For an industry all about moving, the relocation industry doesn’t seem to be budging much. But changes that appear insignificant now, including rising fuel prices, regulatory modifications and advancements in relevant technology, could eventually lead to monumental transformations for the sector.

The outlook has been “cautiously optimistic” for the U.S. freight transport sector in 2011, according to a recent report by research company Business Monitor International. The Japanese earthquake and a hike in oil prices surrounding the Middle East and North Africa crises offset payroll tax cuts agreed to in December 2010; with key future risks including the possibility of further fuel cost increases due to continued unrest in oil producing countries, raising domestic energy costs and halting consumer recovery – a situation that BMI stated does not bode well for the freight transport sector.

Bill South, president of Avatar Relocation Inc., tells DOTmed News he too believes the freight transport sector has hit a rough patch of road, particularly in relation to medical cargo.

“The used medical equipment transportation business has been off in 2011,” he said. “I can only attribute this to economic factors and the uncertainty in health care at this time. For a lot of transport companies, business is shrinking.”

One diminishing freight shipping business is Holman Moving Systems, with business down 2 to 5 percent from 2010.

“We assume it’s the economy, but it’s hard to know for sure,” said Greg Stratton, Holman’s director of special services.

With medical devices decreasing in size, demand for bigger freight carriers may also be on the wane.

“Smaller and smaller equipment means that UPS and FedEx are often a more viable option, but the value and sensitivity of the items hasn’t changed, so handling is as important as ever,” said Todd Partridge, vice president of operations for MoveIt, a specialized freight logistics company.

Adding fuel to the fire
Rising fuel prices are a having a major impact on the transport industry as a whole.

“We’ve had to add a fuel surcharge to shipments to soften the blow of fluctuating prices, so customers have seen some cost increases,” said Stratton.

Increased fuel prices have also prevented Avatar from improving profit margins during the past five years.

“Because of fuel, as an industry we haven’t had the ability to raise our overall prices, which is a real problem,” South said.

When comparing land, air and sea cargo costs, trucking is often the most cost-effective way to ship medical equipment, while air transport has a reputation for being the priciest.

“It all depends on how big the medical equipment is and where it’s going from and to,” said South. “There could be an instance where air is the most economical way to get it there, but in general terms, the most expensive way is to fly something.”

With economy-burdened businesses unable to foot its arm-and-leg costs, the utilization of air transport has decreased 10 percent over the past few years, according to Brad Barenberg, vice president, national account sales, Craters & Freighters Global Logistics.

“At one time, fuel surcharges for international air freight became higher than the actual air freight charges,” Barenberg told DOTmed News.

For domestic moves, it’s almost always better to transport bulky, sophisticated and fragile medical equipment in a truck, according to Stratton.

“If the piece can be moved via truck, it’s better because it reduces the amount of moving; for example, there is no need to move equipment from the lab to the truck to the plane, back to the truck,” said Stratton.

On the other side of the pond
When transporting medical equipment internationally, complicated logistics need to be settled. MoveIt‘s Partridge advises sellers to read up on International Commercial terms so that they do not enter into a business deal they may have no way of settling. Buyers should get in touch with a local customs office to get requirements on products they are bringing in to avoid paying unexpected duties, taxes or other administrative fees.

The biggest challenge with international freightage is obtaining an accurate description of the equipment for export classification purposes, according to Stratton. In many cases, manufacturers and hospitals have to obtain special codes and permissions on their own, prior to the move. Companies like Holman assist them with this process, but Stratton stressed that communication is critical.


“It’s important that we ask a lot of questions because customers aren’t always knowledgeable enough about international shipping and the regulations at destinations to connect all the dots,” he said.

When transporting equipment internationally, regulations naturally vary country to country.

“Requirements can range from a simple commercial invoice prepared by the shipper to complex documentation requirements and inspections performed in the origin country, followed by intensive examination of the documentation and cargo at destination,” he said.

International and domestic shipping challenges mirror each other, according to Jeffrey Rodriguez, Craters & Freighters’ senior operations manager. Different regulatory agencies, compliance characteristics, documentation requirements, transport modalities and proper packaging all come into play.

“These points make the importance of partnering with a knowledgeable transportation partner vital in transport and delivery,” said Rodriguez.

Desired de-installations, crate expectations and big rigs
Companies in this sector are getting used to international challenges, as more used medical equipment is being de-installed and sold overseas.

“This year, we are moving a higher percentage of used equipment and have seen an increase in used gear trading hands,” said Barenberg. “Older technology is being sent to developing countries.”

In the past year, various companies including Professional Installations have seen an increase in rig-outs – specifically, MRIs being de-installed from closing facilities and sold overseas.

“This increase, to us, shows that more businesses are closing and that there is a lack of new facilities being opened or built in the U.S.,” said Toni Mansfield, administration assistant at Professional Installations.

Further evidence of this trend is backed by Holman, which recently transported an entire lab overseas to Spain.

Changing tides
South said although his company hasn’t been affected by any new international regulatory changes, they have been affected domestically by the California Air Resources Board’s new Low-Carbon Fuel Standard regulations, in effect since January. Main aims of the regulations are to reduce dependence on petroleum, market clean transportation technology and stimulate the utilization of low-carbon fuels in California.

“In the transport industry, just trying to comply with the CARB laws has been the biggest change,” said South. “These regulations make it more expensive to transport stuff in and out of California.”

Another recent change has been in the levels of scrutiny applied to international and domestic cargo. The Implementing Recommendations of the 9/11 Act of 2007 required TSA to develop a system to screen 100 percent of cargo transported on passenger aircraft by Aug. 1, 2010.

“From a U.S. security standpoint, domestic moves require the same amount of scrutiny as an international shipment,” said Stratton.

The voluntary Certified Cargo Screening Program was recently created by the TSA to enable freight forwarders, shippers and manufacturers to screen cargo away from the airport to minimize screening burdens.

“TSA understood the challenges in cargo screening and worked closely with the air cargo industry to develop procedures that secure passenger aircraft without impeding the flow of commerce,” William B. Jones, Office of Strategic Communications & Public Affairs, Transportation Security Administration, Department of Homeland Security, told DOTmed News.

According to BMI’s report, however, the TSA caught the airfreight industry off guard by issuing a directive that calls for increased surveillance of high-risk international shipments. This has been subject to criticism within the industry for its sudden implementation and lack of clarity. BMI believes the TSA will need to work more closely with the industry in the future to ensure the success of tighter security measures.

“Through various pilot programs, including CCSP and International Collaboration, the apparent hurdles to achieve 100 percent screening in the time frame initially mandated by the TSA were found to be unrealistic,” said Rodriguez. “There have been no significant statements by the TSA on program screening revisions; only that the current mandates on cargo screening are continuing to be strictly enforced.”

The Federal Motor Carrier Safety Administration and Department of Transit’s hours-of-service changes, implemented this year, have also had repercussions on the trucking industry. The current limit is 11 hours, with further proposals to make it 10 hours, along with cutting the on-duty “work day” from 14 to 13 hours.

“These changes restrict the amount of hours drivers can work and consecutive hours that they need to be off duty in the same 24-hour period of time,” said South.

The U.S. port sector and ocean freight industry also looks set for a shakeup for the first time in a century, as highlighted by the Trans-Pacific Maritime Conference in March. A major focus of the conference was discussion surrounding preparations for the expansion of the Panama Canal, to be completed in 2014. To address this, major U.S. importers are diversifying port gateways and increasing East Coast port usage.

Advancements: Technology improves services
The freightage industry has come a long way from its humble horse-drawn beginnings. Even so, although the freight carried may have evolved over time, the basic steps involved in moving medical equipment from point A to point B have remained largely unchanged throughout the years.

“They haven’t created a better way to move a CT scanner; you still need to go in there, jack it up and roll it out the door,” South said. “If they make a magic wand to wave over large medical equipment to move it into the truck, I’ll be the first one to buy it. Until then, men have to go in there and physically prepare it the same way they always did.”

While there’s yet to be a magic wand, there have been improvements aimed at handling larger, more fragile pieces of medical equipment, including lift gates within vans, portable power pallet jacks and roll-a-lifts. But South reflected that the most important technological updates relate to communication.
“Communication efficiency is important because everything in this industry is such short notice,” said South.

iPhone applications now enable those in the sector to scan bar coded assets onsite at pickup and upload the data; if the asset is damaged, the driver can take a photograph with the phone and the image will assign itself to that particular asset ID. Craters & Freighters have also been beta testing a GPS device that can be placed in crates.

“Now if a crate is ever misplaced on a dock, we have the ability to locate it,” said Barenberg.

Moved to tears: Top tips for buyers and sellers
Money, reputations and lives are at stake when relocating medical equipment. Buyers and sellers must be aware of and prepared for all associated risks. It is essential for companies that ship goods to perform a regular audit of insurance coverage; likewise, decision makers should request regular insurance certificates from transportation partners.

“Risk management is the least talked about, but has the biggest overall impact on all relocation services,” said Partridge. “Recent court actions have settled in favor of plaintiffs filing against shippers who have equipment on trucks that are involved in fatalities; due diligence can’t be overstated.”

All providers noted that customers’ pre-planning and timely notification not only aids in risk management, but also reduces costs.

“Overall transport and packaging costs could be reduced if more time was allocated,” said South. “When you have to react to get something done in a hurry, you typically have to charge the customer a bit more money to make space in the schedule to get it all done.”

While reducing costs is certainly in any customer’s interest, even more imperative is quality service. More equipment manufacturers and hospitals are choosing reputable suppliers over the least expensive option, according to Nick Giallanzo, chief operations officer and vice president of Remetronix, provider of medical equipment installation, logistics and services.

“It’s all about companies that provide turnkey services, to get better leveraged rates versus selecting single suppliers for each step of the process,” advised Giallanzo. “Use experienced, reputable national or international ISO certified companies and avoid ‘local only’ companies.”


Further travels
BMI’s report forecasts that as consumer outlook brightens, volumes at major ports, road and air links will recover from the economic downturn.

Between now and 2015, the port of Los Angeles’ tonnage throughput will grow by 5.1 percent, with annual average growth of 5.1 percent; the port of New York/New Jersey’s tonnage throughput will grow by 0.6 percent, with annual average growth of 0.9 percent; air freight growth is expected at 7 percent, with annual average growth of 6 percent; and road freight growth is expected at 4 percent, with annual average growth of 3 percent, BMI predicts.

“It’s going to be interesting to see how the new health care laws affect the industry in terms of used medical equipment,” said South. “We are at the bottom of the food chain here and I would think if 30 million more Americans are covered under the new health care laws, there’s going to be more medical equipment needed and more used medical equipment moving around; I would think it’s going to get busier for us.”

DOTmed Registered DMBN December 2011 Ocean Air and Truck Freight Companies

Names in boldface are Premium Listings.
Domestic
Sean Saad, california labchoice, CA
Justin Clark, Navis Pack & Ship, CA
Mary Fowler, Espie Service Group, GA
DOTmed Certified
DOTmed 100
Violeta Popeda, Viking Rigging & Logistics, Inc, IL
Steve Vest, Nationwide Equipment Transportation, Inc., KS
Diomid Bashkinov, RBEnterprise Inc, MA
DOTmed Certified
Glenn R. Hammerquist, Berrien X-Ray, MI
Gregory B. Holman, Diagnostic Imaging of New York, NY
Bill Mansfield, Professional Installations, OH
Lori Weidow, KMA Remarketing, PA
Jennifer Culbertson, AIT Worldwide Logistics, TX
Paul Zahn, Mobile MedTech, WI
DOTmed Certified

International
A.Cenk Seyfeli, 4G Technology Medical Systems, Turkey
Kevin Ming, Healthpower Technology Ltd., China
Federica Militello, Logic s.r.l., Italy
khalid abdu, exyard.com, Kuwait
Roberto Robles, Suplecom, Mexico
Subhash Aggarwal, Olympic Pharmacare Pvt.Ltd., India