5 Do-It-Yourself Strategies for Lowering Freight Shipping CostsWritten by Paul Forand
There's some good news and some bad news when it comes to freight costs in the modern business world. The bad news is that shipping costs, in total, are now usually among the top three costs any business has to deal with and can cut greatly into your profits.
The good news is that your shipping costs are also among the most controllable of your business expenses. If you feel like your business is spending too much on freight, chances are good that you can lower those costs... if you're willing to do a little legwork.
Five Ways You Can Easily Optimize Your Freight Expenditures
1 - Proper NMFC Classification
The National Motor Freight Classification system is currently the industry-standard by which shippers and carriers alike use to determine a commodity’s freight class along with necessary regulations and packaging guidelines for that particular product. It’s this class-based system that ultimately plays a chief contributing role in determining shipment costs.
With products, laws and regulations ever changing, out of date NMFC information can cost you dearly in unexpected charges that were not budgeted for after the fact.
Obtaining live, up to date access to the NMFC database can be rather expensive, but the subscription and regular maintenance costs associated with doing so can exceed the initial expense with increased quoting accuracy and decreased billing and budgeting errors.
2 - Conduct A Comprehensive Baseline Analysis
Once you have access to the NMFC, the next step is to ensure everything you're shipping is in line with it... AND that your carrier is charging you appropriate rates for everything you're shipping. In many cases, the NMFC system can be an aid in negotiating better rates, or working with your carrier to implement proper packaging guidelines to decrease costs in the form of fewer damages, regulatory fines and/or delays.
Plus, once you've got the lists and done a baseline analysis matching up-to-date NMFC guidelines with your own products, you’ve now created a database of product information that can be reused throughout your software systems.
3 - Optimize Your Software Processes
Why create a product database? Because, simply put, it can create cost savings with enhanced efficiencies in your shipping processes by reducing paper costs and speeding the flow of accurate information. The more paper you can eliminate from your shipping processes, the better, and any process which can be automated with software systems will ultimately save you a lot of time and money. It also saves your customers time and money, boosting your importance to them.
4 - Invest In Transportation Management Software
There are a lot of off-the-shelf software packages which are designed specifically for this sort of paperless computer software integration. They accept common document and database formats, and can form the backbone of a unified shipping system with minimal extra setup or programming.
Most are now deliberately designed to integrate into common Enterprise Resource Planning (ERP) products so that they can link directly to your existing sales and inventory systems.
5 - Optimize Your Routes And Modes
Work with your carrier more closely on how they transport freight, and by which routes. Many, for example, forget about rail options even though railroad can be the least cost option for long-distance shipments, especially when transit times are not of the utmost importance.
Likewise, smart optimization of parts suppliers or manufacturing services can also lower your overall freight costs. Find a carrier who's willing to work with you as a partner and not simply a provider.
Or, contact ReTrans Freight today for more details on the cost-savings you could see with proper transportation management!