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So, your organization has decided to explore the benefits and perks of less than truckload freight shipping. However, the set-up costs and initial implementation of LTL relationships can seem daunting. You may have to learn how to navigate a new software, or your organization may simply need additional training on a new transportation management system (TMS).

Although these factors represent real costs, the greatest benefit is fully realized over long-term projections and operations. The dedicated TMS can further eliminate the frustrations that occur with typical full-truckload (FT) shipments and small package freight by combining all KPIs and available options into a single, comprehensive tool. Let’s take a look at how the TMS impacts the costs of shipping over the long term in four critical areas.

Overall Costs of Less Than Truckload Freight Shipping

For an organization to justify the cost of using Less than truckload freight shipping, the topic of return on investment usually crops up. Initially, the cost seems to outweigh the benefits, but the overall cost of using Less than truckload freight shipping is dramatically lower than using FT in the long run for short distances and small shipments. Moreover, LTL shippers often work with third-party logistics providers (3PLs) to keep operating costs lower, which translates into lower costs for individual shippers. The overall cost savings can be further expanded through the use of a dedicated TMS, promoting a self-service environment while maintaining the benefits of a 3PL-shipper relationship.

Liability Insurance

Liability insurance is one of the top concerns for shippers. Having enough insurance can mean the difference between keeping an organization running or experiencing excessive fines for failure to maintain financial responsibility. As explained by FP Marine Risks, all shippers should carefully consider the limitations and benefits of a particular insurance policy.

If a shipment is traveling by land and sea, additional insurance coverage may be needed. Some believe marine liability coverage continues on land, but in reality, this type of insurance may not apply to international carriers. In the event of an accident, an international shipment’s value could be lost without an appropriate standard of coverage, leaving the shipper to pay the full cost.

Another fundamental concern about liability insurance includes errors and omissions and retaining paperwork relating to a shipment. For example, an insurance claim may require original Bills of Lading, notices of declination of coverage for specific shipments and more for the claim to be paid properly.

It’s also important for shippers to understand the different types of liability insurance, according to Trucker’s Report, which includes the following:

  • General liability insurance covers a truck, occupants, and cargo when the truck is not moving.
  • Non-trucking liability insurance is used to cover damage that may occur when a truck is not in-transit or housed on company premises.
  • Primary liability insurance is the most important form of insurance for a carrier to have. In most states, the minimum requirements for this type of insurance of $750,000 worth of coverage, but some individuals may opt for higher coverages. For example, additional insurance may be purchased to cover individual trucks and occupants if the truck driver is at fault or if another driver’s insurance does not pay for damages when the driver of the passenger vehicle is at fault.

Obviously, the paper-trail and the potential riders or exclusions to a policy can make selecting an insurance policy difficult. However, the process can be streamlined when a dedicated TMS is used.

Customer Satisfaction

When customers are angry, business will not be good. Less than truckload freight shipping can reduce the delays from using FT shipping to get products to customers, and after delivery, the value of customer feedback must be considered. Even in cases where a shipment was delivered on time, the items could be damaged or incorrect, and this can have major implications for insurance claims and processing.

Customer feedback is also directly related to audits. An organization that routinely performs audits to ensure all orders are fulfilled correctly and in an acceptable time can work to reduce inefficiencies and delays, resulting in better, faster processing and shipping. Now, you may be wondering about how customer feedback affects the auditing process.

Negative customer feedback is indicative of problems during order fulfillment and shipping. Although an audit may not have already caught issues, constant complaints along specific delivery routes or areas can isolate the source of the problems, triggering a review for the affected truckers, distribution centers or manufacturers. Essentially, how well customer feedback is handled helps shippers recognize when an audit may be needed. However, preventative auditing, such as through the Cerasis Rater, can identify potential issues even if customer feedback does not indicate a problem.

Performance Reviews

As with tracking of customer feedback, a dedicated TMS is capable of tracking KPIs and analyzing metrics to determine the performance ratings of particular parties in the shipping process. In fact, the definition of auditing, asserts the Business Dictionary states, “[The] systematic examination and verification of a firm’s book of accounts, transaction records, other documents, and inventory.”

This definition alone shows how an audit can directly lead to the identification of problems in a given shipping process. Unfortunately, audits have a negative connotation, and shippers tend to think of audits as a process that is handled by the government and often results in the assessment of fines. However, preventative auditing is meant to reduce costs by identifying potential problems or violation in compliance measures before they reach the point of requiring an audit from a government organization. In other words, shippers who catch problems as they arise can avoid the assessment of fines or filing of insurance claims for errors before they ever occur.

This concept can be applied to individuals and teams, allowing management to determine if additional coaching or disciplinary action is warranted. As a result, costs are further reduced, and in some cases, internal auditing could result in lower insurance premiums.

Since Less than truckload freight shipping may involve many different organizations, the best way to take advantage of internal auditing remains a 3PL or a dedicated TMS. Therefore, the organization can view internal and external benchmarking results for comparing performance against competitors. In Less than truckload freight shipping, it would be impractical to share all information with competitors with one another, so a 3PL can distribute the information without violating the privacy of individual organizations.

Few shipping processes can be more complicated than managing Less than truckload freight shipping. Your organization has the power to leverage technology and experience from a 3PL and TMS to uncover hidden savings in overall cost, insurance, customer service and performance measurement. However, you still need to take the first steps toward these savings by contracting with a 3PL and TMS-provider today. With time, your savings will clearly be more than the costs you’re currently experiencing.