Understanding the Reasons Carriers Implement a Shipping Embargo
May 6, 2022
r2logistics
If you rely on shipping and logistics services, then you have likely encountered the term “shipping embargo.” However, you may not be quite sure what this term means, why carriers use them, or how they impact your bottom line.
With that in mind, we have created this guide. Below, we explain why carriers embargo freight and what these restrictions mean for your business.
What Is An Embargo?
In the logistics industry, the phrase “shipping embargo” refers to when a carrier stops receiving goods from clients. These can be implemented by any carrier. However, they are most commonly used by less than truckload (LTL) shippers.
A prime example of an LTL shipper using an embargo is FedEx in 2021. The well-known LTL hauler garnered a ton of negative attention when they enacted embargoes on thousands of clients. However, doing so was a necessity at the time because the demand for shipping services far exceeded their current capabilities.
If FedEx had neglected to implement the embargo, clients across the nation would have experienced a lower quality of service. Instead, a select segment of clients suffered, rather than FedEx’s entire customer base.
Types of Embargo Freight
Carriers can embargo freight based on several different criteria. They may embargo freight of a particular type. Alternatively, they may institute an embargo on an entire region.
The latter approach is a cost-control measure when demand for shipping services is exceptionally high. Typically, carriers will impose the shipping embargo on regions that have a higher cost of freight because they do not generate as much profit from these transactions.
Alternatively, carriers may restrict services based on freight characteristics. For instance, they may impose an embargo on exceptionally heavy or large freight because these items consume more capacity on LTL trailers.
While many shipping embargoes are imposed by carriers, they can also be levied by the federal government. Currently, the United States has either a partial or full embargo against a multitude of different nations. When the U.S. imposes an embargo, carriers are prohibited from bringing the restricted goods to domestic ports from those nations.
Why Do Carriers Institute Shipping Embargoes?
The primary reason that carriers institute shipping embargoes is to reduce the strain on their resources. Prior to the turbulent events of 2020 and 2021, these measures were a seasonal occurrence.
Many LTL shippers would embargo freight from certain regions during the peak shipping season, which is typically in late November or early December.
However, the shipping embargoes that have been imposed over the last two years are some of the most comprehensive in history. In 2021, they were particularly restrictive because the demand for logistics services soared as the economy began to rebound.
By imposing embargoes, carriers can better regulate their resources. They can temporarily stop serving clients in congested regions so that drivers are not forced to spend countless hours waiting to dock and offload their shipments.
When selecting where to impose shipping embargoes, carriers will often target areas that do not generate as much revenue so that they can maintain strong profit margins.
How Long Does a Shipping Embargo Last?
By nature, shipping embargoes are designed to be temporary until the demand for LTL hauling services stabilizes. However, there is not always a set deadline for when a shipping embargo will end. Even if a carrier provides clients with a timetable for ending a shipping embargo, they can always extend this date if needed.
Shipping embargoes can last as little as a few days to as long as several months. The length of the embargo will be based on the needs of the carrier and market conditions.
Due to the unpredictability of embargoes, they can be incredibly frustrating for business owners who need shipping services. That is why many business owners partner with third-party logistics providers.
How a 3PL Can Help
Navigating the complexities of shipping embargoes can be challenging. Not only can shipping embargoes drive up the cost of shipping services, but dealing with this hassle can shift your focus away from managing the needs of your organization.
Fortunately, you can avoid shipping embargo headaches by partnering with an award-winning third-party logistics (3PL) provider like R2 Logistics. We offer access to logistics experts and an innovative transportation management solution. Contact us today to learn more.
How Can Properly Executed TMS Affect Your Supply Chain Spend?
L.I.N.K.| Continuous Improvement in the Supply Chain
Intermodal Freight Solutions
Along with our other available capabilities, R2 also offers your business intermodal services. If you would like to utilize this service or explore its options, our experienced staff can assist you in taking advantage of its possibilities. Let us help you find the most efficient and manageable cost for your shipment.
Intermodal Freight Benefits
– R2 associates are on hand 24/7 to assist in any matter
– We can accommodate cost effective solutions for any number of loads you may have
– Watch your shipment move from Point A to Point B online
– Multimodal transition is done seamlessly as your needs alter
– A contracted capacity with the ability to move your freight in the U.S., Canada, and Mexico
Managed Transportation Solutions
As supply chain complexity is in constant evolution, ingenuity is vital for gaining a competitive edge. Our expert associates provide the ability to appraise your logistics network to expand and apply more cost effective and service oriented solutions. Do you have just one requirement or several? The R2 team is only a phone call away to help position your company above the competition
R2’s Managed Transportation Program Includes:
– Collaboration – your business is our business. We will aid in the arrangement of meeting your supply chain demands with corporate guidelines
– Evaluation of your distribution system and design of the most cost effective network
– Providing transportation direction to bring control to your shipping budget and improving response time
Truckload Capacity
With R2 Logistics’ excess of contracted carriers, the options are endless to find the right solution to move your freight. We also understand that getting it moved isn’t your only concern. That’s why it’s our first priority to choose the right option for you.
After the selection has been made we begin the process of following the freight from start to finish. At least 5 check calls are made for each shipment to ensure its security, and if you ever have a question, we’ll have an answer.
Truckload Freight Benefits
– We’re committed to you and your business – we’re available 24/7
– We set you up with your ONE and ONLY account representative
– We are not bound by U.S. borders – we make it easy for you to move shipments to and from Mexico and Canada
– Follow your shipments quickly and easily online
– Countless options – whether it’s for one load or for your entire supply chain, R2 has the solution you’re seeking
LTL Freight Simplified
Knowing when to use Less Than Truckload shipments increases productivity, reduces freight spend, and streamlines freight shipping. LTL is ideal when freight doesn’t require the use of an entire trailer and weighs between 150 and 15,000 pounds.
Our relationships with the nation’s leading LTL carriers, allows R2 to pass our rates to our customers. Beyond our competitive rates, we have simplified the LTL shipping process with our innovative and game-changing Transportation Management System.
Using our TMS, shippers can realize the rewards from the moment they log on. With R2’s cloud-based TMS, shippers have access to real-time pricing, capacity across multiple carriers, and actionable reporting analysis.
LTL Freight Benefits with R29
– Analyze your logistics network and improve its current state
– Competitive rates pre-negotiated with our network of LTL carriers
– Ability to instantly quote, book, track and manage all shipments with R2 TMS
– A dedicated LTL freight expert to help with any of your freight questions
– Consolidated invoicing for all your shipments
– Unparalleled reporting capabilities making performance and cost analysis simpler than ever
Expedited & Air
We can understand that there’s never enough time in the day. If you have a shipment that should have been moved 24 hours ago we have the means of getting it there now. We have a multitude of contracted expedited and air freight carriers who can move your freight for you in a safe and reliable fashion. Let us do the work for you. We will track the shipment and let you know when it has arrived at its destination.
Expedited and Air Freight Benefits
– Dedicated dispatch and freight management from all R2 associates
– Extra precaution and 24/7 supervision for sensitive shipments
– ONE point of contact to answer any and every need you may have
– Customized options allowing you to utilize the best combination of service and value
– Accessibility to a surplus of different vehicle or trailer types as well as single and team driver
Ocean Freight Solutions
With a wide range of Ocean Freight services covering multiple equipment types and consolidation services, we ensure your cargo reaches its destination in the most cost-efficient manner. Our long-term relationships with ocean carriers allows R2 Logistics to provide both Less-Than-Container Load (LCL) and Full-Container Load (FCL) shipments. Our in-house team of international freight specialists manage your freight and also offer customs clearance and tariff classification.
R2’s Ocean Shipping Benefits
– Competitive rates pre-negotiated with our network of ocean carriers
– Use FCL shipping for valuable cargo that you wouldn’t want with another person’s shipment. FCL is also a good option if you need to ship loads of 12+ pallets
– LCL shipping means you share container space with other cargo. This can be a more cost-effective option for shipping smaller loads overseas.
– The ease of working with one company for all your logistics needs—including ocean, air, customs brokerage, trade compliance, and surface transportation
Reverse Logistics
Simply put, Reverse Logistics is the return of products to a manufacturer or distributor from their customer. A well-organized Reverse Logistics program will result in direct benefits such as improved customer satisfaction and reductions in warehousing and distribution costs. Studies show 8-9% of all customer shipments are returned and 25-30% of e-retail shipments are as well. Managing Reverse Logistics costs are critical to running an efficient Supply Chain.
Reverse Logistics Benefits
RA Numbers & Accounting
RA numbers are captured in the R2 TMS and linked with BOL numbers and Carrier PRO numbers resolving accounting issues due to missing RA numbers.
Damage & Recouping
Strong relationships with R2’s network of LTL carriers ensures shipments are handled with care.
Cost
The R2 TMS will select the most effective carrier for both transit time and cost. Customers are no longer held “hostage” with only one carrier choice.
Flatbed & Specialized Freight Solutions
When you’re hauling a shipment that’s oversized and overweight, attention to detail is crucial. The attention needed is exactly what you will receive with R2. With our vast network of nationwide carriers we can solve the problems you may face with your specialized shipment. Safety always plays a major role in any shipment moved under our watchful eyes. This makes us the easy choice for your next shipment requiring special handling.
Flatbed & Specialized Freight Benefits
– 24/7 dispatch supervision from start to finish
– Guaranteed certified and insured carriers used for every load
– ONE account executive available for any assistance needed
– Online tracking and document retrieval capability
– Shipping solutions designed to meet your unique needs