Transportation expenses have increased in the last year, but shippers may mitigate these increases with careful planning. Tim Benedict, senior director of transportation at APL Logistics, gives the following freight cost-cutting suggestions. First, choosing international air over the expedited ocean for the bulk of hot cargo might result in significant savings.
Consider time-definite ocean transportation, which is generally 75 percent less expensive than air and frequently just as dependable. Even when circumstances necessitate the use of international aviation, ocean freight should not be ruled out. Depending on the delivery date, it may still be feasible to fly your products for a portion of the voyage and then load them aboard an ocean vessel for the remainder. As a consequence, your items travel fewer miles, and your freight costs are reduced.
Allow transportation to guide your warehouse selection process.
If a low-cost site adds too many miles or hand-offs to your supply chain, the cost savings from the location will be negated by increased transportation costs.
If your firm buys worldwide yet runs deconsolidation centers hundreds of miles inland, consider locating a deconsolidation center near your ports of entry to transport items directly to nearby clients. This will result in a reduction in unnecessary transportation costs. Typically, businesses that ship LTL rather than truckload pay a premium of 10% to 30%. It is advantageous to negotiate with clients who demand many minor deliveries on a regular basis to see if they will agree to a less frequent delivery schedule.
The tools for utilizing trailer cubes are only as good as the dimensional data that is entered. Verify the precision of your measurements by collecting extremely specific information on the contents of the most recent outbound truckloads. Utilize the updated data to optimize trailer cube utilization. Numerous businesses are unaware that they may be transporting their cargo using obsolete, and hence more expensive, categories. If your firm has made significant changes to its goods or packaging, determine whether you qualify for a lower-priced product class.
Conquer incoming transportation.
Suppliers’ first objective is to provide items, not negotiate the best shipping costs or encourage collaboration. When feasible, take responsibility for optimizing your inbound deliveries yourself or engage the services of an engineering-savvy third-party logistics provider. Ascertain that you have ultimate authority over which carriers handle your business’s items.
A targeted, centralized transportation procurement effort provides analytical, strategic, and relational benefits that a more dispersed strategy cannot match. The benefits include more efficient transportation, increased cost tracking, and the opportunity to negotiate more advantageous volume prices.
Inviting logistics personnel to engage in Lean transportation initiatives or to examine shipment trends may appear to be an unnecessary expense for your business. However, it often pays for itself through increased insights that result in increased potential economies. Some of the most significant transportation cost savings may be realized when logistics teams do their study.