Eight Ways to Save on Freight CostsWritten by Neal Willis
1. Run Rate Comparisons For All Shipments
Shippers can automate this process with a TMS program, which can rate shop every shipment and route shipments least cost by default. Even if you don’t have a TMS, it’s always a good idea to periodically spot check shipments and run rate comparisons across your carriers to ensure you’re still routing effectively. Shippers often times get into a routine and route shipments based purely out of habit without running rate comparisons to confirm they’re using the least cost carrier option.
2. Reduce The Number of Carriers
By reducing the overall number of carriers being utilized, shippers can ease dock congestion and increase their leverage and standing with the carrier(s), which can save them both time and money. When a carrier is utilized regularly, they become familiar with your business and tend to view you in a more favorable light. They’re much more likely to accommodate your schedule and any special needs you may have from time to time when they know they can count on your continued business.
3. Improve Packaging & Handling
Take a look at damage rates to see if claims ratios are within an acceptable range. When higher than normal for your particular industry, spending a little bit of money up front for packaging and handling improvements may prove to be beneficial to your bottom line if damages can be reduced. Lowering the administrative costs of claims processing alone can be a huge savings. Lowered claims ratios will help sustain favorable freight rates and a reduction in damages will enhance customer satisfaction.
4. Benchmark & Evaluate Carrier Performance
Performance benchmarks, such as on time percentages, transit time and claims ratios should be utilized to evaluate your carrier’s performance on a continual basis. You may be surprised at what you find. Compare your carrier’s performance to others in the industry and hold your carrier accountable. If they are unable to meet industry standards, then it may be time to look at another carrier option.
5. Control Inbound Freight
Whenever possible, take control of your inbound freight. Have your inbound materials and products billed collect to your account through the rates you have in place with your carriers. Not only will it help to eliminate what you’re paying in marked-up freight charges billed by your suppliers, the added inbound freight volume can be used to leverage better rates in your yearly carrier rate negotiations. It also gives you visibility of inbound freight, which can assist with scheduling receiving operations more efficiently.
6. Consolidate Orders
Instead of sending and receiving multiple orders, consolidate them into one, larger shipment whenever possible. Consolidating multiple parcel shipments into an LTL shipment and multiple LTL shipments into one truckload shipment will help save you money. You can start by looking at customer shipment history to see if you’re sending multiple deliveries to the same customer within a given time period (one week or month). This practice can also be applied to purchases. Instead of purchasing toner, paper and other supplies you tend to order in smaller quantities on a regular basis, buying them in one larger order can help lower your freight costs. Plus, the order consolidation may even allow you to take advantage of added volume discounts from suppliers for increased order size.
7. Order Enough For Free Freight
As we’ve mentioned before, freight is never free. However, sometimes it might make sense to order enough product from suppliers to qualify for free freight.
8. Mode Optimization
Determine your delivery objectives. Look at the costs for alternative shipping modes and then determine what is truly necessary in order to meet them. Make sure that your time sensitive freight is legitimately time sensitive. In some cases, you might find that a change in scheduling or simply planning ahead can help you avoid more expensive, expedited-type shipments. LTL Volume shipments can be a cost effective alternative to shipping regular LTL and, depending on the product and whether or not time is a primary concern, shipping via rail may be a cost effective alternative to LTL and/or TL.