3 Key Benefits Of Outsourcing Freight ManagementWritten by Paul Forand
Are you still handling all your own shipping in-house? If so, there's a good chance you're paying more for freight than you have to!
For the last 10-20 years, it's been common for businesses to handle all of their own shipping by, negotiating rates with carriers directly. This worked fine in the past, as freight carriers were plentiful and often fighting for jobs. However, the global manufacturing boom is now stretching carriers to their limit, and the driver shortage and government regulations have exacerbated capacity problems.
The freight market has shifted, drastically, and everyday businesses are now at a disadvantage. That's why an increasing number of companies are turning to Third-Party Logistics providers (3PLs) to handle their freight.
Three Clear Reasons Freight Outsourcing Makes Sense Today
1 - Leverage
Threatening to take your business to a different carrier is no longer an effective tactic these days. The majority of carriers are running at or near capacity, and there are always other buyers looking for shipment space. On top of that, many are having trouble finding enough qualified drivers to even keep up with the workload.
In short, they simply have little reason to fight for business from a small company. Some carriers have even begun "firing" clients who aren't bringing enough business.
On the other hand, 3PLs work on behalf of many smaller firms at once, often bundling several clients into larger buys which allows them to leverage far more buying power. The largest and most respected 3PLs can often negotiate rates similar to those enjoyed by the largest companies like Wal-Mart.
You need that kind of price leverage to keep your own rates competitive. Otherwise, the companies that can negotiate low freight rates, or locked-in fuel charges, enjoy a huge advantage in the market.
2 - Software and Databases
Today's third-party logistics partners also bring a huge software advantage. They have databases of products, carriers, schedules, and prices which have been built up over years, or even decades. In some cases, they may have direct partnerships with carriers that give the 3PL access to the carrier's own data.
For starters, this means they have far more information at their disposal for putting together the cheapest possible routes for your shipments.
However, there's more to it than that. They can also bring these software systems to you, automating your processes and opening up the shipping tools to everyone in your operation. Orders that would take days to process, going through several hands, can be almost entirely automated by software and handled within minutes instead.
These paperless software systems can drastically reduce the man-hours spent dealing with red tape and bureaucracy, while greatly improving speed and performance for your own customers.
3 - Focusing on your core business.
At the end of the day, does freight seem like something that people in your company should be spending their time on? Instead, don't your coworkers all have better things to do, like jobs that will create better products or better services for your customers?
Sure, you could hire a dedicated Transportation Manager to handle these things... but qualified applicants will demand a salary in the high five figures, at least. A qualified 3PL can accomplish the same goals at a fraction of the cost, as well as bring software tools that no single administrator is likely to have.
Just as you may outsource your payroll, shipping is another area that can be outsourced, so your workers can focus on their real jobs. The problems and challenges in shipping should be invisible to your employees and your clients. A 3PL gives you that level of invisibility, while bringing you "it just works" processes for making shipments happen.
You Don't Have To Go It Alone
The shipping market is far larger and more complex today than in the 1990’s or 2000’s, and most companies simply don't have the resources or the leverage to really keep up. With freight quickly becoming one of the top cost components for any business, it simply makes sense to find a partner who can lower those charges.
Want to learn more? Contact ReTrans Freight today for a free consultation!