How Consolidating Freight Orders Can Help Reduce Costs

Written by Paul Forand

freight-cost-43We had a great example come up lately of how freight order consolidation can create a significant cost reduction for a business looking to stay competitive. A manufacturing company in Texas with a variety of products, including automotive and aerospace, came to us looking to reduce their shipping costs.  What we discovered is that their shipping processes were out of date, and they weren't taking advantage of newer ways of bundling shipments.

For example, many smaller shipments were being sent to the same customers, even when they could be bundled into the same Less-Than-Truckload (LTL) shipment for lower overall costs with no changes in transit times.  

By analyzing their processes and their relationship with their biggest buyers, we were ultimately able to reduce their shipping by 20%.  Such consolidation easily results in huge cost savings. Here are a few tips if you're looking to consolidate your own shipping.

Larger Shipments Result In Lower Cost-Per-Pound Rates!

1 – Consolidate shipping data.

If you're still handling shipments on paper, on an order-by-order basis, the first step is automation.  You won't be able to properly analyze your shipments until you have  a single sortable database that can give you a true Big Picture look at ALL of your shipments.

This will enable you to pull up any customer's records and immediately have a good idea of how much they order, how frequently they receive shipments, and your cost per shipment.

This gives you a solid foundation for any kind of analysis or shipping cost reduction.

2 - Talk bulk discounts with your customers.

If you have a customer who's getting frequent shipments, have a chat with them about bulk discounts.  You'll be able to offer your own products at lower prices, along with getting much better deals on shipping them in larger batches.  

Once you've got solid numbers to work with, you should be able to make some compelling offers to your existing customers which will lower their costs while ultimately boosting your per-unit profits.

3 - Consolidate your own suppliers.

transportation-cost-61The same basic process can be applied to those shipping materials to you.  Could you be placing larger orders, less frequently, that end up filling a truck?  Full-truckload shipments will be cheaper, and your larger LTL shipments will result in a lower cost per pound. Near-sourcing may be another option here, especially if you can work out favorable bulk prices with local sources.  If you can increase shipment sizes while simultaneously reducing distance traveled, you'll realize huge savings.

4 - Consider a 3PL

Third-party logistics companies specialize in providing all these services and more, for less than it would cost to hire even a single in-house transportation expert.  They have extensive routing knowledge, IT resources and customer service professionals at your disposal.  

A 3PL can provide you with a robust technology platform and other web-based tools that can be integrated into your own systems at minimal additional cost, which can be expensive for a business to implement on their own. 

There are a lot of DIY options for optimizing your shipping, but few are likely to bring clearer results, more quickly, than hiring a 3PL.

Contact ReTrans Freight today for consultation on your shipping options!