As a smart shipper, fattening up your bottom line also means knowing how to manage freight costs and increase shipping efficiencies with the help of practical strategies.

Costs Associated with Managing Freight

Every business is different, yet the most costly element associated with managing freight costs often tends to be the cost of the transportation itself. Realizing a better bottom line is not just negotiating better terms, but requires strengthening relationships and understanding the intricacies of the transportation and logistics systems themselves.

High-impact factors within the transportation industry include managing fuel, driver salaries, and equipment costs. Plus there are costs associated with packaging, warehousing, handling fees, as well as customs and import/export fees.

Overall, the total cost of managing freight will depend on a number of factors unique to your business – mainly the type of goods being shipped, the distance they are traveling, and the level of service required.

In this article, we will explore how a 3PL company can assist businesses in controlling freight costs. Some methods may be as obvious as shipping during off-peak hours, others require a better understanding of the components and common factors that drive up freight costs.

The following strategies provide insight into how to manage freight costs to help improve your transportation’s bottom line.

Strategies That Cut Shipping Costs

1. Perform an In-Depth Cost Analysis

When working with carriers, it’s important to clearly define what you need from them in order to make a comparison between their quotes.

For example, instead of simply asking for a standard rate and tariff format, specify the type of rate you need (e.g. kilogram rate, tonnage rate, pallet rate) and ask for quotes for different quantities (e.g. 1-5 pallets, 6-10 pallets).

By requiring all carriers to provide quotes in the same format, it will be easier to compare and understand which carrier is offering the best service and prices.

2. Define Your Freight Rate Structure

When it comes to freight rates and pricing structures, it’s important to make sure you’re paying the right rate for your specific needs.

For example, if you’re paying an hourly rate for deliveries, literally being on the clock might not necessarily encourage the transport company to make your deliveries efficiently.

It’s important to consider the rate structure, whether it’s per ton, per pallet, per carton, and ensure that it aligns with your freight profile. If it doesn’t, it might be worth reevaluating and potentially renegotiating the structure.

3. Recalibrate the Speed of Your Shipping Methods

When it comes to shipping and the premiums attached to speed, it’s important to make sure you’re not overusing faster methods like air or express freight when regular road freight would do. Take a look at your invoices and see which shipping speeds you’re paying for and make sure they’re appropriate. Often, people will book a higher priority than necessary.

Also, consider the different speeds of shipping methods and ask yourself if air freight is necessary for the entire shipping distance. For example, it might be more cost-effective to use air for a portion of the route and ocean transport for the rest, or vice versa.

4. Develop Relationships with Carriers

When shippers establish long-term relationships with carriers, they gain insight into transportation management that can have a real impact on the bottom line.

Long-term contracts allow carriers to optimize their resources and create more efficient networks with minimal deadhead miles. Carriers that are maximizing their assets are more profitable and can offer better rates. Plus, locking in a rate for a longer term, such as a number of years, means no annual rate changes and an overall better service.

5. Ship on Off-peak Days

Shipping on off-peak days can lead to some significant savings. For example, Fridays tend to be quieter days for shipping consumer goods as most retailers aim to have their products on shelves by the weekend. Similarly, Mondays tend to be less busy for carriers, so they may be more open to negotiating rates.

Of course, this may vary depending on the type of goods you’re shipping – for example, non-perishable goods may have more flexibility when it comes to shipping days than perishable goods. However, coordinating your freight shipments to take advantage of off-peak days is a great option for shippers of non-consumer products.

6. Offer Later Pick-up Times

Offering later pick-up times can be a great way to shave overhead costs in shipping. For example, by allowing carriers to pick up your freight after most other shippers have closed for the day, like between 6-12 p.m., you’re giving them the opportunity to make your load into a backhaul.

This means that they can fill their truck with your freight after completing another delivery, instead of having to make a separate trip. It’s a win-win situation, as it helps the carrier maximize their assets and save you expense. Just keep in mind that it depends on the cargo and the carrier’s schedule.

7. Bundle Your Shipments

Bundling shipments is a great way to drive down shipping costs; combining multiple orders into one shipment can save a significant amount of money. Instead of shipping a few pallets at a time, try to bundle them together into a larger shipment.

One way to encourage customers to bundle their orders is to offer them a discount on shipping costs. Another option is to implement Vendor Managed Inventory, where the retailer only pays for items once they are on the shelf, which may encourage them to take larger orders.

8. Maximize Your Carrier Capacity

Consider the ways in which you are packaging and presenting your freight to carriers. By making adjustments to loading and handling processes, you can help the carrier maximize the capacity of their vehicles and potentially reduce your costs.

For example, if you’re shipping fragile products that require individual pallets, you will be paying for unnecessary space in the carrier’s vehicle. Additionally, think about the overall design of your pallets, ensure they’re evenly packed to allow for efficient stacking.

9. Minimize LTL Shipments

Because LTL shipments operate on a piecemeal basis, less-than-truckload shipments drive up your freight costs.

Ways you can reduce LTL shipments include:

• Using logistics software make your full-truckload shipping frequency more efficient
• Work with carriers that offer load consolidation
• Offer incentives to freelance LTL carriers who offer better freight rates

10. Join forces with Other Shippers

Collaborate with other businesses near your regular distribution centers to bundle your shipments with theirs. This approach is even more advantageous if the companies are local and have a shared customer base.

11. Reduce Dunnage

Consider working with carriers to minimize unnecessary packaging and reduce shipping expenses without compromising product safety. Utilize carrier’s dimensional weight pricing plans that incentivize using the appropriate size packaging, reducing weight and packaging materials.

12. Increase Delivery Lead Times

By planning your supply chain needs and providing carriers with ample advance notice for future loads, you can help them optimize their resources and assets. Advance shipping notice allows carriers to align their trucks, drivers, and warehouse space to ensure efficient transportation.

One of the biggest costs for carriers is the idle time of trailers waiting to be loaded. By improving planning, communication and providing longer notice, carriers can reduce these costs and offer you more competitive rates. This also applies to all aspects of the supply chain, including pick-up, staging, and live-loading.

13. Contract for Steady Lane Freight Volume

Establishing a consistent and reliable shipping schedule with a carrier can lead to cost savings. Carriers can market unused capacity on their return trips and build a more efficient network when they know they will receive a steady flow of freight in the same lanes from you.

Additionally, in today’s market with limited capacity, carriers tend to prioritize the freight of shippers who are loyal and have dependable shipping volume.

14. Load Your Freight Quickly and On Time

Carriers typically develop their pricing based on a 2-hour load window. If the carrier knows they’re cutting their load time in half when picking up cargo at your facility, that’s an incentive to drop the price, and good reason to continue at a discount.

A shipper with a reputation for being efficient not only saves time and resources attributed to extra charges, but has carriers waiting and willing to negotiate better rates.

15. Find Carriers for Backhauls from Ship-to Points

Carriers that can fill space by backhauling from your ship-to points will get you a lower rate. Dead-heading costs them time and money. You can help them alleviate empty mileage and at the same time reduce your own freight costs.

Therefor it’s worthwhile investigating carrier terminals near your ship-to locations and endpoints.

16. Outsource your transportation department

Freight management for smaller companies especially is top-heavy. For many, the overhead in staffing and systems necessary to operate a transportation department is simply beyond their means.

By outsourcing the many facets of freight management to an experienced and efficient 3pl provider, the financial stresses of staffing and capital expenses are offloaded allowing the company to grow and innovate.

Reasons for Controlling Freight and Shipping Costs

Controlling freight costs is crucial, especially for small businesses, for several reasons:

1. Financial Impact: Freight costs can be a significant expense for small businesses, and if not managed properly, they can quickly eat into the company’s bottom line. By controlling freight costs, small businesses can free up funds for other important expenses, such as marketing and product development.
2. Competitive Advantage: Small businesses often operate in highly competitive markets, and controlling freight costs can give them an edge over their competitors. By keeping freight costs low, small businesses can offer their products at more competitive prices, which can help them attract and retain customers.
3. Cash Flow Management: Small businesses often have limited resources and rely heavily on cash flow. By controlling freight costs, businesses can better predict and manage their cash flow, which can help them avoid financial difficulties.
4. Improved Inventory Management: By reducing freight costs, businesses can reduce the amount of inventory they need to carry, which can free up space, reduce carrying costs and improve cash flow.
5. Better Customer Service: Businesses can improve their customer service by controlling their freight costs, as they can offer more flexible shipping options and faster delivery times. This can lead to increased customer satisfaction and loyalty.

Final Thoughts on Managing the Costs of Freight and Shipping

“I never predict freight rates; nobody can do that.”

Soren Skou CEO A.P. Moller-Maersk

For the short term that’s a fair statement. But a more significant observation involves the question, “Are future costs going to go up or down?” The answer is obvious.

Just as rates are expected to rise with inflationary pressures and demand, the same evolutionary predictions should be exercised when managing freight costs. Therefor, periodically evaluating and reevaluating your company’s position on transportation costs is an ongoing process; a critical facet of the jewel that is your company.

Need help managing your freight or shipping needs? Brimich Logistics is here to offer customized solutions guaranteed to move your company forward – contact us today!

Effective freight management is crucial for the success of any business that involves the transportation of goods. In this article, we will explore the various aspects of freight management and how they can be optimized to streamline logistics, lower costs, and ensure timely delivery.

What is Freight Management?

Freight management is the process of planning, organizing, and overseeing the transportation and delivery of goods or cargo. Any company, regardless of size, that produces physical goods has an interest in moving their products from point of origin to final destination on time, in good order and at the lowest possible cost.

Managing this process includes the coordination of various logistics activities such as freight forwarding, tracking, customs clearance, warehousing and distribution, and transportation planning.

Freight management also involves the negotiation and selection of transportation providers, the management of inventory and shipments, and the implementation of cost-saving strategies.

As stated, the ultimate goal of freight management is to ensure the timely and efficient delivery of goods while minimizing costs and maximizing efficiency.

Freight-Management Processes

The Benefits of Freight Management

Freight management services are an important aspect to any business. These services help ensure that goods are delivered on time and cost-effectively. Just as systems continue to improve to meet demand, the importance of well-organized freight management continues to increase over time. According to GlobeNewswire, the industry is predicted to grow to an estimated value of $21.13 billion by 2030 globally.

As an essential lever used to move the global economy forward, this service is utilized by the smallest to the largest of corporations to ensure goods safely reach their destination.

Businesses can benefit from using a freight management system in several ways:

1. Cost savings: A freight management system can help small businesses negotiate better rates with carriers and find the most cost-effective shipping options. This can lead to significant cost savings for small businesses over time.
2. Improved efficiency: A freight management system can automate many of the manual processes involved in freight management, such as tracking, scheduling, and documentation. This can lead to improved efficiency and less time spent on administrative tasks.
3. Better tracking and visibility: A freight management system can provide real-time visibility into the status of shipments, allowing small businesses to better track and monitor their goods in transit. This can help with inventory management and customer service.
4. Increased flexibility: A freight management system can help small businesses quickly adjust their shipping options and routes in response to changes in demand or disruptions.
5. Compliance: A freight management system can help small businesses stay compliant with regulations and laws related to freight management, such as customs clearance and hazardous materials handling.
6. Scalability: A freight management system can help small businesses scale their operations as they grow, allowing them to handle more shipments and larger volumes of goods without adding additional staff.
7. Better supplier and carrier management: A freight management system allows small businesses to have better control over their carrier and supplier performance, by analyzing the data and identifying the bottlenecks, delays and inefficiencies.

Additionally, there are more intricate parts of freight management, each with its own benefit towards lowering costs and optimizing operations. Some of these integrated services include:

• Load planning
• Route, schedule and transport optimization
• Multimodal and intermodal optimization
• Vehicle tracking using GPS
• Tracking and tracing shipments
• Using barcodes and RFID for package tracking
• Tariffs and regulations management
• Accounting
• Claim management
• Data collection, analytics and reporting

Overall, a freight management system can help small businesses optimize their logistics operations and improve their bottom line.

Different Types of Freight

There are several different types of freight, each with its own unique characteristics and challenges. Some of the most common types of freight include:

1. Less-than-Truckload (LTL) – This type of freight is made up of multiple smaller shipments that are consolidated onto one truck for transport. It is typically used for smaller shipments that do not require a full truckload.
2. Full Truckload (FTL) – This type of freight is when a single customer books an entire truck to transport their goods. It is typically used for larger shipments that require a full truckload.
3. Air Freight – This type of freight is when goods are shipped by air, typically for time-sensitive or high-value items.
4. Ocean Freight – This type of freight is when goods are shipped by sea, typically for large or heavy items, or for international trade.
5. Rail Freight – This type of freight is when goods are shipped by train, typically for large quantities of bulk cargo or for long-distance transportation
6. Special Equipment – This type of freight is when goods are shipped using specialized equipment such as refrigerated containers, flatbeds, or over-dimensional loads.
7. Hazardous Materials – This type of freight is when goods are shipped that are classified as hazardous materials and require special handling, packaging, and transportation regulations.
8. Dangerous Goods – This type of freight is similar to hazardous materials but has more strict regulations and requirement for special handling, packaging, and transportation.

How Freight Relates to Logistics

Freight and logistics are closely related as they both involve the planning, coordination, and execution of the transportation and delivery of goods.

Freight specifically refers to the actual physical goods that are being transported, while logistics encompasses the broader systems, processes, and strategies involved in the movement of those goods.

Logistics Operations Flow

Logistics includes freight management as a key aspect, but also encompasses other activities such as inventory management, warehousing, transportation planning and scheduling, customs clearance, and supply chain management. Third-party logistics providers (3PLs), often offer freight management services as part of their portfolio.

In summary, freight is a crucial component of logistics as it refers to the physical goods that need to be transported, while logistics is the overall process of planning, organizing, and overseeing the transportation and delivery of those goods.

Why are Freight Management Services Important For Businesses?

Most businesses are concerned about managing day-to-day operations that allow them to do what they do best. Unless your business is directly related to transportation, this means you shouldn’t have to worry about shipments. For example, in the middle of a busy week, the last thing you want is to have to scramble to make sure that your goods reached their destination.

You should have peace of mind with the right transportation management system in place that easily tracks and ensures products have reached your customers with the simple click of a button. Partnering with a reliable freight services provider such as The Brimich Group gives you this opportunity. It also provides the following benefits:

• Customer Satisfaction: Working with an organization that has expertise in logistics ensures your customers receive their shipments on time. With the right system in place, you and customers can track every shipment until it reaches its destination, leaving you and the customer satisfied with the overall process.
• Cost Effective: You can be sure of low freight rates from these firms. Since these companies handle in bulk, rates are lower and even negotiable depending on the amount of business you give them. The more business you provide, the lower your rates will be.
• Efficient and Time-saving: This goes especially for smaller businesses which don’t have the resources to handle freight properly. Going with a freight company streamlines the supply chain management aspect of your business. With their expertise, shipping will be one of the most efficient parts of your business as you will have all the technology and resources available for a smooth process.
• Detailed Tracking and Reporting: You will have access to state-of-the-art technology that will provide you with all the tracking and reporting information needed for every shipment, helping you maximize your business efficiency.
• Shipping Strategy for Your Business: The best part about freight handling services is the fact that you get a shipping strategy as per your business requirements. The company works with you in devising a custom strategy rather than try to fit your business into an existing mold. This service ensures that all your shipping requirements are met.

Additional Services Provided by Freight Management Companies

Besides transportation management systems, human resources, and expertise, there are additional services you get when opting for a reliable firm. Here are some optional services they also provide:

1. Warehousing and distribution, taking care of your inventory, packaging, and labeling.
2. Dealing with customs, since the process of either exporting or importing goods is quite lengthy and full of paperwork. The service provider will assist in the customs process making it much smoother for you.
3. Providing insurance on your goods in case there is a mishap during the shipping process.

As a growing or established business, you no longer have to worry about shipping your goods. With reliable freight management companies, you can let the experts handle that process for you, so you focus on the continued growth of your business.

Final Thoughts

As an essential aspect of logistics, freight management ensures the timely and efficient delivery of goods while minimizing costs and maximizing efficiency. For small business, a freight management system can help automate processes, negotiate better rates with carriers, track and monitor shipments, adjust shipping options and routes, stay compliant with regulations, scale operations and have better control over supplier and carrier performance.

Overall, a freight management system can help small businesses optimize their logistics operations, improve customer service and increase their bottom line.

Need a freight management company you can count on? Contact Brimich today!