Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Posted by on in Freight Cost Savings
  • Font size: Larger Smaller
  • Hits: 4338
  • 0 Comments
  • Print

What Can Shippers Do to Mitigate the Upcoming Freight Rate Increases?

Freight rate increases are coming this year. The economy is on the upswing. Truck capacity is tightening as driver shortages, government regulations, cost overruns from a very challenging winter and carrier financial prudence all push freight rates in one direction - - - higher What can shippers do to mitigate the impact? A lot. Here is my list.

1. Capture your Freight Costs

Take a look at your freight costs and compare them to prior years. Look for opportunities to fix negative trends (e.g. lack of discipline in moving less than optimum size shipments, too much expedited or air freight etc.) that may have arisen.

2. Benchmark your Freight Costs

Obtain rate quotes from carriers that serve your traffic lanes. Compare their rates to yours. If your company ships high volumes, consider obtaining a benchmark freight rate service on at least your major lanes of traffic. The study will at least tell you if your company is paying market rates or higher and identify carriers that provide the same service at lower rates. There are also companies that provide an ongoing fee-based benchmarking service.

3. Standardize your Accessorial Freight Costs

Small parcel, LTL, over the road truckload and intermodal carriers utilize a variety of fuel surcharge formulas. Do your due diligence and negotiate a fuel surcharge that is appropriate for the type and volume of freight your company ships. In addition to fuel surcharges, carriers charge for a myriad of services (e.g. apartment deliveries, job site deliveries etc.). One of the most common charges is for trailer detention. Very often this can be rectified by ensuring your carriers book scheduled appointment times and arrive on time. Review the top two or three accessorial charges that your company pays and look for ways to reduce or hopefully remove them.

4. Evaluate opportunities to switch modes

Look at the location of your vendors and customers. Rail service has improved over the past decade and intermodal service can be a viable option on lanes of 500 miles or more in some parts of North America. An intermodal option can help you save money on freight.

5. Conduct a Post-Audit of your Freight Costs

Does your company audit its carrier invoices. Rate errors, whether intentional or unintentional, can drive up freight costs. A freight auditor will identify errors and assist you in filing a claim with the offending transport companies.

6. Verify Routing Guide Compliance

Routing guides should be established for all major lanes of traffic. Every shipper should have its primary and backup carriers identified for every move. Routing non-compliance and load refusals need to be closely monitored to guard against unnecessary cost overruns. Carriers that consistently don’t supply their committed capacity should be replaced with companies that do meet your company’s capacity needs at the preferred rates that you negotiated.

7. Take Advantage of Technology

Transportation Management Software (TMS) systems help companies route shipments to the best carriers (based on rates, service and capacity) on every lane. They can monitor orders and look for consolidation opportunities. Cloud-based pay as you go systems can be quite cost effective. Many leading freight management companies offer this capability.

8. Develop a Core Carrier program and Collaborate with them

Look for opportunities to convert spot moves to contract rates with core carriers. Establish honest, open communication with these carriers. Together, look for opportunities to remove redundancies, inefficiencies and excess costs from your operation.

9. Optimize your Freight Network

Search for situations where inbound and outbound moves can be combined into round trips. Are there situations where one move can be connected with another (continuous) move? These types of situations provide you with leverage in carrier discussions and save you money on freight.

10. Take Advantage of Consolidation and De-Consolidation Opportunities

Rather than moving all of your freight in small parcel or LTL size shipments, look for situations where shipments can be consolidated (e.g. shipped in full truckload or partial truckload quantities to a warehouse) and then de-consolidated and shipped to customers. Of course, if your company hasn’t conducted a Freight Request for Proposal in the last year or two, this is still one of the best ways to ensure your company pays market rates. Over time, shipper volumes and lanes change as do carrier requirements. New carriers enter the market from time to time. A well-structured RFP is still a very effective way to save money on freight and create a solid routing guide. As we come out of this nightmarish first quarter, shippers should take advantage of the tools available to manage their freight spend.

 

 

To stay informed on Best Practices in Freight Management, join the Freight Management Best Practices group (http://www.linkedin.com/groups?gid=4357309&mostPopular=&trk=tyah) on LinkedIn. To stay up to date on the latest industry news, subscribe, at no charge, to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466?utm_source=subscription&utm_medium=email&utm_campaign=paper_sub ), published 365 days a year.

0

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Friday, 29 March 2024

Most Recent Posts

Search


Tag Cloud

Crude Oil by Rail 2012 Transportation Business Strategies. Jugaad Anti-Vax David Tuttle automation Hudsons Bay Company dark stores cars selling trucking companies Distribution Coronavirus transportation audit Canadian truckers Tracy Matura Doug Nix ELD Warehousing Load broker Trucker Protest USA Truck Leadership EBOR robotics rail safety NAFTA Digital Freight Networks fuel surcharge routing guide future of freight industry shipper-carrier roundtable truck driver shipping wine Value Proposition Horizontal Supply Chain Collaboration TMP Worldwide Regina freight payment freight audit laptop Outsourcing Sales Conway KCS Freight Shuttle System Crisis management freight audit Career Advice asset management Microsoft freight rate increases freight costs Freight Management Loblaw computer protection freight forwarders Right Shoring Keystone Pipeline Twitter transportation news Surety bond Stephen Harper Trade Vision UP freight broker broker security Load Boards Freight Rates financial management Dan Goodwill business security Grocery economy Shipper Cleveland Cavaliers truck drivers Railway Association of Canada Justice Covid-19 Rotman School of Business Habs Freight truck capacity Schneider Logistics MBA employee termination Whole Foods JB Hunt technology Ferromex Harper Davos speech freight cost savings Yield Improvement Search engine optimization hiring process Entrepreneur CSX RFP energy efficiency Truckload Muhammad Ali China Hockey $75000 bond Management CN freight agreements Retail NMFC Masters in Logistics Transplace freight marketplace Canadian freight market Digitization New York Times Adrian Gonzalez Canadian Protests Global experience FMCSA capacity shortage Success intermodal Software Advice freight transportation economic outlook Electric Vehicles Freight Carriers Association of Canada bulk shipping small business US Auto Sales solutions provider freight payment pipelines Impeachment General Motors broker bonds Dedicated Trucking CITA Shipper Pulse Survey NCC Online grocery shopping Sales Management computer Omni Channel Business Development Blogging Failure derailments Success failure entrepreneur YRCW Trucking Doug Davis Spanx US Housing Market Bobby Harris trucking company acquisitions freight transportation in 2011 FCPC Freight contracts LCV's Politics University of Tennessee Emergent Strategy Scott Monty digital freight matching Life Lessons Colilers International computer security President Obama Climate Change Tariffs capacity shortages cyber security US Economy Reshoring last mile delivery LinkedIn Transloading Business skills Finance and Transportation Amazon Driving for Profit Accessorial Charges Otto Geopolitics trade Transportation home delibery BlueGrace Logistics 2013 Economic Forecast buying trucking companies Transcom Fleet Leasing Trump autos APL marketing economic forecasts for 2012 Map-21 FuelQuest ShipMax Toronto Werner Rail online shopping Retail transportation NS 2014 economic forecast business start-up Inbound Transportation ProMiles Social Media US Election autonomous vehicles FCA customer engagement Infrastructure MPG 2014 freight volumes Leafs driverless TMS shipper-carrier contracts 3PL Facebook professional drivers Deferred Packaging Canadian Transportation & Logistics Fire Phone TransForce Education home delivery e-commerce recession Sales Strategy Training New Hires Social Media in Transportation freight RFP Transport Capital Partners (TCP) shipper-carrier collaboration Packaging USMCA Canada Government Associates tanker cars Celadon shipping Canadian economy Swift CSA scores transportation newspaper Job satisfaction Business Transformation Strategy Rate per Mile BNSF the future of transportation LTL Consulting Business Strategy network optimization mentoring 3PLTL risk management FMS Comey Freight Recession Dedicated Contract Carriage carrier conference Freight Matching freight transportation conference Training Sales coaching driver small parcel Donald Trump freight bid Canada-U.S. trade agreement YRC drones Blockchain 2015 Economic Forecast CRM Derek Singleton IANA Global Transportation Hub dynamic pricing Driver Shortage driver shortages CP Rail peak season Montreal Canadiens Canada's global strategy cheap oil Carriers Wal-Mart Freight Capacity driver pay Uber Freight Canada U.S. trade Toronto Maple Leafs CN Rail consumer centric Sales Training CSA Transportation Buying Trends Survey 360ideaspace dimensional pricing US Manufacturing Broker 2014 freight forecast natural disasters Transportation service supply chain management

Blog Archives

March
February
December
October
September
August
June
May
April
March
January