Freight expenses are a significant line item for many businesses, but reducing costs is about more than finding the lowest rates. Streamlining processes and avoiding common errors can lead to considerable savings while improving service quality.
Here are actionable strategies that can help businesses optimise their freight operations:
Match Shipping Methods to Freight Size and Type
Selecting the wrong carrier or service type often leads to inflated costs. For example, small packages sent through bulk freight carriers or large shipments handled by parcel couriers waste resources. By aligning shipment size and type with the right service, businesses can minimize inefficiencies and save money.
Use the Right Pricing Models
Choosing a simplified approach like pallet rates may seem easier, but it’s not always economical. For smaller or lighter loads, cents-per-kilo rates might be more cost-effective. Conversely, larger shipments might justify pallet or cubic-meter pricing. Businesses need to analyze their freight profiles to select the most appropriate rate structures for their operations.
Optimise Packaging for Efficiency
Adjustments in packaging can make a big impact. Reducing package dimensions by even a small amount can lower costs associated with volumetric weight calculations. For example, a company that redesigned its standard boxes saved thousands annually by optimising its shipments for dimensional efficiency.
Understand Cubic and Deadweight Costs
Understanding how carriers calculate freight costs—whether by volume or weight—is critical. Mismatched rates can lead to unnecessary expenses. Businesses that accurately calculate their freight profiles are better positioned to negotiate with carriers and select rate cards aligned with their needs.
Leverage Directional Cost Advantages
Freight costs are not always uniform in both directions. Some routes may be cheaper for return loads due to demand imbalances. Taking advantage of these reciprocal lanes can reduce expenses without compromising service quality.
Plan for Predictable Movements
Frequent ad-hoc shipments to meet urgent needs can be costly. Businesses should focus on consolidating orders and planning replenishments in advance to use standard shipping lanes. This not only reduces transportation costs but also ensures better stock availability.
Consolidate Daily Shipments
Unconsolidated shipments to the same destination create avoidable fees. For example, sending three separate deliveries to one location in a single day incurs three base charges. Consolidating them into one shipment can significantly reduce these fixed costs.
Invest in Automation and Integration
Manual processes, such as generating invoices or tracking shipments, slow down operations and increase labor costs. Automated systems that integrate with existing ERP platforms can streamline tasks, provide real-time insights, and reduce the likelihood of errors. Businesses that adopt automation often recover significant time and labor, which can be redirected toward more strategic activities.
The Road Ahead
Improving freight efficiency requires a mix of data-driven analysis, process refinement, and leveraging the right tools. These adjustments not only lower costs but also enhance service reliability. By focusing on operational excellence, businesses can turn logistics challenges into opportunities for growth and sustainability.
Published on December 5, 2024 • Insights & News