How Shippers Can Reduce Transportation Costs: Part 2

Earlier, we looked at how technology can make a big difference in transportation management. Making sure data entry is accurate and shipments are properly classified are key when it comes to increasing operating efficiency and reducing logistics costs.

And the pressure is on! The most recent Cass Shipment Index, a measurement of shipping volumes, has risen 0.7 percent, meanwhile, payments for freight have fallen 8.3 percent year-over-year, according to Cass. Since the numbers indicate weak freight rates it’s vital now, probably more than ever, to take a closer look at the logistics program and working relationships with carrier partners to find best practices and identify areas in need for improvement.

Aside from having a strong TMS program in place, here are a few other ways shippers can help their carrier partners control costs:

  1. Strong Communication is Key: Make a habit of good and honest communication with your carriers. Logistics is a fast-paced industry with so many things that can go wrong. By keeping everyone briefed about disruptions in the supply chain, you can avoid anything, which might become a larger problem further down the line.
  1. Forecast the volumes by lane for your carrier base: Forecasting usually starts at an annual level during the bidding process, but fine-tuning this to a monthly, or even weekly forecast will let your carriers easily update their capacity allocation models. Preferred carriers of each lane, which are probably the most competitive, would accept a higher percentage of loads since much of their trucking capacity is uncommitted at that point.
  1. Make it a Round Trip: One of the most efficient means for moving truckload shipments is to combine shipping lanes into continuous moves or round trips. By opting for round trips, you’re introducing outbound as well as inbound flows to your supply chain. Not only does this increase your efficiency, but it also reduces empty running, shorter transit times that make more cost effective experiences for your carriers and allows them to give you a better price.

While it’s not always possible to create round trips or even continuous moves, shippers may consider collaborating with their business partners, other suppliers, companies that sell to a similar market, or deliver to the same warehouses. Without competing directly, you’ll both be able to make significant savings – steady flowing supply chain and improved on-time delivery performance.

It’s time to start asking less about what your carrier can do for you to lower cost, and more about what you can do with your carrier to help control costs. Treating your carrier as a business partner, rather than merely a supplier, will often yield better results than simply working with whoever is the cheapest at the time.