iTECH: Can Technology Lift the LTL Barrier?

By Amy Zuckerman, Contributing Writer

This article appears in the April/May issue of iTECH, published in the April 13 print edition of Transport Topics. Click here to subscribe today.

Conga lines of idle trucks waiting to clear U.S. customs are daily a fact for trade traffic at America’s major border-crossing points, north and south.

Aside from crossing during off-peak hours, about the only way to beat the backup is to qualify to be “green-lighted” through a FAST (Free and Secure Trade) lane — which is open only to electronically pre-cleared carriers and cargo.

There’s a certain regularity to life in the FAST lane: Truckload carriers serving automotive manufacturers in Canada and the “maquiladora” factories dotted throughout northern Mexico — which assemble duty-free components for export — routinely move the same type of shipment to the same consignee daily. These operations rely on expedited border crossings to meet just-in-time schedules.

But because a lot of security vetting is involved up and down the supply chain, the more complicated the load composition, the harder it is to qualify for a green light — so much so that most less-than-truckload carriers have been discouraged from participating.

“It’s a tricky proposition because the load factor is difficult,” said Greg Plemmons, vice president of OD Global, a service of Old Dominion Freight Line, Thomasville, N.C.

Old Dominion, No. 20 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada and No. 6 in the LTL rankings, is working on a homegrown plan to make preclearance viable for at least some of its inbound land movements.

A little technological help is in order.

Ultimately, improved radio-frequency identification cargo tagging and Web services could broaden the appeal of preclearance for international LTL movements, some experts say.

First, here’s why preclearance is not a simple deal: Not only must the trucking company win certification as a trusted carrier — under the Customs and Border Protection agency’s awkwardly named Customs-Trade Partnership Against Terrorism — so, too, must the “importer.”

Likewise, the truck driver needs a FAST card with a microchip, which, in effect, attests that the driver, like the cargo, is a low security risk.

Expedited border crossing is a problem for LTL because individual packages and goods from different sources, bound for different destinations, are brought together in one trailer. With security requirements stretching along the supply chain, all those “importers” have to be cleared in C-TPAT if the truck is to get the green light in the FAST lane.

“You have all these different consignees, some with different customs brokers. As soon as you consolidate one box [without C-TPAT clearance], any shipment can get red-lighted,” said Troy Ryley, director of transportation for Transplace Distribution, a division of Transplace Mexico in Laredo, Texas. Transplace is a non-asset-based third-party logistics company that was founded by some of the largest LTL carriers in North America.

Even though Old Dominion is close to earning certification, most of its international customers are not. As Margaret Irwin, in charge of customs and other border-crossing issues for American Trucking Associations, described it, certification “isn’t a problem on the trucking side, but many small importers don’t want to bother with it.”

Old Dominion’s database holds the names of about 70,000 customers, some of whom ship across several borders.

When iTECH spoke with Plemmons, OD Global was polling customers, and the survey indicated about 5% were currently compliant.

The company is working on an internal C-TPAT cargo-tracking system that, when complete, will be able to identify these customers and cross-reference them with daily shipments. Then OD Global will be able to load U.S.-bound dedicated trailers with C-TPAT cargo only — clearing the way to the FAST lane.

A new generation of RFID products holds promise for cross-docking, distribution and other sorting operations to quickly identify C-TPAT-tagged items and funnel them to dedicated trailers.

At this point, though, “most of our customers aren’t using RFID at the shipment level,” Plemmons said. “We use a separate scanning system with the phone number on bar code.”

The idea is that products based on RFID standards under development could lead to more advanced tags for separate cargo pieces, pallets and so on, and an on-board wireless data collection and trans-ponder system.

And a Web services platform could help shippers prepare their goods for U.S. delivery.

Small-to-midsize businesses tend not to use the electronic data interchange that has been the mainstay of automated carrier-customer delivery transactions since the mid-1990s. EDI transmissions are coded in specific message sets unique to the shipper, and working with a multiplicity of these codes is resource-intensive.

Although hailed as a major breakthrough 15 years ago, EDI today is considered cumbersome compared with the ability to send the same data over secured electronic or Web-based networks using common markup languages.

Web-based interfaces are an option.

Ryley said Transplace offers an online platform, capable of handling EDI message sets, that lets shippers and carrier partners share customs-related information. This platform means even the smallest mom-and-pop shippers, logistics companies and other trade professionals can work with each other using just a PC and Internet connection. They are spared having to fax paperwork or key in large amounts of data — which Ryley argued not only saves times but improves data accuracy.

“The combination of the right technologies mean benefits to the LTL carriers, not just shippers,” Ryley said. Transplace’s system grabs data from a carrier’s or customer’s database for combining and consolidating freight at the order level.

In time, Ryley said, Transplace is going to segregate customs-certified freight from all the rest.

Technology aside, Ryley agreed with other people interviewed for this article that “the root solution” to expedited LTL land shipments into the United States is for importers to get their C-TPAT certifications.

Without them, FAST lanes, RFID tags, electronic manifests and Web pages won’t do much good.