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!

Unless you’re in the business of shipping air, knowing how to calculate linear feet for shipping to maximize your package space is a must.

Imagine a Jenga stack with pieces missing, then imagine the same stack with all its pieces in tact. With no wasted space, the latter is the equivalent of a fully maximized, cost-effective truckload, whereas the former represents un-utilized space – which can ultimately cost you in inefficient freight charges.

Packing a freight truck is an art and science. If you understand how to calculate the linear feet of the cargo, you’ll achieve maximum efficiency, and help ensure your shipment is delivered on time.

Additionally, carrier companies rely heavily on accurate freight measurements – miscalculations can be disastrous. And it happens often, resulting in large fines which could have been avoided using some simple calculations.

Therefor it’s important to understand the different methods of loading shipments, and how the linear foot fits into the process of freight shipping.  

What is a Linear Foot?

There are a few ways to measure a linear foot, but in simple terms, a linear foot is 12 inches – the length of a standard ruler.

The word “linear” means straight.

For those in the United States or Canada, certain measurements are referred to using the Imperial system. For instance if someone asks you your height, your reply would typically be in linear feet and inches.

For practical purposes, a common tool for measuring linear feet for shipping would be a tape measure.

How does linear feet differ from other measurements?

With freight shipping, another common term applied has to do with volume – the measurement of three-dimensional space often noted as “cubic feet.” With these 3D measurements, carriers are better able to package the goods they need to ship.

Linear feet may be a simpler equation, but it’s most important for you as a shipper.

Why Are Linear Feet Important for Shipping?

When you need to supply the number of linear feet your cargo will take up, you’re being asked to measure how long in terms of square feet, the total length of your shipment uses. In other words, its footprint.

There’s only so much space in a truck trailer. If you accurately know how many linear feet your cargo occupies, your quote will be that much more specific which helps you plan the rest of your budget.

Based on your measurements supplied as the shipper, there are two common quote methods:

• Cost Estimation. Carriers give you the most accurate quote that they can. In order to do that they must know how much space you’re taking up on the truck. Therefor, providing an accurate measurement in linear feet allows them to make that estimation.  
• Per-Foot Adjustment Rate. Many companies will offer a per-foot adjustment rate, which means if you exceed or take up less space than originally accounted for, you’ll either be charged or deducted a certain amount.

The actual cost values for these quotes will depend on the carrier company, and how much flexibility you want in your own shipping process.

How to calculate linear feet

Calculating linear feet is really quite easy:

1. Divide the total number of pallets by 2.
2. Take this number and multiply it by the pallet length in inches.
3. Divide this number by 12, and you’ll have the shipment’s linear feet!

The Linear Foot Rule

The linear foot rule is a standardized way to charge shippers for the goods they transport. Applied to LTL (less-than truckload) shipments, it’s an affordable option that allows your freight to share the same truck space with other shipments.

The linear foot rule states that shipments occupying 10 linear feet or more of trailer space are charged for 1,000lb per foot. This rule usually applies when there are at least five pallets single-stacked or 10 pallets double-stacked.

In other words, if your palletized freight is not stackable, it has a larger footprint and therefor costs more to ship.

The Cube Rule

The cube rule applies to freight that’s light and low density, but takes up a lot of space. In terms of packaging items like paper towels can take up a lot of physical space but don’t weigh very much.

Cubic feet differ from linear feet in that it’s a three-dimensional measurement. Using a formula which includes three dimensions, plus a weight factor, allows the carrier to assign a freight class that matches the goods to be shipped.  

Shipping options

While there are several variations on both of the shipping options mentioned, there are essentially two main methods that the entire carrier industry utilizes – LTL and TL, or less-than-truckload and full truckload.

Understanding the differences between the two can save you a lot of money. Knowing how to leverage your linear foot measurements can help you take advantage of the space available within the truck.    

Avoiding Extra Fees By Using the Linear Foot Rule

When shippers fill out the paperwork for the carrier, they typically have to state how many linear feet the shipment will take up.

Simply put, understanding how to properly measure and document this dimension will help prevent you from paying unnecessary fees.

Take Accurate Measurements

Human error is, unfortunately, far too common. For instance, the shipper takes inaccurate measurements simply because they don’t know exactly what they’re supposed to be measuring.

If your freight is going to be placed on a pallet, it’s essential that you include the pallet size size in your final estimation.

As a shipper, it’s also critical that you provide accurate measurements, or face adjustment delays and additional fees. Not to mention the upset it causes to the normal flow in the supply chain.

Clarify Your Specific Freight Needs

Because of the vast difference in package and product sizes, there has to be flexibility in the loading process – therefor not all freight is loaded in the same way.

When you’re filling out the paperwork beforehand, make sure you specify that your freight requires special treatment if necessary.

Know the Dimensions of the Trailer

Not all trailers are the same size. What fits easily in one might not come close to fitting in another.

Before you attempt to load your freight at a terminal, make sure you’ve checked the trailer dimensions and confirmed your shipment will fit.

Loading Techniques

If you’re the one loading your shipment on a trailer, there are a few things to do to make sure the trailer is ready to carry your shipment safely.

• Be honest with yourself about your ability to load the shipment. Shippers tend to take on too much weight, improperly use tools, or end up seriously hurting themselves. Good advice would be to leave such tasks to the professionals.
• Double-check the area is clean and dry. If you’re shipping sensitive dry goods, moisture can ruin your products and result in a wasted shipment.

Straight loading

Straight loading is the simplest and quickest way to load pallets – lifting and sliding them directly into the trailer. But it may not be the most effective use of space.

Most pallets are 48×40 inches.

Given these dimensions, loading pallets straight into the trailer results in empty space. Empty space also makes it possible for pallets shift during transport creating a hazard.

However, straight loading can still have gaps. Therfore many companies have decided to maximize space whenever possible by pinwheeling (see below) for more efficient straight loading.  

Side loading

Side loading, as the name suggests, loads the pallets into the truck sideways. Using this method, you end up consuming all the room between the inner walls of the truck, but you still run the risk of having the pallets slide around.

Pallets don’t interlock, and as a result, can potentially create a hazard during transportation.  

Pinwheeling

Pinwheeling is the most effective method for loading palletized freight into a truck.

It’s achieved by altering the direction of every pallet in turn so that they fit snugly against one another – therefore maximizing trailer space. When you pinwheel, the interlocking pattern creates additional stability.

Final Thoughts

With a comprehensive understanding of how to calculate linear feet fo shipping and its place in the supply chain, you should be able to save yourself aggravation, time, and money on your shipments.

The concept of linear feet may be simple, but its application in shipping is extensive and will prove enormously helpful next time you plan a shipment.

With continuing evolution of the supply chain, customer expectations of fast deliveries right to their door are changing as well.

Thanks to successful models developed by Amazon and eBay, customers are not only comfortable, but prefer to shop online – especially in a compromised environment due to a pandemic.

Because of this shift in how customer’s view shipping, getting your products from A to B, or from the factory to their door is more critical than ever.

Of course your company is committed to excellence and customer satisfaction – that’s a given. Therefor, awareness of the most common shipping mistakes just might help you avoid those awkward moments when a problem does need to be explained.

Mistake #1: Listing the Wrong Address

It seems obvious enough to avoid, but it happens all the time, and at many different levels. It’s a stupid mistake that can cost you dearly and delay your shipment arriving on time.

If you list the wrong address, or if it’s entered incorrectly for you – thanks autofill, your delivery will end up at the wrong place. As a result, it’ll have to be tracked down and re-routed to the right address.

This costs time and resources in re-routing fees, missed deadlines and most unfortunately, unhappy customers.

Mistake #2: Improper Packaging

Sketchy packaging means damaged freight, which means unhappy customers and again, higher costs.

According to experts, the structural integrity of most any shipping container suffers significant break-down over the course of a single journey; and that’s for boxes that are correctly packed and sized.

When the package is NOT sized or sized correctly, the potential for damage rises exponentially. With the amount of time and care you put into creating your fantastic product, why would you risk all that work with inappropriate shipping boxes or using boxes with a sloppy fit?

Of course different products require varying amounts of care and protection, much of which depending on an item’s size, weight, and fragility.

Even with the right packaging, make sure that your goods are secured properly to their pallet: not filled with overhanging packages. Instead, column-stack or interlock-stack goods. Make sure they’re secured with stretch wrap and bands along with cushioning to increase shock absorption, strength, and stability.

A conversation with a preferred carrier will go a long way, and a little extra time is worth the cost of making sure your goods arrive intact and in good condition.

Mistake #3: Bill Of Lading (BOL) Inaccuracies

The key document required for every freight shipment – The Bill of Lading, one of the essential shipping terms to be familiar with, is a legally binding document giving both the carrier and the driver all the details to necessary to process and invoice the freight accurately.

The BOL includes:

• The date of the shipment
• The number of units in the shipment
• The exact weight of shipment
• The Shipper’s and Consignee’s full names and addresses
• The Freight classification for the items being shipped
• Type of packaging
• The declared value of goods
• A description of items being shipped: name and material of manufacture
• A Purchase Order or special account numbers used between businesses for tracking
• Special instructions for the carrier to ensure prompt delivery – such as closing times
• If necessary, a note regarding potentially hazardous materials

Considering the amount of specific information that must be documented, it’s not uncommon for shippers to use the wrong commodity description; enter the wrong piece count; notify party; or fail to read the terms and conditions of the bill of lading just to name a few.

Mistakes like these can be extremely costly and easily avoided by carefully filling out the information. Engaging the help of someone to double-check also goes a long way to ensuring its accuracy.

Going the extra mile may seem unnecessary, but you should remind yourself what’s at stake when things aren’t 100% accurate – your products, and you business’ reputation.

Mistake #4: Incorrect Weight or Freight Class Listing

Yes, it is part of the BOL, but it’s important enough to have its own listing because improperly listed freight class or weight can be a serious and costly mistake.

If you try to guess your shipment’s weight without the aid of a weigh station, you will inevitably receive additional fees – the same goes for improper freight class.

Because a lower class is associated with a lower price, shippers sometimes try to list their shipment in the lowest possible class. But if they’re incorrect, the reclassification fee will be much higher than the margin from one class to another.

This may not seem like a big deal to some, but if you’re shipping hundreds or thousands of freight loads a year, those additional fees can add up fast. Not to mention the damage it does to a reputation.

Mistake #5: No Freight Insurance

In order to cut costs, shippers may opt to avoid insurance. It may be cheaper in the short run, but the law of averages will come back to bite you.

The simple frequency of continuous shipping over time will inevitably lead to damage of one kind or another. It may be it an overturned truck, theft, natural disasters, an accident, or a host of other problems capable of ruining a shipment.

Human error has to be taken into consideration. Plus the likelihood of a mistake occurring increases with travel distance and package handling.

The relatively small price of insuring the goods saves you from worrying about the inevitable mishaps that are bound to happen over time, and save you from what could be financially crippling replacement costs of an entire shipment.

Mistake #6: Not Palletizing

Palletizing takes time and effort, but it’s far better than having a loose stack of packages free to shift around while on route and get damaged.

Furthermore, most LTL companies won’t allow you to ship without using a pallet. If you don’t, they’ll palletize your goods and pass the cost of doing so on to you. While this can be negotiable point, it’s far less expensive to do it yourself.

Mistake #7: Overpaying for Freight

This last “mistake” may seem obvious, but it’s one mistake made far too frequently.

Working with a trusted 3PL partner is one of the best ways to avoid the mistakes listed, and more, and keep your freight costs low at the same time.

An experienced 3PL partner audits your freight invoices to ensure your company is paying the correct amount for your shipments. If in case you are overpaying, they’ll work directly with your preferred carriers to provide accurate pricing, or correct other issues.