Amid rising shipping costs, every penny counts. For companies that oversee complex supply chains, managing freight expenses is critical in maintaining profitability. From fuel costs to carrier rates, even minor fluctuations can impact your bottom line. The good news is, you can take proactive steps to optimize your freight spend and ensure you’re getting the most value for your transportation dollar.
Analyze and understand your costs
The first step to effective freight management is gaining visibility into your spending. Conduct regular freight invoice audits to identify potential errors and overcharges from carriers. Don’t just look at the total cost. Delve deeper into cost breakdowns for individual lanes, carrier performance metrics, and accessorial charges. This level of detail will highlight areas for improvement and inform future shipping decisions.
Optimize your shipping strategy
Consolidation is king for freight savings. Whenever possible, combine smaller shipments into larger ones to leverage economies of scale and negotiate better rates with carriers. Additionally, utilize route-planning software to optimize delivery schedules, reduce travel distances, and minimize deadhead miles.
For example, in analyzing logistics data, you might find an opportunity to consolidate disparate less-than-truckload (LTL) shipments to the same or nearby destination. Merging these into a single full-truckload (FTL) shipment and scheduling it earlier during off-peak hours could decrease your spend.
Build strong carrier relationships
Developing solid partnerships with reliable carriers is key to securing competitive rates and ensuring consistent service. Negotiate rates and contracts based on your volume and loyalty. Look for carriers with a proven track record of on-time deliveries, efficient communication, and a commitment to safety. Explore partnerships with companies that understand your product or industry and can offer value-added expertise.
Embrace technology and automation
Technology is a game-changer in freight management. A good transportation management system (TMS) can streamline the shipping process from order placement to tracking and invoicing. These systems provide real-time visibility into your shipments, optimize carrier selection, and automate manual tasks, allowing you to focus on strategic planning. You should also consider utilizing digital freight platforms that offer instant quotes, real-time booking capabilities, and access to a wider pool of carriers, giving you more leverage when negotiating rates.
Additional cost-saving techniques
Other techniques to squeeze more savings out of your freight budget include negotiating longer lead times with your customers whenever possible. Reducing packaging materials (dunnage) and exploring backhaul options for a discounted rate with carriers can also lead to cost savings. But cost-cutting shouldn’t correlate to lower service quality. The goal is to trim expenses and maximize value.
Shipping doesn’t need to be expensive
By implementing these best practices and continuously monitoring your freight management processes, you can decrease your shipping costs and free up valuable resources to invest in other areas of your business. Remember, a well-managed freight strategy isn’t just about saving money but gaining a competitive advantage.