As a shipper, saving money and finding ways to lower freight costs are always top of mind when considering the services and solutions that you leverage for logistics. After all, protecting your bottom line is vital throughout your organization — shipping is no exception.
It's important to understand, however, that chasing the lowest less-than-truckload (LTL) and full truckload (FTL) freight shipping rates isn't always the most sustainable way to reduce your transportation department's overall spend. You also must consider all the resources needed to ship (labor, hard freight costs, processes and technology) and lower freight expenses with a holistic approach.
How To Lower Freight Costs
GlobalTranz is a leading third-party logistics (3PL) provider with decades of experience helping businesses just like yours make the most of their shipping operations. Here we provide eight tips on how to reduce freight costs that don't always involve finding the lowest rate for singular shipments.
1. Consolidate (and Develop Relationships With) Your Carriers
Consolidating the number of carriers you leverage may increase your profit margin. One approach is to look at your freight by lanes and types of shipments and ask a number of carriers to bid on them. You can also bring in a few of your carriers to talk about your challenges and find out what solutions they would employ. In the end, you can generally expect lower freight costs when you greatly increase the amount of volume per carrier. They will appreciate your business and will reward you for it.
You can also contact a 3PL provider to look at your freight expenses. A non-asset based 3PL does not own any trucks and can provide an objective viewpoint while negotiating lower freight shipping rates with their in-house network of freight carriers. This can be the most effective way to create a tailor-made strategy to get the very best freight rates possible for your specific needs.
2. Know Your Shipping and Logistics Services
Freight shippers have more solutions available to them than they might think when they need to move products. Knowing those options inside and out can help them cut freight shipping costs and remain profitable. In fact, not understanding how to best leverage freight services can have a negative impact on your budget.
For example, there are times when it makes financial sense to move your product by LTL freight shipping. This is a great option if you have shipments that are large, but still aren't big enough to fill an entire truck. However, if you have multiple freight shipments going to the same location, it just makes sense to load them all onto one full truckload (FTL) shipment as a cost-savings measure.
These are just two examples of why it's important to understand your shipping options. By working with a 3PL, you will have access to a partner who can advise you on which freight shipping services are right for your products.
3. Understand Accessorial Fees
Accessorial fees are often called "unforeseen" or "unexpected" fees since they do sometimes come as a surprise to shippers. However, these freight costs are often legitimate, and shippers are on the hook to pay them. Some of the most common accessorial fees are:
- Liftgate charge
- Inside pickup or delivery fee
- After-hour delivery
- LTL reclassification
- Limited-access delivery
- Fuel surcharges
If you feel you were wrongly charged an accessorial fee, you can certainly take it up with the carrier. However, there isn't much you can do if the cost is justified. The most important strategy in dealing with accessorial fees is to understand and plan for them. A 3PL can help you develop tactics to offset these freight costs and understand when they are and are not needed.
4. Avoid Rush Shipping
Sometimes it's necessary for companies to use expedited shipping for products that must be there as soon as possible. However, it is generally not sustainable to constantly rely on this shipping method when other options are available.
Rush shipments can sometimes cost two to three times the price of a normal delivery, making it worthwhile to find out why you are using this solution so often, and to look at how you can increase your lead times. You may also want to look at your internal supply chain processes to get away from rush orders.
5. Ship During Off-peak Times
You may not always have control over when your shipments need to be moved. However, when you do have such authority, you may want to try to ship during off-peak times. Generally speaking, most loading and unloading happens during normal business hours during the week. If you can swing it, try to ship after 7 p.m., during the weekend and even on Fridays and Mondays when shipping volumes aren't as high and freight shipping rates may be slightly lower.
6. Freight Bill Audit
A freight invoice is more than just a bill. It is a snapshot of your shipping strategy and provides all the details of how you ship and what services you utilize. Conducting a freight bill audit can help you understand where and how you spend money AND how you can optimize your shipping for lower freight costs. A 3PL can help by making sure you are being charged at the right class and rate, and whether or not you need the services that are producing accessorial fees, among other services.
7. Utilize a Transportation Management System
A transportation management system (TMS) is an all-in-one technology platform that serves as the shipping hub for companies who use them. They are vital in today's shipping world. An effective TMS can help you with the following shipping tasks:
- Get instant freight quotes from multiple carriers.
- Add insurance options while booking shipments.
- Customize invoicing and payment options for easy accounting.
- Track all shipments from one convenient platform.
- Make informed shipping decisions with real-time visibility.
An industry-leading 3PL can provide you with access to these platforms and can help you set up processes to save money and cut freight shipping costs.
8. Work With a 3PL To Cut Freight Expenses
As mentioned, working with a 3PL can help you develop strategies to protect your bottom line and ship smarter. In fact, a 3PL can provide you with:
- Lower freight costs: Get competitive rates by leveraging the size and scope of offerings and reduce your overhead costs associated with shipping.
- Consistent capacity: Tap into a network of multimodal carriers that are sourced, qualified and managed by your provider.
- Visibility and reporting: Track shipments more easily and get automated reporting and back-office support.
- Consultative partnership: Gain a partner with industry expertise that can help create custom-made solutions.
Want to learn more? Check out our Guide To 3PL Services & Types of 3PLs.
GlobalTranz can help you learn how to reduce freight costs!
At GlobalTranz, we pride ourselves on providing a full suite of tools and resources, a variety of shipping solutions and best-in-class support from our team of dedicated logistics experts. By working with our network of 85,000+ FTL and 75+ LTL freight carriers across the nation, you're sure to find a solution to fit your company's needs and budget. Connect with an expert today to see how GlobalTranz can help transform your logistics and help you learn how to reduce freight costs.