Freight Basics

/Freight Basics
Freight Basics 2017-09-27T21:26:01+00:00

FREIGHT FOR THE BREWERY

Shipping and receiving is a crucial component of any successful business that produces a product for consumption. Beer, as a product, offers many unique challenges. Failure to get raw materials to the brewery in time disrupts the brewing schedule. The finished beer product has a built in vulnerability to time and temperature as well as regulatory hurdles that can slow or stop it from reaching consumers. This can make failure to get a shipment from A to B a very expensive mistake. This content is intended to provide brewers with the essential foundation of knowledge needed to prepare and receive shipments. With this information, costly mistakes and misunderstandings can hopefully be avoided.

TLTruck Load – When shipping something that takes up over 16 feet (a large partial) to 53 feet of a trailer and/or up to 44,000 pounds, this is considered a Truck Load. When shipping a truck load, you are paying for the whole truck which will then deliver your goods from point A to point B. These carriers are major trucking company names and dominated by small independent and owner operators.

LTLLess-than-Truck Load – When shipping anything less than 16 feet (6 to 8 pallets or less), you are shipping LTL. This means you will be working with a national trucking company and your freight will be sharing a trailer with other shippers. Your goods will not go directly to your requested location. Instead, the local terminal picks up your goods and returns to the local cross doc. Here, your pallets are married with other shipments going in the same direction. Your goods will then be transferred from hub to hub until they reach they’re destination. Transit times will be slower than TL shipments but the cost is lower as you are only paying for a portion of the trailer.
Common LTL carriers: FedEx Freight, R&L, Estes, UPS, YRC, Old Dominion

Dry Van – A dry van truck/trailer has no refrigeration unit on it. Most dry van trailers are air-ride, measure 53 feet long, 102 inches wide, 9 feet inside height, and can usually haul 43,000 – 44,000 lbs. Less expensive than a reefer, more dry van options are available on any given day to take your freight. Standard 53-foot dry van trailers will hold 26 40×48 shipping pallets.

Reefer – These temperature-controlled trailers will keep the beer cool and “freeze protect” the shipment by keeping the product above freezing temperatures during the winter months. Typically 53-feet in length and a little over eight feet wide, reefers can haul up to 44,000 lbs. of cargo. However, many reefers are required to carry less than the maximum weight as the empty trailer alone weighs more than a dry van. The total weight of the tractor/trailers/cargo is calculated to remain below the max legal limit for road travel. Dry loads can also be shipped via reefer trailer.

Estimating Load Weight – When shipping LTL, you are paying the carrier on a weight-based rate or tariff. The rate is determined by keg and pallet weight, linear feet, standard local pick-up, delivery fee and service requirements (lift-gate usage, strict appointment time, freeze protect, etc.). Booking LTL freight with an accurate weight is extremely important.

  • High estimations can lead to over-spending and lost money. LTL carriers will not issue refunds if freight is found to be lower than the original estimation.
  • Low estimations will incur “re-weigh” penalty fees as well as deficit coverage. You will have to make up the difference in price.

Your estimated total load weight is not just how many cases of beer or combined keg weight, but the pallet(s) weight also needs to be included in those calculations.

Pallet weights for estimated load calculations:

  • Standard pallet – Approximately 25 lbs.
  • Heavy duty pallet – Approximately 50 lbs.

* If you are shipping internationally, please go to www.usda.gov and search “wood packaging materials” for the latest regulations.

Shipping Class

Product Class – The next factor in your calculations to determination the cost of shipping.

It is important to know your product’s CLASS or NMFC code (National Motor Freight Classification) prior to booking a shipment. The LTL carrier determines your shipment rate based on the weight and class. Below are the most common CLASSES/NMFC codes. Ensure you are entering these correctly on your BOL (Bill of Lading) for proper billing:

  • CLASS 65, NMFC code 111470 – Beer – full product, Cases; glass or cans, Kegs all sizes.
  • (HB) CLASS 100, NMFC code 174610-06 – Empty kegs – ship 3 pallets high per stack. 1/2bbl kegs.
  • (SB) CLASS 92.5, NMFC code 174610-07 – Empty kegs – ship 3 pallets high per stack. 1/6bbl kegs.
  • (QB) CLASS 92.5, NMFC code 174610-07 – Empty kegs – ship 3 pallets high per stack. 1/4bbl kegs.
  • CLASS 70, NMFC code 99992 – Hops – Pellets compressed.
  • CLASS 100, NMFC code 99992 – Hops – Loose, Flowers, lighter per box.
  • CLASS 70, NMFC code 87700-09 – Glass – empty bottles, carboys.
Cases – A standard full stack of beer (approximately 60 – 72+ of either cans or bottles) could way between 1900 to 2200 pounds per pallet stack.

Kegs – Full kegs can be stacked two pallets high with each pallet weighing between 1200 to 1400 pounds. Important: The weight-bearing pallet at the bottom of the pile must be strong enough to hold the load).

Load shift:

The weight balance of the load you’ve created will shift in transit. Not only is this dangerous for shipping personnel, but for your load as well. You risk an increase in damage that the carrier will not pay for. To prevent load shifting, please do the following:

  • Shrink wrap and tie your cases/kegs to the pallet. Make sure the wrap extends around the base of the pallet to help secure the load.
  • Banding for kegs is preferable. If unavailable, use copious amounts of shrink wrap to hold them in place. Too much is never enough.

The main goal is to get the product to the wholesaler intact so please wrap as securely as possible.

Load Stacking:

  • Cases – standard load stacking
    • Do not stack too high. There is a greater chance of load shift during transit. 2200 pounds per pallet is a safe max weight per pallet position.
  • Kegs: Standard load stacking
    • 1/2 bbl. kegs, 8 per layer or 16 full max per one pallet position (2 stack)
    • 1/6 bbl. kegs; 20 per layer, 40 max per pallet position (2 stack)
    • 1/4 bbl. kegs, 14 per layer, 28 max per pallet position. (2 stack)
  • When shipping a full truck load of beer, you will need to “weight out” the truck in order to determine the maximum amount of product weight you can ship. 20 to 22 pallets is the average fill.

Temperature:
Every brewery, regardless of its size, has their own rules when it comes to full product and temperature. Below are basic guidelines:

  • Full beer being shipped overnight (with less than 16 hours of transit) can be shipped in a dry van regardless of the season.
  • Long distances, multiple drops, a transit longer than two days in the summer or winter months would constitute the use of a reefer.
  • Packaged beer gives you more leeway than draught.

Reefer Truck Load Rates:

  • Reefer rates run on the average of 50 cents/mile. Dry Van rates are far less expensive: 15 cents/mile.
  • Reefer LTL can be very expensive due to limited choices and timing. A flexible shipment schedule will increase your chances of finding a reasonable rate.
Inbound freight could include dry goods, glass, cans, malt, hops, new/used equipment and empty keg returns. Most suppliers will offer to sell your goods “delivered”. (Cost of unit plus freight). While this may seem like a good deal, there may be times you’ll be paying a premium for the freight component. Ask the supplier for the actual freight cost and compare their rates with an independent source.

When shipping tanks to the brewery, pre-planning is needed. It is very important to have exact specs so the right truck can be booked. Spot changes to the original plan can mean a loss in time and an increase in cost.

Shipping Empty Kegs

  • Empty kegs can be stacked three pallets high
  • Sizes can be mixed. HB, SB and QB are all the same height and can be mixed/matched on a pallet to create a full stack.

Weight Estimates for Empty Stainless Steel Kegs

  • 1/2 bbl keg – approx. 30lbs.
  • 1/4 bbl keg – approx. 22lbs.
  • 1/6 bbl keg – approx. 16lbs.

When to Schedule Pickups
Each brewer must decide between small keg loads or large keg loads.

Small keg loads:

  • Allows the brewery to turn kegs faster
  • More kegs are filled with the same size fleet (saving capital dollars – no need to buy additional kegs)
  • Return rate expense is higher per keg

Large keg loads:

  • Freight cost is less
  • Capital investment is higher as more kegs need to be purchased to cover the time between turnaround
How to File a Loss/Damage Claim

  • If your product is missing or damaged upon arrival, action must be taken at the dock with the driver present.
  • You or the wholesaler will be asked to sign the Bill of Lading (BOL). Do not sign anything until the receiving party has counted all the kegs, cases, etc.
  • If it matches, sign. If it does not match, still sign it but with an addendum declaring how many and what items are missing/damaged.
  • Take pictures of the damaged product.
  • Claim forms can be found on the carrier’s website. If you are using a third party to book your freight, it is their responsibility to file the claim and help you assemble all the required documents.
  • Once the claim form has been submitted, reviewed and approved, it can between 30 – 60 days to receive your refund check.
If a truck has to wait more than two hours to load or unload, you will be charged a detention penalty fee. Pricing starts at $50/hour.
Outsource: Work with a primary freight broker who handles everything. The brewery can negotiate a set “cost plus” arrangement or per pallet/case freight cost target.

Benefits to outsourcing:

  • Every order gets shipped on time, every time
  • “Just-in time” inventory: All goods are at the brewery when needed
  • Freight broker will take care of all shipping due diligence leaving you to oversee other aspects of the brewery

In-House: Works well with high enough volume. Look to hire a staff member with experience as a carrier or broker. They’ll have to be hyper aware of all beer order/shipment details as well as work with multiple brokers to insure you’re getting the proper rates for your brewery. The lowest cost may not always be the best option as it doesn’t necessarily guarantee prompt loading and delivery time.

Rail: Rail can provide reasonable savings over 2000+ mile distances. It works best with empty kegs but can use for full kegs as long as there is a way to maintain the proper temperature. Transit times are faster than anticipated. Most major lines, like Union Pacific, CSX, and BNSF, will do freight transportation and have regular east-west bound trains running seven days a week.

In most scenarios, the wholesaler will pick up full beer and return the empty kegs for free. For those who don’t, the brewer must decide how they will ship their product to non-local markets and how they will price out their finished goods. Freight cost becomes a factor in this equation and is handled in two ways:

  1. The beer is sold to the wholesaler FOB brewery dock. The wholesaler then has to arrange pickup.
  2. The brewery controls the carrier/broker as well as the shipment timing. They also cover the shipping and freight costs. The wholesaler will then ask for a freight allowance to arrange freight movement.

Finished Product Price Point

  • Start at the shelf: Fall in-line with the average price of a six-pack in your selected market(s).
  • Work back from there to the margin the wholesaler needs.
  • Add in the cost of freight to get it to the wholesaler’s dock.
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“Just-in time” inventory: All goods are at the brewery when needed.