Why Shippers & Carriers Need Accurate Data For Freight Cost Analysis

Written by Neal Willis

freight cost analysisConducting a freight cost analysis can sound like an overwhelming project and one that can easily be postponed. A freight cost analysis, however, is a rather simple task that, often times, shipping and logistics companies will help shippers perform. A freight cost analysis can be useful for several purposes, including driving cost savings through freight rate negotiations and process improvements, as well as a means of analyzing various market and customer trends to identify both opportunities and the root cause(s) of underlying problem areas with a particular shipping lane, carrier or product line.

Accurate data can help drive sound decision making, from carrier selection to process improvement, and having complete and accurate freight data is vital to performing an objective freight cost analysis. In their efforts to improve profitability and get a better handle on costs and operations, carriers today are scrutinizing their networks and performing their own freight cost analyses. Dimensionalizer machines have made it easier for carriers to identify mislabeled freight shipments with less effort and at lower costs than ever before. Through their own freight cost analysis, carriers are better able to price the freight more in line with what it actually costs them to haul it. They are demanding accurate product descriptions and bills of lading and, if they don’t get the information they need up front, they’re forcing shippers to pay for their mistakes on their freight invoices. 

analyzing freight costWhen shippers conduct a freight cost analysis, it’s often a means for trying to achieve cost savings with lower freight rates, but there are other benefits that are sometimes overlooked, like the identification of potential bottlenecks. After completing a freight cost analysis, a shipper may discover that better packaging could lower damage rates and freight costs, or they may learn they need to plan their deliveries to be more in line with their customer’s capabilities and requirements, such as the need for inside delivery due to the commodity value.

Not only at the time of shipment, but also when conducting a freight cost analysis, shippers have to be open with carriers about their freight shipments and the characteristics of their freight shipments, which means providing the carrier with accurate product weights and dimensions and notifying them of any special requirements needed for delivery. Many times, a shipper needs to provide more than just a data file to proceed with a comprehensive freight cost analysis. Data files don’t always include all of the necessary information that is contained on the freight invoice from the carrier, such as the NMFC item # and/or a commodity description. 

An in-depth freight cost analysis is best conducted with all of the information a shipper can get their hands on, including copies of the actual freight invoices, bill of ladings, pictures of the freight, catalog information with product dimensions and weights, product value, etc. Any information that will illustrate to the carrier exactly what they can expect to be handling and hauling will be most useful and appreciated by the carriers. In turn, complete and thorough information will yield the best possible freight cost analysis results for the shipper, helping them to make better decisions and, ultimately, keep and lower freight transportation costs long term. Saving money is something most people and companies strive to do. Whether in good times or bad, however, in order to determine if savings are obtainable, you first need to know exactly how much you’re spending and exactly where it is being spent.