August 2003 | Commentary | Supply Chain Technology

Cogistics Part 2: Cutting Costs on Urgent Shipments

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Last month I introduced you to Cogistics, a Lakeland, Fla.-based service provider that helps companies plan and execute their transportation and supply chain operations through collaboration and data management. This month, I follow up by concentrating on Cogistics' Urgent-1 service and pre-audit/carrier payment process.

"Cogistics' critical shipment call center, Urgent-1, does not pertain exclusively to expedited freight, but to any shipment requiring visibility and the assurance that it will arrive on time and in a cost-effective manner," says Scott Schaal, Cogistics' Urgent-1 manager.

"Urgent-1 was established to help companies significantly reduce domestic and international premium transportation expenses. The service helps cut costs in many areas, including air charter, air cargo, over-the-counter (next-flight-out), and surface expedited, while meeting performance requirements.

"Additionally, Urgent-1 users can access real-time shipment status communications provided through phone, e-mail, Internet, or a wireless text transmission directly to their mobile phone or pager," he says.

Here's how the Urgent-1 service works, step-by-step:

  1. The user contacts Urgent-1 via telephone, e-mail, pager, or web site with the parameters of a shipment—dimensions, weight, pickup point, protect time, etc.
  2. An Urgent-1 professional confirms these details and establishes a point of contact with the customer.
  3. The carrier and transportation mode are selected.
  4. A pickup is scheduled.
  5. The pickup is monitored.
  6. The shipment is monitored while in route.
  7. The delivery is monitored.
  8. The user receives POD notification.

"It is important to note that carrier/mode selection is critical and Cogistics follows a strict procedure to ensure the right equipment is selected and is available in the area needed," Schaal says. "Additionally, the transportation mode dictates what additional steps we'll take to ensure success."

For example, suppose an air charter is booked. Cogistics will take these additional steps to ensure success. First, airports closest to origin/destination are determined. Second, a pickup carrier is selected and booked to bring freight to the origin airport.

Once the pickup carrier is booked, the FBO (Fixed Based Operator) at origin is contacted and arrangements are made to load and offload the charter. The delivering carrier is then selected and booked at the destination airport to move freight to the dropoff point.

"These procedures allow Urgent-1 to save users extra incidental costs that traditional air charter operators charge when all services are bundled into an all-inclusive air charter price," Schaal says. "Urgent-1 books everything separate so the user can see the real dollars spent for each component of logistics involved in the air charter. There are no inflated or hidden costs.

"Urgent-1 professionals use all their experience and resources to find the solution that best meets the customer's needs while reducing the financial impact of the purchased transportation," he says.

Here are two areas where Urgent-1 saves money:

Recoveries. Urgent-1 recovers freight already in transit. For example, a shipment is moving via a truckload carrier and the customer now has an urgent need for the freight. This status change requires the freight to move via air. Urgent-1 has the resources to get freight stopped and stripped from a trailer and to the airport so the customer gets the freight as needed without jeopardizing production lines.

Mode blending. Urgent-1 saves money by blending different modes of transportation to meet the customer's requirements. Sometimes a pickup location is not near a large airport that handles commercial flights. Urgent-1 can fly parts on a local charter for a short distance to make a commercial flight to the end destination.

This saves the customer from having to charter the shipment from origin to destination. "Savings can be very substantial," Schaal says. Cogistics also saves customers money through its pre-audit/carrier payment process.

"Auditing payments directly affects the bottom line," says Jeff Leslie, manager of customer services for Cogistics. "On average, companies can expect to save two percent of their annual transportation spend. Auditing payments also reduces administration costs."

Cogistics performs a complete pre-audit. First, it audits invoices to ensure its customers' responsibility. Then, the company audits invoices to make sure charges are correctly applied. In addition, Cogistics processes payment to carriers and handles all carrier inquiries. It also provides carriers with the ability to check payment status and remittance details.

Users of the pre-audit/carrier payment service also have online capabilities including document imaging, carrier payment status, and a user-specific report generator.

The biggest advantage to using Cogistics' pre-audit/carrier payment program lies in its comprehensive transportation data warehouse. "This data is a powerful tool and, with effective logistics analysis and execution, can lead to a more efficient transportation supply chain," says Leslie.

Cogistics also performs comprehensive international audits. "Because the importer of record is responsible for accurate customs entries, having Cogistics do a post-entry audit assures that the company is in full compliance with U.S. Customs regulations imposed under the MOD Act," says Leslie.

It also ensures that the company obtains the best possible benefits on their imports through various trade agreements.

The international audit process includes:

HTS classifications to ensure that the broker has applied the correct tariff classification to the goods being imported, and that the company has paid the accurate amount of customs duties. Cogistics also can determine if the company has overpaid duty due to the broker applying an incorrect classification.

Entered value. The Cogistics audit ensures that the broker has input the correct imported value of the goods and used the correct exchange rate if goods are invoiced in foreign currency.

Petitioning for duty refunds. If the broker has applied the wrong HTS classification causing overpayment of customs duty, Cogistics returns to the broker for an amendment and refund on behalf of its customers.

Petitioning for duty payments. If the broker has applied the wrong HTS classification or entered value causing underpayment of customs duty, Cogistics returns to the broker for amendment and payment to U.S. Customs on behalf of its customers.

Importer of record. Cogistics checks entry to ensure that the correct client location is the responsible party and that the correct tax I.D. number has been applied.

NAFTA. All materials imported from the NAFTA region for automotive use are now duty-free. If the broker has assessed duty on imports, Cogistics ensures that an up-to-date NAFTA Certificate of Origin is in place with the broker and petitions for a duty refund.

If a Certificate is not on file with the broker, Cogistics contacts the appropriate person to submit directly to the broker to ensure that further imports receive NAFTA preferential rates.

For more information on Cogistics: www.cogistics.com

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