How to reduce freight costs is a critical concern for any business involved in transporting goods to customers or raw materials to facilities. Opting for economical carriers may lead to challenges, as they might not always meet the required services and transit times, causing potential headaches and added costs.
Cutting down on freight expenses can significantly benefit a company’s financial health. However, finding ways to reduce freight costs without compromising quality is key. Here are five strategies businesses can employ to minimize freight expenses while maintaining high standards:
1. Mode Optimization
Optimizing transportation modes is a highly effective method for cutting freight expenses. Various transportation modes are available, such as less-than-truckload, volume, partial truckloads, truckload, expedite, and more. Selecting the appropriate mode can significantly reduce costs.
For instance, a shipper sending 15 pallets across 5 LTL shipments to the same destination could save by opting for a partial truckload. Conversely, a shipment of 6 pallets may secure better pricing by utilizing Less-than-Truckload networks instead of booking a full truck.
2. Develop Relationships, Don’t be Transactional
Rate shopping, commonly practiced by companies aiming to trim transportation expenses, may appear beneficial initially. However, in the long run, this approach could hinder your operations.
The initial attractive rate might catch your attention, but a strong relationship with your carrier will ensure your freight gets picked up reliably. The seemingly lower rate might omit necessary services or could be a tactic to win your business initially, only to increase the rate on the next load.
Build solid relationships with carriers and 3PL partners. While anyone can offer a lower rate to attract you initially, what lies behind that offer is uncertain. Building a relationship fosters trust between both parties and can lead to a positive experience, even if the initial rate is slightly higher.
3. Freight Invoice Auditing
Freight invoice auditing is the process of auditing your quotes for transportation with the invoice amount. There are many benefits to this process other than flagging instances where a carrier overcharged. Utilizing this process, a shipper can dive deeper into where costs are going into. Does the shipper consistently see reweigh fees and reclassifications on shipments?
By diving further into what is being invoiced, a shipper can audit their entire transportation program to find efficiencies. To make the process easier, third party logistics provider provides the service automated through their transportation management systems.
4. Being a Shipper of Choice
A shipper of choice is the best recognition a shipper could have from a carrier. A couple of ways to become a shipper of choice is always properly packaging freight, communicating freight details properly, loading / unloading carriers swiftly, and being a great partner for the carrier.
Shipper of choices can receive discounts for helping a carrier’s operation run smoother. If a shipper is hindering a carrier’s operation, the carrier might be forced to increase costs to service the shipper. By helping the carrier operationally, the shipper will receive further benefits from the carrier.
5. Transportation Management System
A Transportation Management System (TMS) allows shippers to control their transportation from one, unified system. The best TMS will hosts rates, communicate to carrier’s systems for auto-tendering and tracking, and provide various tools for the shipper. An example of a productive tool is a built-in density calculator to provide accurate rating for a shipper based on the shipment details.
To experience next level control in freight costs, it’s highly recommended to ship via a TMS system. These systems give shippers full-access to controlling their supply chain. For an easy to use system, check out TLI’s ViewPoint system here.
Reduce Freight Costs with a 3PL Partner
Teaming up with a 3PL Freight Broker can lower expenses by providing shippers with access to costly freight tools. These include carrier monitoring programs, API rating engines, automated freight invoice audit systems, transportation management systems, and many other services readily available from a 3PL partner. By partnering with a 3PL, you can reduce costs while benefiting from industry-leading tools and resources.