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Reducing Freight Costs Part Two: 11 Considerations That Go Beyond the Freight Rate

In part one of reducing freight costs we covered some of the basics, such as carrier discounts, accessorials, fuels surcharges, picking the best mode or route, and picking the best classification. In today's post about how to reduce your overall freight expenditures and look beyond just the rate to realize both hard and cost savings around freight which will impact your business's bottom line, consider these additional five points when processing your freight shipments:

Look beyond the Freight Rate or Quote For Reducing Freight Costs

Does your transportation coordinator always pick the least cost carrier? It may sound like a good idea at first thought to pick the lowest cost carrier to save the most amount of money, but long term, it could cost you much more than just the cost of freight. What if the transit time causes your customer to always feel like you are late or aren't keeping them top of mind? What if you pick the carrier with the worst safety record and you are always having to deal with claims or worse yet, you didn't have enough insurance to cover your damaged freight? Start tracking your carrier choices and analyze the whole picture around each freight to see which carriers are best for you over time in order to realize the most soft freight costs savings that come from looking beyond just the quote or freight rate.

Uncover all Potential Cost Savings: Multi-Lane Pricing

We find that most shippers do not ship to only one lane. In fact, there are sometimes hundreds or even thousands of different lanes, with different commodities, different classes, and different requirements, depending on the size of the shipper. So, instead of using a base rate, it may make sense to put together and RFP and get specific pricing for all of the varying lanes for reducing freight costs. In doing so, the overall specific pricing lowers your costs by getting you the best rates across the board. Sometimes this causes higher rates in some lanes, but lower rates in others, but the goal is to get the overall savings.

Ignorance is Not Bliss In Freight Claims

Much like when you took driver's education all those years ago, it's not if you get in a car accident but when ... tis the same in freight claims. At some point, you will have to deal with processing a freight claim. The more you know about what to look out for in freight claims, and the more knowledge you have, the less time you spend dealing with the process and the more claims payment you can realize. Some of the first things to consider in freight claims are:

  • Shortage of product
  • Missing seal
  • Freight load shift (due to improper blocking and bracing)
  • Freight involved in rough handling
  • Stolen freight
  • Water damage
  • Possible contamination

If these things are seen, then it may require a freight claim.

Proper Freight Accounting

How many shipments do you process or receive in a given week that create that many freight invoices? Are you thus allowing you to catch errors and thus reducing freight costs? How many claims do you have open right now?  What is your cash flow? Is your head swimming yet? Proper freight accounting can really mean a lot of savings. This means making sure carriers are paid on time and that you are able to audit and catch mistakes in a timely manner. Consider these processes to get the most out of freight accounting:

  • Freight Payment
  • Freight Auditing
  • Consolidate Freight Invoices from similar carriers

Employ Freight Technology

Finally, the #1 way you can save on freight costs is to employ freight technology, such as a transportation management system, freight claims software, and accounting software. Make sure all of these systems can speak to each other through web services or integration so they work seamlessly together and don't create more resources required to manage them. When you use technology you can:

  • Eliminate manual process
  • Have multiple carriers to choose from at your fingertips
  • Ability to analyze data and shipment activity to arm you with more knowledge
  • Track and manage employees and activity
  • Decrease time in training new hires
  • Easily deploy through web-based applications, meaning no costs to install or keep up the system

There are several ways to save money on your overall freight costs. Sometimes it takes a little knowledge in order to maximize savings. Make sure you are asking your logistics coordinator or whoever manages the transportation in your department to take a look at this post and ensure you are getting the most savings from your freight departments!

If you have any tips on how to save on your freight costs, let us know in the comments below!

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Adam Robinson
Adam Robinson oversees the overall marketing strategy for Thomasholmes including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.
Adam Robinson

Adam Robinson

Adam Robinson

Adam Robinson

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