Strategic Shippers Negotiate Effectively
How do I lower my transportation costs? With rising costs in the current market, everyone wants specifics. While I can’t provide all the details in just two sentences, here are three key steps to get you started.
Lower Your Transportation Costs!
Transportation costs are crucial for shippers because they directly impact profitability. High costs can erode profit margins and make it difficult to stay competitive. By managing these expenses effectively, shippers can offer better prices to customers and improve their market position. Lower transportation costs also allow for reinvestment in other areas of the business, driving overall growth and efficiency.
Getting a carrier tariff with a 99% discount is meaningless if you don’t have a rating engine to compare the base tariff. Shippers can make the right routing decisions by using technology to compare the least-cost provider against all other available carriers from an effective logistics sourcing RFP. Focusing on the cheapest freight cost on a shipment-by-shipment basis is outdated and not scalable. It also raises issues like ensuring proper cargo liability protection and needing control, visibility, and good service from the carrier. Let’s take a strategic approach, shippers!
First, become a strategic shipper rather than a tactical one. Tactical shippers focus on getting the lowest cost for each shipment, treating transportation as a commodity. This approach is reactionary and misses opportunities to negotiate incentives and realize cost savings for volume and regularity.
Strategic shippers, on the other hand, prioritize building strong partnerships with carriers. They negotiate mutually beneficial contracts based on volumes and networks, gaining greater access to capacity when it’s tight and securing better rates, especially when rates spike. They use accurate shipment history, carrier performance data, and internal analytics to maximize service levels while minimizing costs and driving continuous improvement as conditions change. By thinking strategically, logistics professionals can optimize a large number of shipments in a dynamic network, rather than reacting on a shipment-by-shipment basis.
Quality Supply Chain Data
Second, ensure you have quality supply chain data to plan holistically and optimize rates and service levels. Without good data, you can’t properly analyze past performance or develop meaningful future options. Make sure your freight audit and payment operations capture accurate shipment attributes and true shipment costs. An accurate and complete shipment history file is essential for lowering costs and improving service capabilities.
Evaluate TMS Technology
Third, evaluate the technology you use to manage transportation spend and operations. Do you have the most effective managed transportation processes and LTL rating tools? The FTL market also offers a wide array of options, making it challenging to find the right one-off solution for your organization. Our ViewPoint TMS is a user-friendly option for mid-sized North American shippers. If you want to learn more about the best TMS, freight payment, or other technology options, get in touch.
Data-driven, strategic shippers that are technology-enabled, can significantly lower transportation costs relative to their competition.