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We pick up with part 2 of our series on how to reduce freight rates and save money. In our conclusion, we discuss the next 5 key tips on how to save money on transportation costs.
1. Make sure your trucks ship fully loaded. You would be surprised to learn, according to the DOT, fully loaded trucks rarely happen. There are systems that help you achieve that goal. One such system is AutoVLB from Transportation | Warehouse Optimization. In fact, Procter & Gamble, a client of Transportation | Warehouse Optimization since the early 90's, claim they realized a 7% savings by using this system.
2. Eliminate unnecessary or wasteful moves. It seems strange that any company would ship a load unnecessarily. But it happens often. For example, one well-known ERP system defines the ship point for any customer and then sticks to it. So a customer in Detroit would receive a load from its supply point in Chicago - even if the entire product was made and in stock in Cleveland. Simplifying assumptions often lead to unnecessary or wasteful moves.
3. Be aware of what is going on in the industry. Sometimes the traditional method of shipping may not be the most economical. For example, if exports are high, you can get great deals from the ocean carriers. They are desperate to get their 40 ft containers back to port. Granted, it is not your typical 53 ft container, but the deal you can make will more than make up the lack of container space and you can reduce freight rates dramatically.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
5. Keep your options open. One way of doing this is to have the right mix of operations. This can include a mix of private fleet, dedicated trucks, capacity, and market (spot) purchases. Use your private fleet for your high service customer deliveries. Dedicated trucks can be more cost-effective, but you still have to keep them on the move, and dedicated capacity offers some guarantee of the number of trucks that you can provide on any day. It offers both shipment security and good supply chain management.
The best way to reduce freight rates is to cut waste and work with the right partner.
When you consider a Transportation consultant, consider Transportation | Warehouse Optimization. They have been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. Transportation | Warehouse Optimization takes a long-term approach, they know the market place, and they keep the client as top priority. Contact them at: wwwTransportationOptimization.com (615) 791-8000 for transportation cost reductions or solutions to warehouse challenges. While visiting their website, TEST YOUR SKILLS and see how well you can load a truck or manage cost savings.
1. Make sure your trucks ship fully loaded. You would be surprised to learn, according to the DOT, fully loaded trucks rarely happen. There are systems that help you achieve that goal. One such system is AutoVLB from Transportation | Warehouse Optimization. In fact, Procter & Gamble, a client of Transportation | Warehouse Optimization since the early 90's, claim they realized a 7% savings by using this system.
2. Eliminate unnecessary or wasteful moves. It seems strange that any company would ship a load unnecessarily. But it happens often. For example, one well-known ERP system defines the ship point for any customer and then sticks to it. So a customer in Detroit would receive a load from its supply point in Chicago - even if the entire product was made and in stock in Cleveland. Simplifying assumptions often lead to unnecessary or wasteful moves.
3. Be aware of what is going on in the industry. Sometimes the traditional method of shipping may not be the most economical. For example, if exports are high, you can get great deals from the ocean carriers. They are desperate to get their 40 ft containers back to port. Granted, it is not your typical 53 ft container, but the deal you can make will more than make up the lack of container space and you can reduce freight rates dramatically.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
5. Keep your options open. One way of doing this is to have the right mix of operations. This can include a mix of private fleet, dedicated trucks, capacity, and market (spot) purchases. Use your private fleet for your high service customer deliveries. Dedicated trucks can be more cost-effective, but you still have to keep them on the move, and dedicated capacity offers some guarantee of the number of trucks that you can provide on any day. It offers both shipment security and good supply chain management.
The best way to reduce freight rates is to cut waste and work with the right partner.
When you consider a Transportation consultant, consider Transportation | Warehouse Optimization. They have been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. Transportation | Warehouse Optimization takes a long-term approach, they know the market place, and they keep the client as top priority. Contact them at: wwwTransportationOptimization.com (615) 791-8000 for transportation cost reductions or solutions to warehouse challenges. While visiting their website, TEST YOUR SKILLS and see how well you can load a truck or manage cost savings.
About the Author:
Tom Moore and his associates at Transportation l Warehouse Optimization will help you reduce freight rates and save you money. Transportation l Warehouse Optimization works with companies such as Procter and Gamble and BP and many other Fortune 500 companies. They can help you reduce freight rates and save money.
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