How To Estimate Freight Charges In AdvanceWritten by Paul Forand
It's generally not possible to estimate freight charges in advance and be correct a true 100% of the time. However, there are some things you can do to help improve your accuracy on freight estimates. What method do you use?
After all, there are a lot of externalities involved in shipping. Accidents can happen, items can get mis-weighed, regulations can be misunderstood. The goal is always to create accurate estimates, but those estimates can sometimes fall short of the final bill.
Even though exceptions will always happen, companies that produce generally-reliable shipping estimates are going to be rewarded with happier and more-loyal customers.
Here are some right AND wrong ways to estimate your freight charges...
Methods For Estimating Your Freight Charges In Advance
I - The Wrong Way
1 - Historical billing estimates.
Far too many businesses use this as their only guideline: They add up whatever they've paid to ship the product on previous occasions, and then take the average.
The problems here are numerous. Rates, regulations, accessorial charges and fuel surcharges change over time, so these historical averages will never reflect today's reality. Additionally, historical shipment costs don’t take into consideration potential weight and volume breaks, which could leave you paying higher-than-necessary rates.
2 - Percent of sale price.
In some cases, companies may simply assume "10% of the sale" or something along those lines will cover the freight costs, rather than doing any direct research. Frankly, this is no better than throwing darts at a board. If the estimate is accurate, it's pure luck.
II. The Right Way
1 - Research the carrier's website.
Most (but not all) major carriers will have online rate calculators which are relatively accurate, assuming all of the shipment information is entered correctly. These rate calculators will almost always be more accurate than any estimate you perform on your own. It's a bit time-consuming to manually compare prices, but you'll be able to produce very accurate estimates.
2 - Connect directly to a carrier.
Many carriers and brokers don't want to openly display their prices for just anyone, but they may have the technology in place to link your freight rates with their web services for quoting purposes. This gives them a "captive" customer and allows you to get good estimates almost immediately upon request.
And if you do a lot of business with that carrier, this is often a path towards a better relationship and lower freight costs.
3 - Use a non-broker 3PL.
Most third-party logistics firms simply act as an intermediary purchasing a service on your behalf. Non-broker 3PLs, however, offer a few advantages over traditional 3PLs.
For many businesses, this hits the right balance of visibility, cost, speed and reliability. To hear more, just contact ReTrans Freight about our superior cost-saving measures!
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