing the potential for theft and fraud related to transportation

1.  Have a system to give unique pick up and delivery numbers to every shipment. Give this number only to an authorized representative of the transportation company you are dealing with. If a driver does not present a valid number, you shouldn’t load him or unload him.

2.  Know who you are doing business with:

  • Check insurance policies are valid by calling the carriers agent to verify
  • Check online resources like the FMCSA to confirm the carrier is authorized to move freight and has a valid license to do so.
  • Check the phone numbers on the website vs. FMCSA vs. the guy you’re talking to. This will prevent someone posing as a “real” carrier from calling you to solicit freight, only to steal it.
  • Google the carrier’s address. A trucking company is pretty obvious from Google on satellite. If the carrier’s address turns out to be a strip mall, PO box, or a residential area, you may want to ask a few more questions.
  • Call the carrier from the number on their website. Ask for the person you are talking to. This confirms they work there and are a valid representative of the company you think you are speaking with.
  • Ask for references of other customers, and call them! Make sure the references given haven’t just started doing business a couple of weeks ago. This should be a red flag. You’re looking for longtime customers.
  • Do a credit check. Do you really want to give $100,000 worth of your product to someone on the verge of bankruptcy. Probably not. Check! It’s important. Plus, how likely do you think a carrier on the verge or bankruptcy is going to be to pay a claim.
  • Google the carrier. You’d be surprised what you might find out. There are lots of blogs and complaint websites about fraudulent carriers. They may have already committed fraud somewhere else.
  • Develop an in-house “do not use list”. If you’ve disqualified someone once. Don’t give them the opportunity to try and fool you again. Keep a list.

Hopefully, this will help keep the industry safe and clean for everyone. If everyone is a little more diligent we can prevent bad things from happening. If I had one more piece of advice to offer it would be to be extra diligent on that 4pm on a Friday afternoon rush emergency shipment. The fraudsters wait for these. They know when time is of the essence that all the checks and balances sometimes get thrown out the window. Don’t let it happen to you.

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$1340 Dollars Raised for the You Be The Chemist Drive

 

DSN Chemical Transportation is happy to announce that for the first month of our fund raising drive for the You Be The Chemist program, $1340 dollars have been raised.

DSN committed to donate $10 per shipment made by every CACD member between November 1, 2011 and January 31, 2012. Further details can be fount at:

You Be the Chemist Fund Raising Drive

The 134 shipments made under the program came from 8 different CACD members.

We thank the membership for their support of the program. Our goal is to raise over $5000 for the YBTC campaign. Keep those shipments coming!

 

 

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How a Little Bit of Diligence in Carrier Selection Can Avoid Some Serious Problems.

By Paul Stevens, General Manager
DSN Chemical Transportation
www.chemicaltransportation.com

C.H. ROBINSON
$23,700,000
(Sperl et.al. v. C.H. Robinson)

C.H. ROBINSON
$23,750,000
(Schramm v. Foster)

Browning-Ferris
$719,237
(Puckrein v. ATI Transport)
The three cases listed above set some serious precedents in relation to how you manage your carriers and how you should qualify the safety of the carriers moving your freight. If you want to read the cases in more detail, please Google them to find a more in depth explanation of each individual case.

My objective today is to convince you that carrier selection and management has some serious implications for your business and you need to take it seriously. I know with budget cuts and downsizing, many companies like yours have done away with the traditional transportation manager position and have re-assigned this workload to purchasing, or pushed it down to customer service. In these scenarios you have people unfamiliar and inexperienced in the trucking industry buying freight services. Buying freight services is not like buying office supplies! There are many contractual and safety issues to consider before engaging the services of a transportation provider.

General Liability Insurance:
There are statutory minimum levels of insurance required by your carriers. In Puckrein v. ATI Transport, the shipper did not ensure the carrier had the proper insurance and was ordered to pay damages to victims of a traffic accident. It’s critical to have a system in place to monitor and verify that your carriers have valid insurance in place. You can do this by obtaining a certificate of insurance from their insurance company.

Cargo Insurance
Did you know that freight picking up in the US is covered under US law, more specifically, the Carmack Amendment? This means that it rides at full value and the carrier is liable for full value in the event of a claim. However, read your fine print! Many carriers can, and do offer you pricing discounts in exchange for limited liability. I’ve seen some as low as 10 cents a pound. Be careful make sure you ask the question, especially with high value freight.

Did you know your carrier has no liability if your freight is damaged by: Act of God, Act of Civil Authority, Inherent Vice in the Goods (ie: insufficient packaging), or act or omission on behalf of the shipper (like loading it properly). You should have insurance that covers your goods in transit and specific situations where your carrier is not liable.

Did you know that freight originating in Canada has a maximum carrier liability of $2.00 per pound? If you declare more, you will be charged a fee, if you don’t declare a value $2.00 per pound is all you’ll get in the event of a claim.

It’s good practice not to be named as an “additional insured” on a cargo policy. You may limit your right to file a claim under the policy. You can’t file a claim against yourself!

Does your transportation broker have Errors and Omissions Insurance? They should! In a case where your broker “forgot” to tell the carrier to heat a freezable shipment in the winter, the carrier would be off the hook because they were not contracted for heat. The broker would have to take on the liability of a cargo claim in this situation. You need to ensure they have coverage.

How much is the deductible? Your transportation provider may be reluctant to pay a sizable claim if it’s under their deductible on the policy.

Workers Compensation
If you’re contracting with Ontario based carriers, you should have a WSIB clearance certificate on file for the carrier or transportation provider you’ve contracted with. If your subcontractor is not in good standing with the WSIB, you could be liable for their WSIB premiums as a percentage of the contract cost you paid them. This is scary! They can go back years. Make sure you have a WSIB certificate on file for any transportation provider based in Ontario that you do business with.

Cargo Theft
There are more and more cases of identity theft in the transportation industry. A typical scheme is where a “thief” poses as a legitimate carrier and then gets all the credentials to pick up a shipment. The thief carrier goes in and picks up a shipment, never to be heard from again. You can reduce the risk of this by doing your homework and checking insurance certificates, the carriers website and real phone number, check with the FMCSA to make sure the carrier has an active operating authority, and if the rate seems to good to be true, it probably is.

Safety
In the Schramm v. Foster case, the central issue was the safety rating of the carrier involved in an accident. You should be checking SAFERSYS to make sure your carriers have a SATISFACTORY safety rating. This is easily done on line and should be monitored regularly, because it can change. If you are using carriers with CONDITIONAL or UNSATISFACTORY safety ratings you could be putting your company at risk in the event the carrier gets in an accident where there are injuries or death.

In addition to SAFERSYS, there is a new safety rating program that started in late December 2010. It’s called CSA – Compliance, Safety, Accountability . It’s a safety ranking system that ranks a carrier on seven BASIC’s Each BASIC is a safety related category that ranks the number of violations and warnings for the carrier against all carriers in the industry. There is a threshold value for each one. Once exceeded, it opens the carrier up to greater inspections and interventions by the FMCSA. In the context of due diligence you should know if your carriers have any safety alerts (above the threshold value) in any safety categories. This is a great program, but it puts more onus on shippers to check up on the carriers they are contracting with.

Conclusion
Contracting with a carrier or transportation provider is serious business. It’s not like sending a package by FedEx! There are complicated rules and regulations that govern transportation contracts as well as, a history of common law practice. Most of the time, if nothing goes wrong, no one notices. In the event of a chemical spill, an accident, a cargo claim, or cargo theft, everyone goes looking for someone to blame. Don’t let that person be you. Make sure you have a tight policy on carrier selection and qualification and make sure you have clearly defined who can approve new transportation providers.

A little due diligence comes in handy when the worst happens.

If you would like a free review of your carrier selection program, please contact the author at:

paul.stevens@chemicaltransportation.com

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