12 Smart Ways to Reduce Your Freight Costs
ARTICLE SUMMARY A common conundrum for companies is how to reduce their freight costs, which due to a recovery in demand following the Covid-19 pandemic have skyrocketed. Putting a lid on escalating freight costs has now become more important than ever. There are a number of smart ways to achieve this goal. Here, in brief, are 12 of them: Define your freight profileRecalibrate your speed of deliveriesMaximise your carrier capacityConsolidate non-urgent shipmentsJoin forces with other shippersSite your distribution centres cleverlyLook beyond local carriersChoose the right serviceNegotiate for off-peak timesReduce your dunnageMinimise LTL shipmentsMake an in-depth cost analysis This article takes an in-depth look at each of these points and offers advice on how to meet the significant challenge of reducing freight costs. One of the most common questions I get asked is, How can I reduce my freight costs? In answering this question I start by highlighting the wrong way to go about it. The first thing people try to do is attack the rate itself—the dollars per ton, the dollars per pallet, whatever it is that you are paying. Let’s say you are paying $30 per pallet for delivery and you try to get $29 or $28. That’s really not the way to go about it because you need to realise that freight transport is a very low margin activity and if you’re trying to reduce the price, you’re not going to get very far. Instead, it’s often better to try and reduce the cost to the freight company of shipping your products, so that they can lower their price to you. A Dozen Possibilities to Cut Freight Costs Now let us look at some of the right ways to reduce your freight costs. I also go over some of this ground in a Supply Chain Secrets YouTube video, which I invite you to watch. 1) Define Your Freight Profile Are you paying a ton rate or a pallet rate appropriate to your freight profile? For example, if you are paying an hourly rate for deliveries, is that necessarily going to create the right behaviour in the transport company to get your deliveries done efficiently? So think about the rate structure, whether it is per ton, per pallet, per carton, and try to ascertain if it it’s the one most suitable for your freight profile. If not, it could be worth renegotiating the structure. 2) Recalibrate your Speed...
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