How To Regain Control Of Your Freight Costs – Start With Inbound Freight

Written by Neal Willis

control freight costFreight costs are among the most manageable business expenses, however, they can quickly get out of control if they’re not properly monitored. Vendors commonly ship freight to their customers on a prepaid and add basis. While some companies markup the cost of freight as a means for securing profit, some consider it a necessary practice to cover administrative costs, and others use it as a buffer to hedge against inaccurate freight quotes and unforeseen freight costs. No matter the reasons, companies commonly markup the freight charges to their customers. If you are leaving it up to your vendor to choose the freight carrier and allowing them to pass the cost along to you, then you are more than likely paying higher than necessary freight costs.

Beginning with inbound freight, shippers can easily regain control of freight costs by instructing vendors to route their inbound freight “freight collect”. By doing so, shippers can eliminate the opportunity for a vendor to markup their freight charges and avoid paying more than necessary for freight costs. While it may seem like a headache to take ownership of a process your vendors have historically been handling, controlling inbound freight can be made simple with the right tools, such as a vendor routing website where vendors can obtain freight shipment routing information according to shipper specifications, which is usually based on the least cost carrier.

inbound freight costThe use of a vendor routing portal offers several advantages, including capturing inbound shipment information and eliminating the need for the shipper to determine and relay routing information to vendors. With a vendor routing website, vendors have access to real time, least cost routing information and bill of lading instructions. When vendors utilize the portal, shippers gain visibility of inbound and drop shipments, which includes the expected freight costs and transit times associated with each shipment. In the event there’s an exception or problem with the shipment, the ability to trace this to the source (the vendor responsible for routing the freight shipment) is an added bonus.

Another upside of having vendors ship freight collect is the additional inbound shipment volume can be combined with existing outbound and drop shipment volume to help stabilize and, in some cases, lower pricing with the carrier(s) due to economies of scale. From both an operational and revenue standpoint, increasing volume with the carrier(s) makes the shipper a more visible and valuable partner, and it gives them a little more leverage when it comes time to negotiate pricing.  

If the freight budget is in disarray, controlling inbound freight is an effective means of reigning in and regaining control of freight costs. As previously iterated, freight isn’t free; someone is paying for it.