We pick up with part 2 of our series on how to reduce freight rates and save money. In our conclusion, we discuss the next 5 key tips on how to save money on transportation costs.
1. Did you know that most companies, according to the DOT do not ship trucks full? By optimizing truckloads, you can save money and reduce freight rates. The median weight capacity on shipping loads is more than 47,000 lbs. It is rare that companies achieve this weight. Procter & Gamble, one of the best run supply chains in the CPG business, improved its loads using a system called AutoVLB from Transportation l Warehouse Optimization. P & G also pocketed a 7% savings.
2. Eliminate unnecessary or wasteful moves. It seems strange that any company would ship a load unnecessarily. But it happens often. For example, one well-known ERP system defines the ship point for any customer and then sticks to it. So a customer in Detroit would receive a load from its supply point in Chicago - even if the entire product was made and in stock in Cleveland. Simplifying assumptions often lead to unnecessary or wasteful moves.
3. Optimize modes. Conventional tractor-trailer shipments or even inter-modal 53 ft containers are not always the most economical way to ship. Steamship lines are often desperate to get their 40 ft containers back to port. While the load size is diminished, the savings can more than make up for that apparent inefficiency. Shipping even a few containers will reduce freight rates and increase cost savings.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
5. Keep your options open. One way of doing this is to have the right mix of operations. This can include a mix of private fleet, dedicated trucks, capacity, and market (spot) purchases. Use your private fleet for your high service customer deliveries. Dedicated trucks can be more cost-effective, but you still have to keep them on the move, and dedicated capacity offers some guarantee of the number of trucks that you can provide on any day. It offers both shipment security and good supply chain management.
Working with the right partner and eliminating waste is the best way to reduce truckload freight rates.
Test your skills and see how efficient you are at managing costs by loading a truck. Visit www.TransportationOptimization.com. While there, request a call back with one of the premier transportation consultants in the industry from Transportation | Warehouse Optimization. Working for many companies in the top Fortune 50 like Procter & Gamble, Nestle, Kraft, and BP, they understand your unique problems and can help you to solve them.
1. Did you know that most companies, according to the DOT do not ship trucks full? By optimizing truckloads, you can save money and reduce freight rates. The median weight capacity on shipping loads is more than 47,000 lbs. It is rare that companies achieve this weight. Procter & Gamble, one of the best run supply chains in the CPG business, improved its loads using a system called AutoVLB from Transportation l Warehouse Optimization. P & G also pocketed a 7% savings.
2. Eliminate unnecessary or wasteful moves. It seems strange that any company would ship a load unnecessarily. But it happens often. For example, one well-known ERP system defines the ship point for any customer and then sticks to it. So a customer in Detroit would receive a load from its supply point in Chicago - even if the entire product was made and in stock in Cleveland. Simplifying assumptions often lead to unnecessary or wasteful moves.
3. Optimize modes. Conventional tractor-trailer shipments or even inter-modal 53 ft containers are not always the most economical way to ship. Steamship lines are often desperate to get their 40 ft containers back to port. While the load size is diminished, the savings can more than make up for that apparent inefficiency. Shipping even a few containers will reduce freight rates and increase cost savings.
4. Sometimes negotiating and locking in the freight rates for multiple years makes sense. Of course, it depends upon market conditions. You have to audit and benchmark freight payments to determine if there are billing errors and evaluate your competitiveness. Determining how good your rates are can also be achieved by checking the market often. Sometimes you may have a good thing going and locking in the rates with some form of indexed adjustment makes sense.
5. Keep your options open. One way of doing this is to have the right mix of operations. This can include a mix of private fleet, dedicated trucks, capacity, and market (spot) purchases. Use your private fleet for your high service customer deliveries. Dedicated trucks can be more cost-effective, but you still have to keep them on the move, and dedicated capacity offers some guarantee of the number of trucks that you can provide on any day. It offers both shipment security and good supply chain management.
Working with the right partner and eliminating waste is the best way to reduce truckload freight rates.
Test your skills and see how efficient you are at managing costs by loading a truck. Visit www.TransportationOptimization.com. While there, request a call back with one of the premier transportation consultants in the industry from Transportation | Warehouse Optimization. Working for many companies in the top Fortune 50 like Procter & Gamble, Nestle, Kraft, and BP, they understand your unique problems and can help you to solve them.
About the Author:
Tom Moore and his associates at Transportation l Warehouse Optimization will help you reduce freight rates and save you money. Transportation l Warehouse Optimization consults with companies such as Procter & Gamble and BP and many other CPG companies. They can help you reduce freight costs and save money.
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