Consulting company Capgemini recently shared its list of the top challenges facing logistics and shipping managers. The list, compiled through a survey, found the top challenge to be “cutting transportation costs.”
While many shippers naturally start to look for ways to reduce their rates, there is also a broad range of optimization tactics logistics managers can employ to help their businesses realize sustainable long-term savings.
Here are 10 shipping optimization tactics you can apply today:
1. Supplier Inbound Compliance
Make sure you have consistent processes in place for managing all your inbound freight. Perform an annual audit to measure what percentage of your material purchase orders have “collect” shipping terms versus “prepaid.” In general, a buyer should control inbound transportation unless the product the company is buying is extremely expensive or risky to move.
If you allow suppliers to ship freight prepaid, you also run the risk of paying 10–40 percent premiums, which are profitable for the supplier, but expensive for you, the buyer. You may be paying state sales tax on freight charges if they’re buried in the overall product cost, also known as “freight allowed” or “freight included.”
Use a web-based routing guide to instruct your suppliers what carriers to use when shipping to your locations, and add these instructions to your purchase orders. Incorporating vendor routing and compliance guides can help improve transportation service times, control costs, and streamline warehouse operations.
2. Outbound Routing Discipline
You have thousands of carriers to select from to haul your freight. Do you always pick the low-cost option? Or are you choosing a carrier based on convenience? Make sure your process for selecting carriers is consistent across your company.
Use a web-based TMS (transportation management system), with a network of pre-qualified carriers, to provide your team a consistent means to quickly compare carrier rates, transit service, and match the best carrier with your shipment. Utilizing a TMS provides you visibility to all your outbound and inbound freight, so you can make data-driven decisions that drive cost savings for your business.
3. BOL Reduction
Reducing the total number of BOLs (bills of lading) created each day will help lower your freight costs. If your team is responsible for outbound and inbound freight, make it a practice to combine more orders into one shipment, which will create more cost-effective larger volume loads. With more intra-company transparency and connected technology systems, you’ll create significant cost-saving opportunities.
4. Mode Shift and Multi-Mode Combinations
Combining multiple shipments into a single, larger shipment, is called mode shift. With this tactic, you move your shipments into an alternative, less expensive mode. An example of this is combining multiple LTL shipments into a volume LTL, partial truckload or full truckload.
When shipping expedite, it’s essential to compare ground and air freight options. On any given shipment, air freight might be less expensive than a sprinter van, but sometimes, a two-person driving team in a cargo van or 28-foot box truck might be less expensive than shipping via air.
Leveraging multimodal shipping services and logistics solutions, like combining intermodal with truckload and final-mile, helps reduce your overall costs while mitigating capacity challenges and meeting your customer delivery demands.
5. Accessorial Audits
Take the time to audit your freight invoices from the past 6–12 months to make sure you’re not being charged incorrectly, and identify opportunities where you could eliminate accessorial charges. Administrative accessorials like weight and BOL adjustments can be avoided with proper training. Educating your employees on accessorials, and the importance of properly weighing, measuring, and classing shipments, can help reduce your accessorial fees and overall shipping costs.
6. Get Your Product Closer to Customers
As consumers and B2B buyers increasingly expect next day delivery, your fulfillment and logistics strategy is an important part of your customer service equation. When you leverage a nationwide network of warehouses, you reduce the distance between your product and your customers, which can also decrease your cost of transporting your product to market. The overall cost of regional freight shipping from fulfillment centers is usually less expensive than shipping cross country.
7. Increase Lead Times
The more time your logistics partner has to book a shipment, the more leverage they have to secure the best carrier and equipment for your load and lane, identify efficiency improvements and negotiate rates. An advance shipping notice helps a carrier line up the assets and resources they need to efficiently pick up and deliver. One of the biggest costs for carriers is paying for a trailer that’s sitting idle somewhere, waiting to load. When you plan ahead for pick up, staging, and loading, carriers can reduce idle time, lower costs, and pass savings on to you.
8. Leverage Backhauls
Once carriers complete a delivery, they typically travel back to their home base, or to the next pick-up destination. This trip is often taken unloaded or without any freight onboard. Every minute a truck is empty it incurs expenses. Carriers are most efficient when they are hauling freight instead of an empty truck. Logistics service providers can negotiate backhaul credits or targets to help you save money and meet your delivery demands.
9. Pool Shipments
Pooling deliveries from different shippers, destined for the same region or distribution networks, results in cost control. Third-party logistics companies like GlobalTranz can leverage their network of 25,000+ shippers and 30,000+ carriers to coordinate pooling opportunities that combine your shipments with other deliveries and help you save on your overall transportation costs.
10. Drop Trailers
Drop trailers are often used at locations that have enough outbound shipping volume to fill a trailer in a week or less. These enable you to load freight when convenient and combine shipments, which might normally go LTL, into one full truckload. Drop trailers also reduce the amount of time drivers sit idle waiting for their truck to be loaded. In today’s tight capacity market, and with the recent launch of the ELD mandate, carriers and drivers are more conscious of dwell time and lost productivity. Using drop trailers creates flexibility for your dock and warehouse schedule, helps mitigate capacity issues, and enables drivers to quickly pick up your delivery, which in turn helps keep your freight costs down.
Create a Freight-Optimization Culture
When you optimize your freight shipments using these tactics, you’ll deliver savings to your company’s bottom-line. Over time, driving these practices into your culture will yield overall freight savings far beyond one-time rate discounts.
Increase your freight management efficiency and overall cost savings. Call 866.275.1407 to speak with an expert or Request A Quote.
Today’s freight industry runs at rapid speeds to meet customer delivery demands. One event that can disrupt the flow of your freight management operations and supply chain is damaged or lost cargo. The majority of shipments are picked-up and delivered on-time and intact, but knowing what to do and who to contact if you need to file a freight claim can be a key differentiator to minimizing downtime.
These 4 guidelines will help keep your supply chain operating efficiently:
Choose quality over price when selecting a carrier
Sourcing a carrier based on price over quality of service could result in a lot of headaches (as the saying goes, you get what you pay for). If you’re shipping products regularly, do your research and make sure the carriers you use have been thoroughly vetted with the highest level of safety and quality standards. Know the ratio of a carrier’s total shipment count versus their claims count, and find out what other shippers are saying about their experience with that carrier. Front-end research can eliminate potential disruptions.
Package your shipments properly
Proper packaging is critical to preventing cargo damage. If you’re packing items in boxes, make sure your commodity doesn’t exceed the weight limitations of the box. Select a proper box size that allows your item(s) to fit securely inside without excessive empty space. Ensure your product is protected by cushioning material on the inside of the box and stacked on proper pallets and shrink wrapped. If items are shipped loose, your cargo could experience a lot of turbulence, so make sure to package your items to withstand typical LTL shipping treatment. Freight claims can’t be filed on packaging damage alone. The purpose of packaging is to protect your goods from damage.
Label your shipments
To prevent cargo loss, make sure your delivery and return address information is listed clearly and accurately on your shipment. Labels and stickers should be positioned on top of the box, and all former labels need to be removed or covered. Make sure you place labels on an even surface of your package and not on the flap or seals.
When receiving a shipment, be sure to take your time examining the delivery and paperwork. Using the Bill of Lading (BOL) and delivery receipt, verify delivery address, shipment information, count the items on the BOL compared to the quantity being delivered, and inspect the condition of the shipment. If you identify any damage or discrepancies, follow the below tips.
Record specific damage and/or loss details on the delivery receipt
The delivery receipt is a legally-binding document. You must notate all damages, shortages or evidence of pilferage to cartons and containers on the delivery receipt and Bill of Lading (BOL) prior to signing. If a shipment is accepted without exception (i.e., the receiver doesn’t note specific information about what is damaged and/or shorted on the delivery receipt at the time of delivery), then a freight claim will be considered “concealed,” and difficult to resolve in your favor. All damage and loss notation must be clear and specific. Phrases such as “subject to count/inspection,” “potential damage,” and “subject to review,” will not be considered an exception. It’s also a good idea to take pictures of the damage for claim documentation.
Retain the freight at either the shipper or consignee location, not the carrier
Before the carrier resolves a freight claim, they will want the shipper or consignee to retain the goods. If the consignee cannot keep the products, then the shipper must ask the carrier to return the shipment. Keep in mind that the carrier will charge you storage fees if it holds the shipment. Do not dispose the goods prior to claim resolution or the carrier may decline your claim.
Ask the carrier to inspect the damaged freight
Once the shipper or consignee retains the freight, ask the carrier to inspect the goods. Most carriers will only investigate if the damage is greater than $1,000 or may waive their right to inspection. Nonetheless, still make the request. Having the shipment inspected before you submit the claim can help expedite resolution time.
Gather documentation to support your freight claim
By law, you must provide three pieces of evidence to support your claim:
Ensure you complete the appropriate claim form, detailing every item you are claiming. Include quantity, weight, and value. Collect the invoice showing what your cost was (i.e., your vendor invoice or manufacturer invoice) and the sales invoice (i.e., indicating the amount for which you sold the goods). Also, provide pictures, packing list, signed BOL, and signed delivery receipt.
Pay your freight bill
If you don’t pay your freight bill, then the contract hasn’t been completed between the two parties. Throughout the claim process, the freight bill remains valid—the invoice is not put on hold and isn’t voided automatically. If the carrier provides a legitimate declination on the freight claim, they are still owed payment on the freight bill. If a claim is approved and carrier negligence is demonstrated, the carrier won’t pay if the freight bill remains outstanding. If shipping with a 3PL, note the 3PL isn’t the liable party unless otherwise stipulated in your contract.
When presented with a claim, a carrier must prove they were not negligent. The carrier may also decline liability by using one of these five defenses outlined in the Carmack Amendment, a law created for uniformity in rules governing interstate shipping.
It’s not often we see claims declined for reasons one, two or four. If a carrier does reject a claim, it’s usually for reason three or five. The following are the principal reasons carriers deny claims:
The carrier will deny the freight claim if the shipment wasn’t packaged according to industry standards, or if it couldn’t adequately protect the load.
The carrier cannot decline a claim because the receiver didn’t notate damages/shortage on the delivery receipt, but if no additional evidence can be provided to prove the carrier caused damages during transit, they will decline the claim.
Carrier delivered precisely what they tendered
The only piece-count the carrier is liable for is the unitized pieces they pick up, not individual pieces found under shrink-wrap or within a crate. Regarding shortage claims, if the driver picks up one shrink-wrapped pallet and drops off one shrink-wrapped pallet, the contract is fulfilled. If the driver wasn’t present while the individual pieces under the shrink-wrap were counted and loaded, they aren’t liable for that piece count. Note: The driver will typically record the actual piece count when signing the BOL.
Give carriers time to investigate
Carriers have 30 days from the date of the claim submission to acknowledge receipt of the claim, then 120 days after that to investigate. The National Motor Freight Traffic Association (NMFTA) also allots carriers additional 60-day blocks of time after the initial 150 days, if they haven’t reached a decision, as long as they provide written status updates. Create a calendar reminder every 15-20 business days to track the age and status of the claim.
Provide additional documentation or information if the carrier requests it
Throughout the process, there may be multiple people reviewing a claim, especially for high-value shipments. One person may spot something that another person missed and need information from you to properly investigate. These requests can come any time within the 150-day process, and the clock is paused when the carrier sends an inquiry. Sometimes, a phone call to the carrier is all that’s needed to clarify the inquiry.
Complete as much work as you can before submitting your claim
Because everything else in the freight industry moves so quickly, it’s easy to assume that if a claim isn’t submitted just as fast, it could slow down the process. This isn’t true. It’s better to collect all the necessary documentation, inspect the goods first, and make sure this shipment is in the hands of the consignee or shipper prior to submitting your claim. You’ll save time by anticipating what the carrier may need during its investigation. Legally, a shipper has nine months from the date of delivery (pickup, if lost) to provide a formal cargo claim to the carrier.
Mitigate the product or goods
This is a fancy way of saying the shipper must: salvage, discount, or repair the commodity. If you can fix a $10,000 machine for $100, it’s better to make the repairs and file a claim for the cost of the repairs. Remember to first ask the carrier to inspect the products and confirm with them that you may mitigate before proceeding with then claim. Carriers also have rights to the salvage if they pay a claim.
Purchase shippers Interest Insurance
Unless otherwise stated in your contract with a carrier and 3PL, every LTL shipment will fall under the carrier’s limits of liability. The liability limits may be based on class/weight (e.g., class 60 pays $1.50 per pound), products (e.g., furniture pays $2 per pound), and whether the product is new or used (i.e., used is typically $0.10 per pound). The carrier may pay per a general maximum liability (e.g., $15 per pound) or decline the claim entirely because the products are listed on their “restricted/excluded” list. Purchasing shippers interest insurance confirms your products are covered at the invoiced value, and not limited to carriers’ published tariffs.
Planning Eliminates Future Surprises
Navigating the freight claims process doesn’t need to be a daunting task. With the right amount of planning and following the above guidelines, you’ll avoid most of the “road hazards,” while saving time and cost in the process.
Looking for a partner that can manage your logistics operations so you can focus on growing your business?
Call 866.275.1407 or Request A Consult.