Struggling with high freight costs? It’s a common issue, but there are ways to manage it.
Find out how by watching the video below!
Reducing freight costs is a recurring challenge in logistics. During a recent webinar, freight costs emerged as a key concern, leading to this discussion of seven practical strategies for lowering expenses.
Avoiding the Rate Cut Trap
A common mistake is to pressure freight carriers for rate cuts. However, since freight companies operate on thin margins, this approach is rarely effective and could jeopardize long-term relationships. Instead, focus on changing the task—modifying how freight is presented and managed to create efficiencies.
Volume Leveraging for Better Rates
Consolidating freight across different branches or divisions within a company can significantly reduce costs. By combining shipments and negotiating as a single entity, companies can leverage higher volumes to secure better rates from carriers. This strategy eliminates the inefficiencies of disparate contracts and varying rates across the organization.
Optimizing Transport Resources
Matching the right transport resources to the specific needs of your shipments can lead to cost savings. This includes selecting vehicles that are appropriately sized and equipped, such as those with tail lifts or cranes when necessary. Regularly reviewing and adjusting your transport resources to ensure they are aligned with your needs can help optimize costs.
Choosing the Right Rate Structure
Selecting the correct rate structure is vital for controlling costs. Whether it’s a per-ton rate, per pallet, or a full truckload (FTL) rate, aligning the rate structure with your shipment profile can lead to substantial savings. For example, if most of your shipments consist of single pallets, focus on securing a competitive rate for single pallets rather than prioritizing full truckload rates.
Ultimately, reducing freight costs requires a strategic approach that goes beyond merely seeking lower rates. By leveraging volume, optimizing transport resources, and selecting the appropriate rate structure, companies can achieve more sustainable and meaningful cost reductions.
Related articles on this topic have appeared throughout our website, check them out:
- 10 Freight Management Mistakes and How to Avoid Them
- Freight Benchmarking: What Is It? Why Do It?
- Why Containerised Freight Shipping is Daunting for SMEs
- 12 Smart Ways to Reduce Your Freight Costs
- There’s a Less Frustrating Way to Negotiate Freight Contracts
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated August 21, 2024, under the title “How to Reduce Freight Costs – Key Tips Many People Miss“.
