The Secret To Lower Freight Rates: Optimize at the Zip Code LevelWritten by Paul Forand
If your shipping charges seem to be eating up more and more of your profits, you don't have to simply accept the situation. Freight rates may be going up, but smart optimization on your end can often lead to significant savings.
Some of the most effective optimizations revolve around a very small thing: the ZIP code. Focusing on the ZIP codes of origin and destination points can allow you to quickly identify opportunities for shipment consolidation to reduce the overall number of shipments!
5 Easy Ways To Optimize Your Shipping Based On ZIP Codes
1 - Track and chart all your destinations.
The first step is simply getting a handle on where your shipments are going. If you don't have one already, compile a database of your historical shipping patterns. Be sure to include information on any special handling or other requirements for all of the shipments.
This by itself may give you insights into how to optimize your own processes, and it will help with your carrier partnerships as well.
2 - Look for direct-line shipments.
It’s often possible to save money simply by looking for carriers who make specific ZIP-to-ZIP runs without the need for stopovers or truck changes. Once you know which ZIPs you're delivering to the most, it becomes much easier to look for specific carriers who match the routes you need.
3 - Pick one carrier to partner with.
If you're still using ad-hoc processes to choose shipping partners, picking based on market rates at the moment, you're probably costing yourself money. A carrier will be far more interested in negotiating with a company that's willing to offer dedicated, guaranteed business.
If they know up-front they'll be delivering a lot of cargo to a specific ZIP, month after month, that's highly beneficial to them. They'll be willing to talk discounts, if the volume is worth it.
4 - Consider a hub-and-spoke model.
Let's say you deliver a lot of stock all over California, but have little ability to predict which specific destinations. In that case, it might make sense to have two partners: A long-distance carrier that takes all shipments to one ZIP in central California, and a local carrier that takes each order the rest of the way.
You'll need to do significant cost-benefit analyses beforehand, but very often, the amount you save shipping all goods to that initial "hub" ZIP code can balance out the extra expense of having a second shipper handling the local spokes.
5 - Encourage your clients to consolidate.
By and large, shipping runs better when everyone involved has well-optimized systems. Enhancements on the part of your own buyers can often pay off in lower shipping costs for you and them.
Perhaps you are the sole provider of pens for a multi-office organization. The problem is all those orders are being placed per-office, so you're sending out a lot of small shipments at high freight costs.
If your client bought their pens in bulk at the corporate level, it would mean ONE shipment to ONE destination, greatly reducing fees all around.
Want More Options?
A third-party logistics provider can optimize your processes, help you find perfect routes, and integrate their systems directly into yours. Contact Re-Trans freight today to learn how much you could save!
image credit: stevemorse.org