If your business is losing money on freight costs, it’s time to look for better options. Read these 7 ways to slash freight cost to keep more profit in your pocket.
One of the challenges of moving goods from one place to another is the freight cost. The charges continue to rise year after year. Those in the supply chain have an assumption that the situation is fixed.
Without exploring the available options for freight cost reduction, they will continue to contend with the high prices.
The American economy has a daily average of 49.3 million tons of freight. In 2015, it was estimated to be worth $52.5 billion. The figures are expected to increase by 1.4 percent by 2045.
These figures show that transportation is a big industry in the world. It is for this reason that it is essential to look for ways to slash freight costs for more business efficiency. Here are 7 ways how this can be made possible using the latest technology.
Shipping During Off-peak Days or Hours
If you are not sure which days are off-peak, Friday is a good starting point. It is an off-peak for consumer goods because many people want to have their products by Thursday. In so doing, they can shelve the commodities on Friday, ready for sale over the weekend.
Mondays are also slow days because carriers are trying to put their freight together. Nevertheless, this depends on the type of goods being shipped. Fresh products may not necessarily have off-peak days.
You can also consider night pick-ups. Most shippers close the dock by 6 pm. A carrier may turn down a pick-up offer at mid-afternoon because it coincides with another one. A later pick-up allows him enough time to make the delivery and load with your freight.
You are likely to pay less for the freight while helping the carrier maximize the utilization of assets.
Use a Consolidation Program for Smaller Shipments
You can consider combining your shipments with other shippers who have the same freight mass as yours. You get to share the costs for direct delivery, and everyone saves a certain amount.
Large shippers like CVS and Colgate have used this approach, and it works for them every time.
All you get to pay for is your share of the shipment. On the other hand, retailers receive goods in time and can keep the businesses open while cutting costs. Search for suitable shipping partners through the local Chambers of Commerce or ComFreight services.
Utilize Sea or Land Freights Often
Air freight has been a popular option for international freights. Have you considered if it is still the best transportation option? One of the reasons many shippers prefer to use it is its reliability.
Other freight options are also reliable yet cost friendly. Consider looking at the sea shipment services that are time-definite. They are gaining popularity and are as efficient as air freight.
Another option is to cover part of the shipment distance by air and the rest by sea or vice versa.
Improve Delivery Lead Times
By maximizing the notice to your carriers, you can create the ripple effect of maximizing assets like warehouse space and trucks. Giving a shipping notice in advance allows the carrier time to streamline their resources and assets.
Planning eliminates unnecessary costs, for example when the carrier has to pay for a truck that has to wait for loading.
Proper planning can be enhanced at all points of the supply chain, where some costs are eliminated for everyone. The longer the shipment notice, the more the carriers can become efficient and offer you better freight cost rates.
Hold and Consolidate
This method entails holding back non-urgent cargo until when there is enough cargo to fill up the container or truck. It’s all about making shipping and .
The approach does not work for every shipper, and may not even be the best for your company. However, if it can apply in your case without compromising the quality of service offered to clients, give it a try.
Shipping half a container will cost you a lot more than when it is full. You will not only reduce the cost implications but also make better use of the shipping container.
Consider Carriers from Other Regions
You may not have thought about this, but local carriers may not always give you the best freight cost rates. It is possible to achieve a price reduction by engaging carriers who deliver into your location from other places.
The crucial thing is to ensure that you give them a good reason why they would want to handle your backhaul work. In other words, provide them with a load volume that is reasonable enough to keep them in business.
Reduce the Pallet Spaces When Shipping
It is possible to get more cargo packed into a pallet by the way you arrange your boxes. You can stack the product or optimize its cube so that you utilize few pallet spots. Boxing them differently will make it possible to have more cargo packed into the trailer.
For example, you can put mall compartments in small boxes and load out the pallet, saving on its space. Before taking any option, ask for recommendations depending on the type of cargo you want to ship.
Wrapping it Up
Reducing freight costs is possible, and even the solutions suggested above seem self-evident. Unfortunately, many shippers tend to ignore them and pay more for freight than they should. The main reason lies in assuming that it is always business as usual.
Reducing freight costs should be a priority for your business. The above-suggested methods will not only make the supply chain better bust also help your business save some money.
The above solutions may not all make sense to your business, but make a point of adopting that that do. Freight costs are not likely to fall soon. You should continuously look for ways to reduce freight charges if the ones suggested do not work well for you.
Most importantly, examine every freight programs and see how you can challenge the status quo. Successful businesses never stop learning and growing.
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