Freight charges can be a significant financial strain for businesses, making them feel like they are being weighed down. To cut down on expenses, many businesses are searching for ways to reduce their freight costs. Fortunately, there is a plethora of strategies available that can help you achieve this goal.
What is the reason for lower freight transportation?
The primary reason for lower freight transportation is the reduction of overhead costs associated with shipping services. By leveraging technology, businesses can reduce their overhead expenses on fuel, labor, and other resources necessary for freight transport. Additionally, companies can also benefit from discounts when they take advantage of volume discounts or larger contracts that offer reduced rates per load.
Having the ability to quickly adapt to changing market conditions and customer needs can be a huge advantage when it comes to controlling freight costs. By creating an effective supply chain management system that is agile enough to adjust quickly to different market situations, businesses can reduce transport costs while maintaining their customer satisfaction levels.
Freight cost reduction strategies can be broadly broken down into three categories:
- Negotiate Rates with Carriers: One of the easiest ways to reduce your freight costs is to negotiate better rates with your current carriers. Many times, it’s possible to get a discount if you commit to shipping a certain number of packages per month or establish a long-term contract.
- Review Shipping Methods: Depending on the package’s size and destination, you might be able to reduce shipping costs by selecting the optimal delivery mode. For instance, if you’re sending a relatively small package, switching from ground shipping to air freight can save you money.
- Increase Efficiency: By streamlining your operations and increasing efficiency, you can often make significant cost savings in the long run. Evaluate your current processes and look for any areas where you can streamline your workflow or cut out extra steps to reduce freight costs.
By following these strategies, you can make sure that your business is getting the best possible deals on its shipping expenses, but let’s take a look below at the whole picture.
How To Reduce Shipping Costs
- Consider using a 3PL partner for freight management and logistics: A third-party logistics (3PL) provider can help you manage your freight fees by leveraging their established relationships with carriers and negotiating competitive rates on your behalf. They also offer value-added services, such as inventory storage, order fulfillment, return processing, and more.
- Utilise freight consolidation services: Consolidating your shipments into larger orders can help you save on shipping costs, as carriers typically offer discounts for higher volume shippers. To take advantage of these savings, ask your 3PL provider to bundle orders and consolidate shipments when possible.
- Negotiate rates with carriers: Negotiating rates with carriers can be time-consuming, but it’s a great way to reduce freight costs. Have your 3PL provider work with you to negotiate the best shipping rates and customised service levels that meet your needs.
- Invest in track and trace technology: Track and trace technology allows you to keep tabs on orders in real time and can help you reduce freight costs by proactively managing shipments and identifying potential problems before they occur.
- Take advantage of discounts: Carriers often offer discounts for early payment or bulk orders, so take advantage of these offers to save on shipping costs.
- Review invoices carefully: Carefully review invoices to ensure that you’re only paying for the services you actually used. Many carriers will include additional charges and fees, so make sure to check your invoices thoroughly.
- Negotiate better terms: Talk to your carriers and negotiate for better terms, including lower minimum delivery charges, longer payment terms, and improved damage claims policies. The more attractive you can make the relationship with your carriers, the more likely they are to offer discounts or incentives.
- Review transit times: Consider how quickly (or slowly) shipments need to arrive at their destinations when choosing a carrier and negotiate delivery time frames to reduce overall transit time and costs.
- Monitor the market: Keeping tabs on the freight market can help you stay up-to-date on pricing trends, carrier discounts, fuel surcharges and other market changes that may impact your shipping fees.
- Utilise multiple modes of transportation: Depending on the size and type of shipment, consider using multiple modes of transportation such as air/ground freight combination shipments or intermodal transport between ports. By combining different methods of shipping you can often achieve savings over traditional truckload services alone.
- Optimise shipments: Reviewing your existing shipping routes and making adjustments where possible can often reduce freight costs as well. This could involve optimizing packing densities or finding alternative transportation solutions in order to save money on fuel costs. Additionally, look for ways to ship less frequently but in larger volumes, so you can take advantage of bulk discounts from your carriers.
Leveraging your buying power
By consolidating your shipping volume with one carrier, you can often secure better rates and terms than if you spread out your shipments among multiple carriers. Additionally, negotiate with suppliers for discounts or incentives when shipping in larger volumes.
Use technology to your advantage
Investing in technology such as a Transportation Management System (TMS) can help reduce freight costs by streamlining processes, improving efficiency, and providing greater visibility into the supply chain. The use of such systems can also provide access to real-time pricing information which can help you negotiate better deals with carriers.
Shipping cost savings can be achieved by taking a holistic approach to freight management. By utilizing the strategies outlined above, you can reduce your shipping costs and ensure your business runs more efficiently. Negotiating rates with carriers, optimizing shipments, and leveraging technology can all help you achieve greater cost savings in the long-term.