Negotiating Savings with Your Transportation Services Company

Written by Neal Willis

freight-cost.jpgNegotiating savings with a transportation services company is a process that takes time but can yield freight savings for both your company and the LTL freight carrier(s).  It’s important to keep in mind that savings can be achieved not only through hard dollar rate adjustments, but they can also be found through process and efficiency enhancements, such as automation.

Many companies view the process of negotiating savings with their transportation services company as a never-ending and overwhelming project.  Companies will quickly dismiss exploring an opportunity with a transportation services company because they’d simply rather not deal with the headaches.  They will reason that since what they’re doing isn’t broken, it’s better left alone.  

Chances are someone is capturing information and collecting data on any variable that’s measurable and/or quantifiable.  The LTL freight market is data driven.  Both LTL freight carriers and shippers alike crave data, however, the challenge many companies face is not knowing what to do with the data they have.  To exacerbate the problem of not knowing what to do with their data, companies will often guard it as “top secret” and refuse to share it with their current or potential transportation services company, 3PL and/or LTL freight carrier.

piggy-bank-cardboard-box.jpgWithout knowing details on a shipper’s freight and what is being hauled, LTL freight carriers can’t accurately predict the costs associated with the handling of the freight, which is why when shippers don’t relay accurate information to the LTL freight carrier or transportation services company (3PL), they end up facing steep rate hikes, penalties and unforeseen costs down the line. There’s a big difference in strategic and transactional partners.  It’s highly likely that your LTL freight carrier and/or transportation services company would rather work with a shipper who is strategic in their thinking and willing to share information versus working with a shipper who won’t disclose all of the details.

As a strategic partner, working with your transportation services company to determine the specific goals of your partnership is the first step towards achieving both short term and long term freight savings objectives.  Having goals established from the start allows you to determine what’s feasible in terms of how the savings can be achieved and from where they can reasonably come.  It’s best not to cut corners in some areas, such as product packaging.  On the other hand, slight adjustments to processes, like automating freight payment or altering shipping and receiving schedules to better accommodate your LTL freight carrier’s needs, may yield higher savings than a deeper discount on the freight rate would yield.

Strategic thinkers tend to consider the long term and savvy shippers understand that savings aren’t always achieved through variables that can be quantified in dollars.  Shippers must work closely with their transportation services company, 3PL and/or LTL freight carrier and provide them with accurate data and honest feedback.  As they say, it’s hard to get where you’re going if you don’t know the destination or where you are when the journey begins.