How to save money in these economical times is the goal of any transportation manager in industry today. In the first part of our two part series, we are going to closely look at the ten ways in which you can reduce freight rates and save money. In this article, we will look at the top 5. 1. Eliminate costs for the carrier and share the savings. It seems obvious: if you save the carrier time and money, you will reap the benefits. For example, Procter & Gamble eliminated the long waits for unloading by providing the customers an incentive to get all trucks turned in two hours. By eliminating hours of hand unloading and counting, carriers turned their equipment faster and had happier drivers. A win for the carriers resulted in a win for P & G and the end result was reduced freight rates. 2. Create continuous moves. In the early 1980's, Xerox started to send trucks on a tour that ultimately ended back at the origin. Xerox paid for every mile driven, and since it was able to keep the trucks loaded, they were rewarded with lower per-mile rates. 3. Fuel surcharges are favoring the carriers at the expense of shippers. The surcharge is based on fuel efficiency (mile per gallon) far lower than the carrier actually achieves. Carriers also pocket the difference between actual fuel costs and the DOT retail price - which may be quite a bit higher. 4. Use software technology whenever possible. It can do away with the administrative work that takes a lot of time. And administrative time is a hidden part of the total freight rate. Eliminating administration can therefore reduce freight rates. 5. Routing and consolidation are other administrative tasks that can be handled well with systems. Doing this manually no longer makes sense. Systems can handle this much more efficiently. They can both reduce time and save on freight rates. When you consider a Transportation consultant, Transportation | Warehouse Optimization has been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. They take a long-term view, know the market place and keep the client as top priority. Contact them at www.TransportationOptimization.com for transportation cost reductions or solutions to warehouse challenges. Ask for a free consultation. While visiting their website, TEST YOUR SKILLS and see how well you can load a truck or manage cost savings.
As we continue with part two of our series on how to reduce freight rates and save money on transportation, shipping truckload freight, we look at the remaining 5 tips that can put money in your pocket. 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. You would never think a company would ship a load unnecessarily. Believe it or not, it happens all the time. Simplifying assumptions often lead to unnecessary or wasteful moves. For example, it is easier to ship from a plant to its outside warehouse and then onto the distribution centers spread around the US. Shipping direct form the plant requires more planning and coordination to get the right mix to the remote DC's. Here is where systems can help - do the planning and bring the few cases of slow moving product to the plant instead of moving the many pallets of materials through the DC. 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. Audit activities and renegotiate freight rates when there is an opportunity and lock the rates in for multiple years. Check on your freight payments and evaluate your competitiveness by going to the market often. But, when you think you have a good thing, lock the rates in with some form of indexing over the next few years. 5. Expand your base. You have to have the right combination of private fleet, dedicated trucks, dedicated capacity, and spot-market level purchases. Not only does this provide you with shipment security but also it can be very good supply chain management. This gives you good coverage for your high service customers with your private fleet on the short turnarounds, and any other thing that comes up. You have to manage it, but if run well, it can reduce freight rates. Working with the right partner and eliminating waste is the best way to reduce truckload freight rates. Transportation | Warehouse Optimization (TWO) had worked with the best of the best. Procter & Gamble, and other Fortune 50 companies are among their client list - P & G is a long-term client since 1992. TWO has saved P & G millions of dollars with transportation consulting solutions. Taking a long-term view, they understand the industry, the market place, and like good consultants do, keep the client as the top priority. Contact them at www.TransportationOptimization.com for your free consultation today. Also TEST YOUR SKILLS and see how well you manage your costs. Load a truck and see how efficient you are.
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