Rhett Talley, Cubiscan Product Manager for ANZ, Singapore, and Malaysia at Diverseco, says that many freight service providers are leaking revenue due to inaccurate freight measurement. He tells MHD how Legal for Trade measurement equipment can staunch this flow – and recover lost revenues.
When moving freight throughout the global supply chain, every millimetre and every unit of weight – however small – counts, says Rhett Talley, Cubiscan Product Manager at Diverseco.
For freight service providers, unless they precisely measure and weigh the units they carry, it can be death by a thousand paper cuts. The paper cuts in this case result in mass leakage of revenue, as shippers under-declare the dimensions of their goods, and freight service providers – who are after all in the business of selling space – aren’t paid correctly for the space actually allocated to the freight they’re moving.
Diverseco is a firm specialising in systems integration, says Rhett. Indeed, Rhett himself exemplifies the qualities of integrated thinking in finding unique solutions for Diverseco’s clients. His interests range from the technical side of measurement and automation to relationship building, sales leadership for products he believes in, the psychology of workers and consumers, and innovative methodologies – all underpinned by a holistic understanding of and commitment to facilitating global trade.
But when it comes to accurate measurement, he has a simple summary of what Diverseco offers: “What sets us apart is that we’re your measurement data partner,” he says. “We make it all about the data.”
LEGAL FOR TRADE MEASUREMENT – AND WHY IT MATTERS
To understand what ‘Legal for Trade’ means it helps to take a step back, says Rhett. “It starts with the International Organisation of Legal Metrology (OIML),” he says. “Legal metrology is the application of legal requirements to the science of measurements – and in this context we’re concerned with whether or not measuring instruments are legally certified to perform the task of measurement to a satisfactory standard.”
Certification of instruments is granted internationally by the OIML and domestically by the Australian National Measurement Institute (NMI). “Diverseco as a company, as well as a majority of our technicians, are licensed and authorised by the NMI to verify various measurement instruments as complying with Legal for Trade requirements as set out by the OIML and the NMI.”
Freight service providers move goods from point A to point B, and they have a finite amount of space on their planes or trucks to fill, Rhett says.
“The meaning of Legal for Trade dimensioning and weighing in the supply chain is relevant for those shippers who have parcels or pallets, and they want to ship them from one place to another, in a less-than-truckload or less-than-container-load application,” he says. “Whether the shippers are sending one piece of freight or 10, they must make a declaration specifying the dimensions of the freight they’re giving to the freight service provider to move. And anyone who has sent freight will be familiar with the forms you need to fill out – they’ll ask you for length, width, height, and weight.”
Rhett says that most people aren’t very sophisticated when it comes to making measurements for purposes of filling out a declaration form – often because they lack the correct equipment to do so.
“So, they’ll make a declaration and get it as close as they can,” he says. “And the freight service provider charges them a price based on a dimensional weight formula. For example, one cubic metre could be equal to 250 chargeable kilograms. If you send a pallet of goods out and it is in fact one metre by one metre by one metre, and weighs 250kg, then that’s fine. But from the freight service provider’s perspective – a cubic metre of toilet paper weighs far less than that, but still takes up the same space – and so the shipper will still be charged $250 based on the formula.”
Because of this variability, there is ample opportunity for either shipper or freight service provider to lose money due to imprecise measurements.
But Rhett says that it’s usually the freight service providers who are losing money because of under-declared measurements by shippers – who might just be using antiquated methods like a rough yardstick or a “good eye” to capture the dimensions they declare. And inaccurate measurements, if not corrected by the freight service provider, mean that space is not priced correctly, and it loses money – either because it’s not charging enough for the space actually taken up by the shippers’ freight, or because it’s not maximising available space in its trucks or planes.
“They’re leaking revenue,” Rhett says. “That’s the term the industry uses – ‘leaking revenue’. And we want to help them recover revenues. We’re in the business of revenue recovery.”
REGULAR AND IRREGULAR FREIGHT
For a freight service provider to amend a shippers’ freight measurement declaration, it must do so using a certified measuring instrument, Rhett says. This is fairly straightforward in the case of standard cuboidal boxes, which can be measured with a certified tape measure.
But what about irregularly shaped freight?
“Irregular freight might include things like a car muffler, or a whipper snipper – or a guitar in its case – to give a few examples,” he says. “Such measurements of oddly shaped items are very prone to human error in making declarations. Theoretically, the freight service provider is charging for the smallest hypothetical box that the irregular shape would fit into – but that’s very hard to do without sophisticated instruments. So even when shippers are doing their best to declare accurately, there is still massive scope for revenue leakage.”
THE DIVERSECO DIFFERENCE
Rhett says that new technologies are available to register measurements with great precision. “There are laser sensor technologies, and for these SICK and Datalogic are – in our opinion – the leaders for this type of equipment,” he says. “There’s also Cubiscan, who are also excellent with their own Legal for Trade proprietary technology. So, these companies build this technology, and then Diverseco – as a systems integrator – can take these components and make them part of an overall integrated system and build bespoke solutions for the unique customer requirements.”
Diverseco implements the best equipment for the operation in question, and then goes to work on the data, Rhett says. “We capture the data from high-tech equipment, then we put it in a digital format that is compatible with your host IT application – whether it be your ERP or your WMS or your billing system. It sounds simple in theory, but it can be very hard in practice. I’m dealing with customers in Australia now who know they’re leaking a lot of revenue in pallet freight – but they don’t have the IT systems in place yet to make sense of the really important data I’m going to give them. First, they have to build the back-office processing based on business rules.”
Rhett says that Diverseco plays an ongoing role with its clients – from inception through implementation and beyond.
“All of the Legal for Trade measurement equipment that we sell into the supply chain is generating item-level data in real time that is super important to our customers,” he says. “So, we have a bank of engineers in Australia who are able to dial in remotely with an internet connection and troubleshoot the money-making equipment for freight service providers in real time, when they need it. We don’t have to come to site to resolve data automation issues.”
He adds that Diverseco’s comparative advantage in the field comes from a deep understanding of the importance of data. “We have worked in partnership with our customers over the last 20 years to develop our own proprietary software to provide for data capture and control of equipment,” Rhett says.
“For those transport providers experiencing revenue leakage, once they introduce sophisticated, Legal for Trade weighing and dimensioning instruments – it’s like a licence to print money. What I say to customers is: ‘Dear Customer, you just have to be prepared to change how you operate in order to get the money.’ And they’re usually happy with that idea.”
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