First Alliance Logistics Management sees a business opportunity in the rising fuel prices that have strained transportation spending. The company has launched a new freight brokerage service to provide better value to companies in the pallet and forest products industries.
“We hope to offer the industry attractive pricing to move pallets greater distances at the same or lower prices,” said Glenn Merritt, CEO of First Alliance, a pallet management company based in Charlotte, North Carolina. “We would like to enable pallet companies, both new and recyclers, the opportunity to more cost effectively ship materials, including lumber and nails, as well as finished goods, such as pallets and crates.”
The core competency of most pallet companies relates to pallet manufacturing or recycling, Glenn noted, rather than transporting raw materials and finished pallets. “To those companies, we would like to say, ‘Hey, let us help you out on the freight side,’ ” he said.
Glenn is a 20-year veteran of logistics. He held key executive positions in the logistics industry before joining First Alliance, so he knows the importance of keeping trucks full and rolling. Trucks that are stopped or traveling empty for excessive time create unnecessary costs.
First Alliance was launched 13 years ago as a joint venture by several leading pallet companies and still is owned collectively by most of the original founders.
Glenn indicated that the new freight brokerage service is not just for large pallet companies. Competitive freight rates will be offered, regardless of company size. The service also allows an attractive two hours each for loading and unloading as opposed to the standard allowance of one hour before extra charges apply.
The new service is offered in conjunction with Custom Logistics, a freight management company also based in Charlotte that has been in business for 15 years. Services include:
1. LTL shipments
2. Truckload (van or flatbed) shipments
3. Ocean freight (FCL/LCL) movements
4. Rail-Intermodal or Boxcar shipments
First Alliance plans to transport pallets from the West Coast to the East to service some customers, said Glenn. “We are combining our know-how of the pallet business with their (Custom Logistics) know-how of the freight industry to see if we can help people.”
First Alliance will review a potential customer’s transportation logistics and spending and see if there is an opportunity to reduce costs. If so, First Alliance will offer a fixed line haul rate for several months, depending on the situation.
Aside from being a pure freight brokerage service for the pallet and forest products industry, Glenn also sees the service as a key ingredient for the pallet management business of First Alliance in the years ahead.
“As we design strategic pallet management programs,” Glenn said, “so many deals are won or lost on how well you manage the freight, and we want that to be a weapon in our arsenal.”
The freight brokerage service will place considerable emphasis on inbound raw material shipments with sales terms that are FOB delivered. Excess freight charges often can be avoided if the freight bill and product invoices are separated. This allows First Alliance the opportunity to negotiate a better rate. “People try to hide freight into product invoices,” Glenn explained. “We want to split that out to help people lower freight costs.”
Custom Logistics, First Alliance’s partner in this venture, works with several hundred carriers to ensure pricing that will meet or beat expectations. As the name Custom Logistics implies, the new service will develop a freight program that best suits the needs of the client.
Pallet manufacturers traditionally ship to a maximum of about 150 miles from their plant, Glenn noted. However, there are also a number of regional moves of 150 to 200 miles or 250 to 300 miles round trip. These longer trips provide more opportunities to expand backhaul lanes, which enable the shipper to generate revenue and reduce overall costs. Each case has to be looked at on its own merits, he added.
First Alliance is a financially solid company that prides itself on business ethics and the quality of its suppliers and partners (who also double as key suppliers), said Glenn.
First Alliance also plans to offer other services to pallet suppliers, such as forklift training certification services and safety audits; the safety audits would help pallet companies avoid or minimize OSHA violations and penalties.
Many businesses rely on forklift suppliers to provide forklift training and certification. First Alliance has its own qualified staff to provide this service. To the extent that travel costs can be minimized by integrating training visits with other First Alliance business travel, First Alliance can take advantage of the network it has in place. “We could provide training and audits for the same or less and do a very good service for them,” Glenn said.
As for its overall business, first quarter revenues were down, Glenn said, largely due to the decline in homebuilding, which negatively impacted its largest customer, a leading manufacturer of building products. However, the second quarter is going much stronger, and the remainder of the year looks promising, according to Glenn.
First Alliance provides pallet recovery and retrieval services for the customer, which uses 45×156 pallets for shipping its products. Since it began providing the service, First Alliance reduced the minimum number of pallets it would pick up from distributors from 60 to 30 and trimmed retrieval time from more than two weeks to three days. In addition, the customer receives its pallet deposit more quickly. The service by First Alliance also reduced the customer’s new pallet purchases, overall packaging costs and return unit freight costs.
A recent joint venture (On/Off Logistics, a labor solutions business) between First Alliance and Pallet Logistics Management provides on-site pallet sorting and repair. “We look forward to the growth of this business, and it should,” Glenn said. “It is perceived to be doing a good job.”
Glenn is also optimistic about Penn-Alliance, a joint venture between First Alliance and Penn Pallet that supplies quality marked pallets to retail vendors and recovers them from the retailer’s distribution centers for reuse.
(Editor’s Note: For more information or questions about First Alliance freight brokerage services, call Rob McGath at (888) 900-4840.)
