Manufacturers and distributors across industries have experienced supply chain challenges impacting their goods and services. Driver and container shortages, port congestion, missed pickups or deliveries, and inflation have affected profit margins and customer satisfaction. To combat these challenges, business leaders are looking at ways to optimize freight costs and streamline suppliers.
In today’s seller’s market, it can seem like options are limited, and accepting the status quo is the answer. However, years of benchmarking and in-depth analytics, coupled with market intelligence from our freight specialists, have proven there are always paths for improvement. We’ve compiled a list of our top recommendations for reducing freight costs during inflationary periods:
10 Ways to Reduce Freight Costs
- Renegotiating contracts with current suppliers or via negotiations with new suppliers
- Operational improvements, like warehouse and freight consolidation, reduced production times, and packaging changes to minimize dimensional weight surcharges
- Using the most cost-effective class code without compromising on protection from damage or loss
- Contracting directly with freight providers vs. through a third-party logistics provider
- Utilizing distribution centers located near the customer
- Using contracted rates vs. daily spot quotes
- Auditing shipment delivery times to earn credit for late shipments
- Minimizing damage through packaging changes, pallet wrapping, vehicle equipment selection, loading and unloading requirements
- Improving transit times lane-by-lane by playing to individual carrier’s lane strengths
- Optimizing individual freight modes based on shipment weight, required transit times, and consolidation of services with a single provider
Need help taking the first step? ERA’s freight specialists can help flip the status quo against a seller’s market by utilizing market intelligence and in-depth analytics from more than thirty years of cost savings projects. Our specialists can achieve savings beyond rate negotiation – putting dollars back to your bottom line – while keeping your staff focused on your business’s key objectives.
Contact ERA to learn more about how our specialists can reduce freight costs and streamline your supplier base.
About the Author
Senior Principal Consultant David Finkel serves as a senior analyst for ERA’s freight practice. In this capacity, he promotes the freight category across the ERA US network to help educate consultants in this area. He has completed dozens of freight reviews as an analyst across warehousing services, trucking, rail, international air/ocean, and small package courier, achieving savings of up to 60%.