How to keep freight moving when it seems like the whole world is conspiring to slow it down.
Logistics professionals who rarely in the past let the word “expedite” pass their lips now find they’re ready to pay more for extra speed. Facing slow procurement pipelines and heavy transportation congestion, companies turn to premium freight services to keep production humming, inventory moving, and store shelves stocked.
“Expedite is becoming not an emergency option, but the option,” says Brian Bourke, chief growth officer at Seko Logistics in Itasca, Illinois, which counts time-definite transportation among its core solutions. Costly though it may be, expediting is the least bad option when the alternative is back-ordering products, failing on customer commitments, or shutting a factory, he says.
Companies are even paying extra to speed routine deliveries of mundane commodities. “Every time they’ve put in an order for bottles, they’ve gotten their bottles,” says Craig Laughlin, senior business development executive at Zipline Logistics in Columbus, Ohio. “Now suddenly they have to wait two weeks.
“If it’s going to cost a few hundred dollars more to get a product in time to make a production run, that’s just the world we’re living in,” he adds.
Shippers have historically viewed expedited transportation as waste in the supply chain, a sign of poor planning. “But now it has almost become a rite of passage,” says Daniel Harms, president of the Americas at Optimas Solutions in Wood Dale, Illinois.
A distributor and manufacturer of fasteners and other manufacturing components that also manages inventory for many of its customers, Optimas pays a premium these days to overcome obstacles such as weeks-long delays in ocean transit.
“We are taking advantage of expedited services when necessary to meet demand,” Harms says. The company works with customers to mitigate the need to expedite when possible.
“But due to the current market environment, we are using courier services and putting charters in the air more when circumstances warrant it,” he adds.
The Many Faces of Expedited
Expedited freight is not a specific set of modes or services. “Expediting is just upgrading over what you would have done before,” says Laughlin.
If you normally ship by intermodal rail, you might speed things by going over the road. If your usual less-than-truckload (LTL) service can’t meet your deadline, you might try a full truckload carrier, an exclusive use (or “hotshot”) vehicle, or air cargo, depending on your budget and needs.
One of Seko’s expedited offerings is next-flight-out, which puts freight on a scheduled flight immediately. “But we also do air charters that can be international or domestic,” Bourke says. Seko has chartered aircraft as small as a Cessna and as large as an Antonov, the world’s largest cargo plane.
In late 2020, XPO Logistics tailored an air service for a large automotive supplier whose production and deliveries had been running late. “We worked with our customer to create a dedicated air route and put the plane into a closed loop, capable of making multiple trips a day to deliver supplies,” says Drew Wilkerson, president, transportation North America at the Greenwich, Connecticut-based third party logistics (3PL) provider. This solution was more reliable and cost-effective than going to market each day to find a plane.
Another option is expedited ocean, which costs more than standard ocean service but offers faster delivery. “Expedited ocean actually saves shippers money by speeding up their supply chains on the inbound side,” says Bourke, whose company offers this service.
“We’re even doing ocean charters now,” he adds. “We’re bringing charters into ports such as Portland, Oregon, and Jacksonville, Florida, because there’s no congestion there.”
The charter vessels are far smaller than standard containerships, with a capacity of 500 or 1,000 twenty-foot equivalents (TEUs). When time is of the essence, smaller can be better.
“Offloading a 20,000-TEU ship can take days if your container is all the way on the bottom,” Bourke says. Freight transported on smaller ships gets off the water much faster.
Optimas uses a different strategy to get ocean containers loaded and unloaded promptly. “We pay for preferred status at a lot of ports, just for the privilege of not being at the end of the line,” Harms says. “It doesn’t guarantee that we’ll be at the front of the line. But negotiating those partnerships with a lot of the ports and steamship lines has allowed us to mitigate some of that delay.”
Alternatives to Expediting
In the struggle to keep product moving these days, expedited freight isn’t always the answer. Shippers and their service providers also find creative ways to avoid the need to spend extra on transportation.
One strategy is to source differently. “Some companies have backup vendors on some of the products that they’re sourcing regularly, their highest-volume items,” Laughlin says. “That’s one way we’ve seen shippers avoid some big issues and delays, which then go hand-in-hand with expedited shipment.”
Recent transportation snarls have prompted many companies to source product closer to home, rather than from Asia. Optimas has done that. It also uses its in-house manufacturing capacity to avoid high-priced transportation.
“One of the first solutions we look at, before we expedite, is whether we can make a product in-house in three weeks, versus having to try to source it,” Harms says.
Storing inventory closer to customers can also eliminate the need to expedite, because product doesn’t need to travel as far. For example, Optimas recently opened a distribution center in Monterrey, Mexico, in an industrial park where several of its customers also have facilities.
XPO also sometimes cuts miles out of the supply chain to reduce transportation challenges.
“We’ve seen our customers manage situations in which they’ve brought in product assumed to be critical, but ultimately didn’t need as quickly,” Wilkerson says. That product sat in trailers, tying up carriers’ equipment.
“To solve this problem, we opened new facilities to help customers bring product closer to their end locations,” he adds.
Pegasus Logistics Group in Coppell, Texas, takes a similar approach with some customers, encouraging them to use, among many other options, forward stocking locations rather than keep all their inventory in one warehouse, if that is viable for the client.
“That way, we can source from a regional, Newark-based warehouse if a shipment is destined for Boston, rather than sourcing from, say, a Dallas-based national warehouse location,” says Heath Shoemaker, the company’s executive vice president of solutions.
“When it’s time for speed-to-market, and you have the ability to raise inventory levels a bit, place your product in strategic regional locations and cut some of that transit time,” he suggests.
Creative routing can also help. For some shippers, XPO has created round-trip regional transportation solutions, providing fleets to cover dedicated and ad-hoc lanes. “These solutions help the customer and carrier manage costs by having regular lanes between two points without paying for expedite,” Wilkerson says.
Pegasus sometimes avoids the congested Port of Long Beach by routing shipments through Mexico and then transloading onto trailers for transport into the United States, says Chad Heller, the company’s executive vice president of global development.
Transloading can also be a lifesaver for freight that would otherwise get stranded at ports because ocean carriers don’t want containers tied up for weeks in intermodal moves. “We have a client with 752 containers that are coming into the Port of Los Angeles and the East Coast that will not make it to their stores pre-Christmas without terminating at those ports and having us come in and do the drayage and transloading,” says Hiram Hartnett, executive vice president of sales at Pegasus.
Finally, companies can use data analytics to improve demand forecasts, reducing the need to rush in more product when demand spikes catch them by surprise. Optimas uses demand forecasting tools powered by artificial intelligence (AI), coupled with a data visualization tool, to get early warning about potential demand spikes.
“It may mean we need to purchase a replenishment order ahead of what would be considered normal in the cycle,” Harms says. “Ideally, it takes weeks out of the replenishment order’s lead time, because we’re triggering a buy much sooner than we would have.”
Stay in Touch, Work Together
Whether a company expedites or uses a different strategy, communication and collaboration are essential tools for getting freight where it needs to be.
“If we pay more for an expedited move, we might call in some favors from the warehouse as well, asking whether they can stay late, come in early, or give us priority,” says Laughlin. “Those are all things that we [and the shipper] need to work on together to make it go well.”
When a shipper keeps a 3PL informed about upcoming shipments, the service provider has time to locate the right equipment and develop efficient routes. “The more we can work to be up front in the planning and forecasting schedule, the more we can advise about how to meet expedited needs,” says Shoemaker.
Maintain accurate data about inventory and product demand, advises Harms. “Without the right master data management strategy, or the right data coming in to have conversations with your suppliers or customers, you’re almost set up to fail in today’s environment,” he says.
Wilkerson offers three pieces of advice for managing expedited shipments:
1. Work with an experienced provider that has multiple escalation contacts to ensure time-sensitive shipments are delivered on time.
2. Find a provider that can meet your capacity needs and offer visibility into the status of your freight.
3. Evaluate buying criteria beyond price and consider all potential solutions.