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A shipper's guide: how to win in the sport of freight transportation.

Yikes! Soon you'll need to ship 20 consignments of your hot-from-the-manufacturer widgets to points throughout Alaska and the Lower 48.

Relax. Although the Great Land's distances, scattered population centers and remoteness from the Lower 48 can pose difficult distribution problems, carriers and freight middlemen offer a wide range of ways to move your goods by land, water and air. Whether shipping to or from Alaska, you'll fare better in the sport of transportation if you develop a strategy for success.

Start by taking an inventory of your shipping needs. Consider whether the goods require special handling, such as refrigeration; the weight, value and dimension of freight; how often transport is anticipated; the number and proximity of destinations; and how fast delivery must be accomplished.

Next, be sure to resolve the obligations of buyer and seller. Determine who is responsible for loading and shipping goods, at exactly what point ownership changes hands, and who is responsible for filing claims for any damage or loss. A variety of free on board -- popularly called FOB and meaning the seller agrees to load the freight for free -- arrangements are possible.

Discuss with customers and suppliers which would be best for particular freight movements. Remember that an Outside supplier might not know the most efficient way to ship to Alaska and may pass the cost on to you.

When evaluating carriers or agents, make sure the businesses can make the necessary connections with the appropriate equipment. Ask if the company offers conveniences such as single billing, rather than bills from all the carriers along the route, and door-to-door service. Also consider how long the enterprise has been in business, its policy and track record on damage claims, and its ability to trace shipments.

Sean O'Hare, sales manager for Alaska Fish & Farm of Anchorage, advises shippers that the cheapest rate available may not always be suitable for the purpose. Alaska Fish & Farm ships foods from the Lower 48 to Anchorage and then to Fairbanks, Kenai Peninsula and Bush locations. O'Hare points out that if slow but inexpensive shipment causes workers to be idle because they don't have the equipment they need, your shipping costs may total more than you think.

One of the most important decisions is resolving how quickly the goods must arrive at a destination. Because speed costs money, planning ahead to prevent rush shipments can reduce costs.

If the shipment must be delivered a substantial distance overnight, air freight is required. When the cargo is not particularly time-sensitive, barge or steamship transport will minimize freight costs.

WAYS & MEANS

Air. For freight that must move quickly, and for some Bush locations that are not accessible by road, air shipment is the only solution. Also, many fragile cargoes, such as works of art or sensitive electronic gear, travel best by air.

Linda Close, senior account executive with Lynden Air Freight of Seattle, reminds shippers who do not require overnight airborne service to consider second-day air or deferred service of three to five days. Rates drop 50 percent for each level of service, she advises. For shipments weighing from 1 to 70 pounds, Close suggests a small-package delivery firm such as United Parcel Service.

Unlike fares for surface and water transport, air freight tariffs are the same for all goods and are billed by weight or volume, whichever is greater. To fully insure highly valuable shipments in case of damage, however, a shipper should declare their values, which raises costs. According to Close, routing business through one air freight forwarder can generate substantial volume discounts.

Within the state, Alaskans can ship by air quickly and cheaply to Bush areas using the U.S. Postal Service's bypass mail option for locations accessible only by air. This service bypasses the post office; the shipper delivers goods to the airline assigned delivery responsibility. Packages must be 70 pounds or less and have a total combined length and width of not more than 108 inches.

To qualify for bypass mail, a company must have its own postage meter licensed in Alaska. An application must be filed with the post office, and a sample of mailing labels must be approved by the post office. A minimum shipment of 1,000 pounds per addressee is required. Check with the post office for requirements and restrictions; for example, construction and hazardous materials cannot be shipped by bypass mail.

Trucking. In the most populated area of the state -- the corridor running from the Kenai Peninsula through Anchorage to Fairbanks -- many goods move by truck. A variety of local and national truck lines offers overnight or next-day service within this region, and two- or three-day service to Haines and Prudhoe Bay. Many companies will consolidate smaller loads into full trailers for hauling, while still others specialize in hauling only trailer-size loads in their own or shippers' equipment.

To transport freight Outside, some shippers prefer to deal directly with larger carriers such as Consolidated Freightways, Yellow Freight and Roadway Express. These companies can provide service throughout the country and handle the details of consolidating less-than-truckloads. Their trucks move in and out of Alaska by ship and barge.

Chuck Onstott, Anchorage terminal manager for Roadway Express Systems, based in Akron, Ohio, says a chief advantage of dealing with a large carrier is that, in case of damage, there is only one company to deal with. According to Onstott, price often is a shipper's main concern when choosing a trucking firm, because the length of hauls in the Alaska market can be expensive. But he cautions, "You have to look past expense and consider financial stability. We've lost several companies in the last few years. Most of these are small companies with small margins."

Train. In the Railbelt, the state-owned Alaska Railroad offers low-cost transport to points between Whittier and Fairbanks. The railroad connects with barge lines in Whittier, so train shipments can come and go from anywhere in the Lower 48.

The railroad's strength is in moving large volumes of heavy materials such as coal, pipe, bulk petroleum products, gravel, and oilfield equipment and chemicals for North Slope producers, as well as bulk shipments of general commodities such as dried foods. Special cars are used for coal and fluids, and "piggyback" rail cars carry marine containers or trailers.

Alaska Railroad offers overnight service between Fairbanks and Anchorage, and most goods on that route arrive within 12 to 14 hours. In November, Alaska Railroad Corp. added extra trains to improve service. Since more goods are shipped into Fairbanks than out, rates for freight headed south are cheaper.

Barge & Ship. Barges bring a lot of the goods from Outside, mainly from Washington state. But they don't bring them in a hurry. A tug averaging eight knots will take about 10 to 14 days to haul a barge from the Seattle-Tacoma area to Anchorage. Shipments going as far as the Arctic coast take about 22 days, and weather conditions can delay trips by as much as two weeks.

In addition to being an inexpensive means of transport, barges' flat bottoms and shallow drafts allow them to call on towns inaccessible to ships because of ice movement in the winter or a naturally occurring shallow sea bottom. Barges also ply Alaska's major rivers in the summer. Because of the short season, it's best to book space ahead of time when shipping to river ports and many northern locations in the state.

Fluids, particularly heating oil, motor and aviation fuel, and bulk lubricants, typically are moved aboard barges, as are building and construction supplies, heavy machinery and automobiles. Barges deliver the gigantic gas-handling expansion and other equipment to Prudhoe Bay.

Barges can carry either containerized cargo, usually loaded by crane, or break-bulk cargo. Some barges carry railroad cars on rails welded to the decks, while other barges transport trucks that roll on and roll off (ro-ro barges). Refrigerated barges that monitor temperatures are available for perishable items such as foods, florals or pharmaceutical drugs.

Faster water transport is available by propelled ships, which take about three days to make the trip from Seattle-Tacoma to the Anchorage area. Most of the time-sensitive and more valuable goods coming into Alaska, such as food, housewares, mail, new cars and furniture, travel by the faster liners rather than by barge.

The two large marine lines, Totem Ocean Trailer Express and Sea-Land Service, each operate three ships carrying container cargo. Sea-Land hauls marine containers that are off-loaded onto trucks or trains. TOTE moves roll-on roll-off cargo, including truck trailers and containers mounted on chassis. The two companies' diesel-driven ships offer a variety of services for perishable commodities and other goods that require special handling.

According to Kathy Lorec, sales manager for Span-Alaska Consolidators of Seattle, very few consolidated or less-than-truckload shipments move by barge. "It's slow, and the rate structure right now is such that the difference between barge and steamship is not that great. Barges are used largely for items that won't fit in the steamship, such as 90-foot concrete beams used to build freeways."

AGENTS

There are at least as many different ways to arrange for shipping as there are transport options. Because such a large proportion of Alaska's goods come from Outside, the state is served by a competitive freight-forwarding and freight-consolidating market.

Many companies in Alaska are both freight forwarders and freight consolidators. Generally speaking, forwarders are responsible for getting the freight to its destination, while consolidators combine shipments either physically or in the way they are billed.

By combining the less-than-truckload shipments of many shippers, freight consolidators can take advantage of volume rates that the ocean carriers offer. A truckload is usually defined as a 40-foot van of from 30,000 to 40,000 pounds. In addition, contracting with forwarders and consolidators offers the convenience of dealing with only one company if the shipment moves by more than one carrier.

Forwarders and consolidators also interpret tariff schedules, which often are difficult to use for small shippers. Forwarders provide this service at a cost to the small shipper by taking a portion of the "spread," the difference between large shipments and small shipments.

Says Span-Alaska's Lorec, "The difference here in Alaska between freight forwarders and freight consolidators is really a matter of semantics. Shipping in Alaska is a lot different than in the Lower 48. In the rest of the country, billing is based on the amount on the bill of lading. In Alaska, in general, the major ocean carriers charge by volume per week." For example, a shipper that has 1,000 pounds of freight leaving Thursday and 9,000 pounds leaving Saturday can receive a cheaper rate for 10,000 pounds because the consolidator bills both shipments together.

Says Lorec, "The first things to consider are how much you ship and how frequently and what commodity you're dealing with. There are different rates based on about nine different factors that determine why one commodity would take a different rate than another -- variables such as density, value and ease of handling."

Another transport middleman is the freight broker. Margy Reich, owner of Reich Transportation Services, an Anchorage-based freight broker, says brokers are not committed to any particular carriers and can make the best match between shipper and carrier. "We are a personal shopper for the shipper," explains Reich.

Shippers might also consider joining a non-profit shippers' cooperative. Although shippers' cooperatives formerly offered lower rates than did for-profit carriers, that is no longer always true since the trucking industry was deregulated in 1980.

Co-ops now compete by providing their members with special handling, convenient scheduling and advice. They also pay year-end dividends to members.

Alaska Outport Transportation Association is a Seattle-based shippers' cooperative with 250 members that provides scheduled service to 10 ports in Southeast Alaska and British Columbia. The organization also offers charter service to other Southeast destinations for both break-bulk and containerized cargoes. To join, an applicant must have a business license and pay a one-time $250 fee.

Another co-op, the Washington-Oregon Shippers Cooperative Association (WOSCA) based in Seattle, ships between Tacoma and Anchorage via Sea-Land and from Anchorage inland via Carlile Enterprises. The one-time fee to join is $325, $300 of which is kept in a fully refundable working capital account.

"We have a tremendous mix of customers and commodities," says Bruce Raney, director of sales for WOSCA. "About 60 percent of our customers are retailers. We have larger customers such as Nordstrom and Fred Meyers, but our ideal customer is the small to medium-sized entrepreneur."

LOSS & DAMAGE

There's a saying in the freight business that if you've ever shipped freight, you've had trouble. By picking the kind of service you need and shipping early, and remembering that in Alaska the weather can take a hand in anybody's scheduling, at least some delayed shipments can be avoided. But invariably freight will be lost or damaged.

Ken Neumann, Alaska general manager for MTI Inspection Services of Colorado Springs, Colo., says the shipper should deal with the contracted carrier for losses or damage. For concealed damage of a shipment, the consignee has 15 days to notify the carrier.

In the case of receiving visibly damaged freight from any carrier, Neumann explains that the consignee should make a note on the bill briefly describing the damage. Don't just sign the ticket or write "subject to inspection" on it, he advises.

According to Neumann, the recipient has nine months to file a claim with the carrier. The carrier has 30 days to respond and must update the recipient every 60 days. The consignee has two years and one day to file suit in court.

In the case of air freight, unless there is a declared value, the air carrier is only responsible for a certain amount per pound for damaged freight. Lynden's Close says some people don't realize the restricted liability of air carriers or try to save money by shipping without the declared value, which can be risky.

When transporting freight, it pays to do your homework. Assess your shipping needs as accurately and as far into the future as possible. Talk to your customers and suppliers. Compare rates and schedules, and call around to see where to get the service you need for the best price. Also, heed the advice of one seasoned shipper: Alaska Fish & Farm's O'Hare says, "Ask your customers what their needs are, find out what the competition is doing, and then shop around."
COPYRIGHT 1992 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:shipping trade in Alaska
Author:Gerhart, Clifford
Publication:Alaska Business Monthly
Date:Mar 1, 1992
Words:2395
Previous Article:Honing the Arctic Edge.
Next Article:Casting about for solutions.
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