2. Trade Secrets to Get the Best Freight Rates
Transportation Management Systems
Similar to how airlines operate, some carriers offer better pricing for certain legs of a trip than others. You can often save thousands of dollars by combining carriers, adding or switching lanes, or adjusting service levels.
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An example of this is seen with FreightPOP's FreightRateHACKER, which uses algorithms to sort through carrier data to isolate the optimal routing for cost savings. This is a feature of their transportation management system (TMS).
TMS systems should help you find savings by giving you the data you need to negotiate quotes better by:
- Cross comparing spot quote rates against negotiated rates and carriers
- Integrating carrier websites and emails into one platform
- Contacting multiple carriers in a single action
- Bringing all carrier responses and bids into one platform, with side-by-side comparisons for your review
- Enabling real-time acceptance and response to carriers
FreightPOP's Strategic Partnerships Manager, Jon Freeman, explains a TMS' intrinsic value to high volume shippers:
Retail giants have changed our expectations of how fast a product can arrive and in our microwave society, we&#;re demanding free shipping, next day, or two-day at best. This puts an enormous amount of strain on a company's supply chain cost center as they try to keep up with growing demand.
This is forcing companies...to shift their view of their transportation process to more of a value driver, rather than another cost line item. To do this, companies have to be SURE that they are shipping on the lowest rate, with the most optimized route, with the most streamlined quoting and shipping processes, every time. Without a scaling enterprise Transportation Management System, this is impossible.
Optimizing the Last Mile
Conex Boxes' Shern points out that:
Another way that you can save on shipping and freight is by optimizing the final-mile process.
The last mile of delivery accounts for more than half of your total shipping costs. The last mile typically requires more complex routing, more idle time, more stops, and more time on the road. Even minor efficiency improvements can yield significant savings.
Solving the last mile optimization challenge is why companies with brick-and-mortar stores use their retail stores for last mile distribution rather than centralized warehouses, especially for same-day or next-day delivery. Walmart, for example, plans to increase its delivery capacity by a third in , using its local stores to handle fulfillment to reduce last-mile costs.
Target is opening up ten sorting centers as part of its solution, with trucks collecting items from stores throughout the day, sorting them by zip codes, and sending them to delivery partners. The effort avoids palletizing items at individual stores and breaking them apart for redistribution.
Last-Mile and Dynamic Pricing
Another challenge on the horizon that will impact last-mile logistics is dynamic carrier pricing. UPS is a perfect example of this. After rolling out its Dynamic ORION, a platform that optimizes routes using AI and algorithms, experts predict it is just a matter of time until they incorporate dynamic pricing, much like how Uber and Lyft price rides.
Dynamic pricing will make it impossible to determine last-mile costs manually. In the near future, a scalable TMS system will be imperative to stay on top of pricing technology.
Zone Skipping
Another strategy for reducing costs is zone skipping. With zone skipping, you bypass the charges carriers apply to packages traveling over established zones. There can be significant savings by skipping zones and having packages arrive within the last-mile.
Zone skipping requires careful planning by shippers to combine as many pallets and packages as possible to particular regions through a single FTL or LTL load. Besides saving money, zone skipping also reduces handling as cargo is unloaded and reloaded at various hubs and distribution centers, which reduces breakage and helps maintain tighter delivery times.
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For smaller retailers and growing businesses, this can be a smart solution.
Retail and E-commerce Expert, Meaghan Brophy, says:
on the horizon that will impact last-mile logistics is dynamic carrier pricing. UPS is a perfect example of this. After rolling out its Dynamic ORION, a platform that optimizes routes using AI and algorithms, experts predict it is just a matter of time until they incorporate dynamic pricing, much like how Uber and Lyft price rides.
Using zone skipping to get packages to local USPS centers (for example) and then utilizing USPS for last-mile delivery, can be a great way to save shipping time and costs.
Expand Searches to Overseas Shippers
Sometimes, you may find better rates by working with shippers in other countries directly.
Old Bull Lee founder, Lee Johnson, says:
We find shipment orders that originate from countries that are not as economically strong as the US end up being overall significantly cheaper. I can not tell you exactly why, I do not think it is as simple as a reduced cost of labor.
I think there is also some default recognition that companies from the US are often financially strong and all the downstream shippers and entities associated with your parcel's transport somehow seem to recognize that and that becomes an opportunity to attach a premium of sorts to the transportation of goods. Freight is very complicated, with many people associated with it, so I can not explain exactly why this is true, I just know that if we have our shipping set up from outside the United States it is almost always less expensive.
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