Saving money is the buzzword in any industry today. That is true in the transportation industry, and a specific concern is the cost of shipping and how to reduce freight rates. In part 1 of a two part series on how to reduce truckload freight rates, we will look at the top 5 of a top ten list of how to save money.
1. Eliminate costs for the carrier and share the savings. It seems obvious: if you save the carrier time and money, you will reap the benefits. For example, Procter & Gamble eliminated the long waits for unloading by providing the customers an incentive to get all trucks turned in two hours. By eliminating hours of hand unloading and counting, carriers turned their equipment faster and had happier drivers. A win for the carriers resulted in a win for P & G and the end result was reduced freight rates.
2. Create continuous moves. In the early 1980's, Xerox started to send trucks on a tour that ultimately ended back at the origin. Xerox paid for every mile driven, and since it was able to keep the trucks loaded, they were rewarded with lower per-mile rates.
3. Rationalize fuel surcharges. Carriers generally overcharge shippers. Carriers make money on the difference between the actual fuel consumption that they achieve and the rate they put in the contract language. They also make money on the difference between the retail diesel prices in the index that the DOT reports and the discounted rates they actually pay.
4. Use systems to eliminate administrative work. Too much time is spent tendering loads and paying freight bills. This is work a system should be doing. Cutting administration is another way you can reduce freight rates.
5. Another software technology can handle things such as routing and consolidation. Better routing and consolidation is a major contributor to savings for LTL shippers. Time and time again, it has been shown that doing routing and consolidation manually is far from optimal. Better routing and consolidation can save costs and typically reduce freight rates.
Test your skills and see how efficient you are at managing costs by loading a truck or picking pallets in a warehouse. Visit www.TransportationOptimization.com. While there, ask for a call with one of their premier transportation consultants. Working for many companies in the top Fortune 50 like Procter & Gamble and BP, Transportation | Warehouse Optimization understand your unique problems and know how to solve them. - 16747
1. Eliminate costs for the carrier and share the savings. It seems obvious: if you save the carrier time and money, you will reap the benefits. For example, Procter & Gamble eliminated the long waits for unloading by providing the customers an incentive to get all trucks turned in two hours. By eliminating hours of hand unloading and counting, carriers turned their equipment faster and had happier drivers. A win for the carriers resulted in a win for P & G and the end result was reduced freight rates.
2. Create continuous moves. In the early 1980's, Xerox started to send trucks on a tour that ultimately ended back at the origin. Xerox paid for every mile driven, and since it was able to keep the trucks loaded, they were rewarded with lower per-mile rates.
3. Rationalize fuel surcharges. Carriers generally overcharge shippers. Carriers make money on the difference between the actual fuel consumption that they achieve and the rate they put in the contract language. They also make money on the difference between the retail diesel prices in the index that the DOT reports and the discounted rates they actually pay.
4. Use systems to eliminate administrative work. Too much time is spent tendering loads and paying freight bills. This is work a system should be doing. Cutting administration is another way you can reduce freight rates.
5. Another software technology can handle things such as routing and consolidation. Better routing and consolidation is a major contributor to savings for LTL shippers. Time and time again, it has been shown that doing routing and consolidation manually is far from optimal. Better routing and consolidation can save costs and typically reduce freight rates.
Test your skills and see how efficient you are at managing costs by loading a truck or picking pallets in a warehouse. Visit www.TransportationOptimization.com. While there, ask for a call with one of their premier transportation consultants. Working for many companies in the top Fortune 50 like Procter & Gamble and BP, Transportation | Warehouse Optimization understand your unique problems and know how to solve them. - 16747
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 work with companies such as PG and BP and many other CPG companies. They can help you reduce freight rates and save money.
