Most companies can reduce freight costs with better planning. It's beneficial for every company to review their procedures and costs. Often times, the maximum cost savings are not being utilized due to a lack of knowledge. Missed commitment dates, damages and mistakes create added stress that can be avoided by following some simple guidelines. With better planning, many areas of shipping freight cost can be reduced or avoided all together.
1: USE A 3RD PARTY LOGISTICS PROVIDER
Third party logistics companies (3PL) are a major player in the world of freight. Many companies, small and large, are cutting cost, not just in freight charges, but also in warehousing and wages from utilizing the resources a 3PL offers. 3PL companies work diligently with many national LTL carriers and warehouses to secure and provide you with the best rates possible. Their staff can provide advice and guidance to avoid extra charges. Some will track shipments from start to finish to ensure on-time deliveries and avoid problems along the way.
2: SHIPPING CRITERIA AND ACCESSORIALS
Knowing the correct shipping criteria prior to your pickup will not only help cut your freight cost, but will also result in more successful and smooth deliveries. All LTL carriers charge additional fees for using non-commercial pickup and delivery locations. They also assess additional charges for making an appointment, using a lift-gate, or waiting for someone to load or unload their freight. Including all of this information when getting your quote will help insure that it is accurate and will reduce the amount of "add-on" charges from the carriers.
3: CLASS CORRECTLY
It's frustrating to get an invoice for higher freight charges than you were quoted. A large number added freight charges are due to the freight not being classed correctly. Classing freight correctly can be challenging and confusing at times. The class of your shipment is determined by the NMFC description of the freight. When shipping freight of any kind, the classification needs to be researched and understood. Transportation professionals at third party logistics companies have the necessary expertise to help avoid re-classes and re-weighs to reduce unplanned expenses. Using a transportation management system can also help reduce costly errors by storing your frequently used freight classifications to avoid simple data entry errors.
If your freight is of high value or can be damaged easily, adding insurance can ensure that you don't lose money on damaged freight. All carriers offer a basic insurance plan that pays a low price per pound if they are found to be at fault for the damage. The pay out on basic liability insurance is sometimes hundreds or even thousands less than the products value. The few extra dollars spent on added insurance could end up saving your company thousands of dollars.
5: IMPLEMENT A TRANSPORTATION MANAGEMENT SYSTEM
All shippers can improve the cost-effectiveness of their freight departments by incorporating a transportation management system (TMS). Many of the available transportation management systems today are easy to integrate and will eliminate many manual steps, reducing the margin of error. Analytical reports from your TMS can provide valuable insights such as carrier performance, claim free percentages, cost per pound and more. Using this information to guide your future business decisions is a great way to avoid future growing pains and their associated costs.
Freight shipping costs are a significant portion of your company's expenses. Keep these 5 money saving tips in mind to achieve your objective and keep your costs under control. A third party logistics provider can help implement all of these strategies and more. Having an expert assist in the day to day procedures of your freight operations will save you time and ensure that you can focus on what you do best.