How to Reduce Freight Costs Without Negotiating RatesWritten by Neal Willis
Achieving zero cost for freight expense is impossible unless you stop shipping, and the days of dictating to carriers or 3PL’s what rates you want to pay are over for the foreseeable future. This means that shippers must find freight costing improvements in areas other than a carrier’s pricing department.
Process efficiencies can produce soft dollar savings, such as less damages and more accurate freight quotes, which result in longer term savings that aren’t always necessarily measurable in hard dollar numbers.
Especially in times like these when better pricing isn’t available, shippers must look into their own operations for efficiency and process improvements, like reducing the amount of time people spend getting rates and allocating costs.
Upgrade from Manual Invoicing to EDI
Sending & receiving carrier invoices via EDI vs. sending & receiving them manually results in fewer billing errors, faster process times, consolidated electronic information, faster billing capabilities to your customers, and makes billing easier for your carriers which can earn you favor with them. By upgrading to carrier invoicing via EDI, you create administrative efficiencies for you and the carriers, plus you reduce hard dollar paper costs associated with printing and mailing.
Process improvements can lead to efficiencies such as faster processing times and optimal handling. With some careful planning and thought with regards to your shipping & receiving process, you may be able to cut down on the number of overtime hours required of your staff, or you might be able to schedule your staff’s workload in a manner that reduces their down time in between deliveries and increases productivity. Could your staff be better prepared to unload a truck when it arrives? If the amount of time the driver is spending at your facility making routine pickups and deliveries is reduced, then you have helped the carrier lower the costs of servicing your account, which is a win-win for everyone involved. The willingness to work with carriers and take their needs into consideration is a vital component to helping them keep the cost of service low.
Improve Product Packaging
Improving your product packaging can result in easier to handle freight with fewer damages, which lowers overall costs and makes handling for you and the carriers easier. Damages and delays have huge implications for shippers, and both can cost shippers an immense amount of money. Even though it may cost a few extra pennies for an added layer of shrink wrap or an extra board on a pallet, if the damage rate is drastically reduced, it could more than offset the costs of the additional packaging.
Improving efficiency is a longer and more arduous process compared to simply obtaining lower cost structures, however, it is one of the very few options shippers have from a freight savings standpoint at the moment.
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