How Warehouses are Reducing Costs by Using a Lumper Service

What Is A Lumper Service?

A lumper service is a group of workers hired by a shipper or carrier to help with the loading or unloading freight from trucks or trailers at a dock. Many shippers and carriers hire lumper services, but they are most common in food warehouses.

What is a Lumper Service?

Lumper services are provided by third parties hired by shippers and receivers to work in their docks. The third parties are companies that specialize in lumper services. These companies employ professionals who understand the nuances of loading and unloading trucks and trailers.

Lumper services regularly work in the docks and either charge the shipper or the carrier for their service. Typically, the carrier informs the driver of the presence of a lumper service upon arrival at a dock so they may hand over the truck or trailer on arrival. Truck drivers pay for the lumper service but are reimbursed by the carrier or shipper.

Why Hire A Lumper Service?

Shippers and carriers hire lumpers to give their drivers time to rest and recuperate after a long journey. They relax while the third-party workers load or unload the trucks and trailers. The thinking is that since the driver has been on the road for many hours, there is no need to strain them on the various loading and unloading stops.

Hiring lumpers also reduces the risk of injuries to drivers that can disrupt work and increase the workman compensation costs for the carrier. Lumpers are experienced in handling different types of goods and load or unload faster than a driver would do. They also know the dock and warehouse very well, meaning that they can complete the job in a few minutes.

  • By hiring a third-party to handle the job, the logistics company benefits in three ways:
  • Drivers get time to recuperate and also benefit from reduced risk of drive injuries
  • The fast loading and unloading saves driver’s valuable time

Warehouse staff time is minimized, allowing them to focus on other tasks

The Cost Differences Between Unloading Inhouse And Hiring A Lumper Service

The average hourly wage of a dock worker is $16.32 and includes tips, bonuses, and overtime. The cost of using lumper services varies widely, depending on the amount of work and the number of labor hours required to complete a job. The cost can range from $50 to unload a truck to $250 to unload a full trailer.

For instance, Walmart charges a flat fee of $50 for most loads while other receivers charge according to the size of the load. The cost may be higher if the lumpers need to restack the freight. Typically, carrier companies include lumper fees in the freight charges so that this doesn’t become an extra cost they have to foot. This page provides a template for calculating the cost of using lumper services.

Even though it is hard to give exact figures, lumper services are cheaper than inhouse dock workers because they do not qualify for as many benefits as inhouse workers. Lumpers charge a lump sum for their services, unlike inhouse workers who require hourly compensation in addition to health insurance, safety gear, workman compensation, and leave allowances.

Lumpers are independent contractors responsible for insurance, injuries, and other costs they incur during their course of work. Using lumpers helps docks reduce liabilities, such as worker compensation and disability insurance premiums. Indeed, the reason docks insist on the carriers to pay lumpers is because it shifts the liability to the third-party agency that hires them.

Flat Rate Lumper Service vs Hourly Workers

Many of the costs associated with operating a warehouse are fixed costs that really can’t be lowered or changed. But one cost many warehouses are realizing that they can cut are on employee costs associated with container unloading and loading.

Normally a warehouse will have hourly workers slowly unload shipping containers which can vary costs depending on how fast the employee wants to work that day. On the other hand, a warehouse can hire a flat rate company to unload or load their containers for them for a flat rate. So instead of playing several workers an hourly rate and having to pay an unknown amount for each container, a warehouse can just pay a flat rate and let the Lumper company deal with it.

Example of the Cost Saving with using a Flat Rate Lumper Service

The savings associated with using a flat rate lumper service will vary but let’s look at this scenario. The Warehouse has a shipping container that needs to be unloaded, they can use two options:

  1. The warehouse uses 3 hourly workers to unload the container which takes 4 hours for a total of 12 hours. With current warehouse laborer wages the warehouse would be paying between $15-$18/ hour for their own employees or $21-$25/ hour for temp agency workers. So, for the 12 work hours required to unload the container the warehouse would pay anywhere from $180 at the lowest up to $300.
  2. Option 2 is where the warehouse uses a flat rate service and pays a pre negotiated rate to unload the container which starts at only $195 per container.

Other Advantages of Using Lumper Services

A common complaint among customers in the food industry is that their deliveries were not handled properly. There may be instances of cargo falling during transit or getting damaged. Lumper service companies help reduce these losses by loading and unloading food packages safely to minimize damage. Lumper services are popular with big grocery chains because they save them millions in labor and staff costs.

Some companies have in-house dock workers who handle the loading and unloading of freight. However, such workers often have other responsibilities apart from packing trailers. They can rush the loading and unloading or make other mistakes so that they can continue with other tasks. This makes them less effective than third party lumping services whose only focus is on loading and unloading trucks and trailers effectively.

Lumpers have worked at the dock for a long time and know the way around the warehouse. This increases the loading and unloading efficiency while reducing the risks of damaged goods and injury to the workers.

On average, lumpers make loading and unloading trailers quicker than it would be if it were done by drivers. Industry experts estimate that drivers unload at 25% of the rate of specialized lumping services. Lumpers are the helping hand that keeps freight rolling.

Lumpers reduce the costs that carriers incur in delivering freight. For instance, the carriers or freight brokers do not have to cover the cost of injuries incurred by the lumpers because they are independent contractors. They also save on training and equipment costs because the lumpers will bring their own equipment or hire from the dock owners.

For carriers, lumpers enhance relationships with receivers because they help restack or unload the freight without much hassle. Lumpers understand the customer or receiver’s demands and handle the cargo according to the requirements. For instance, lumpers understand how the client wants different goods arranged in the warehouse for easy retrieval and stack them accordingly.

Lumpers also help warehouses meet peak period unloading demands.  They help deliver goods on tight schedules by reducing the time it takes to load or unload goods and send them to customers. This reduces lead times, leading to improved customer satisfaction.

Lumpers enable warehouses to handle complex cargo more easily than they would without specialized cargo handlers. For instance, most warehouses involve third party lumpers when handling non-unitized cargo than when dealing with unitized cargo. It is also common for warehouses to use lumper services for unloading unitized loads of agricultural commodities and refrigerated goods.

Using lumpers reduces tax liabilities for shippers, carriers, and receivers because they are independent contractors responsible for filing their tax returns. In other cases, the third party hiring the lumpers shoulder the responsibility for filing their tax returns.

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