How Route Optimizations Help Reduce Freight Costs for Shippers
As operational costs rise, costs of goods increase, and fewer drivers continue to drive shipping rates north of affordable, therefore shippers are actively seeking creative ways of reducing their controllable expenses. While many companies consider shipping a non-controllable, the truth is that route optimization is one of the best ways of controlling your costs of moving freight. Whether you are routing FTL, LTL, multimodal or parcel, shippers in multiple industries can optimize their routing of freight easily by following a few best practices.
In the information below, we’ll outline 3 easy methods for reducing costs of shipping through routine optimization tactics used by some of the biggest shippers on the planet.
It’s well understood that reducing the amounts of steps needed to complete a task is a sure-fire way to save resources. For shippers this methodology equates to consolidating or combining shipments to and from your business. Shippers main expense is paying for items being sent to them from suppliers, vendors, and manufacturers. If you can work with them to consolidate those freight shipments inbound, you can save quite a bit of money. And contrary to popular belief, working with suppliers to consolidate shipments is easier than you’d think.
However, simply streamlining the amount of shipments inbound is not enough to make a huge impact. Outgoing freight consolidation is also a great way of impacting the bottom line. However, since most recipients pay the shipping bill – how does outbound freight consolidation make a difference for shippers? The answer is quite simple – it’s exceptional customer service. If you have a plan for saving your customers money on shipping – they are more likely to continue using your services or purchasing from you in the future. More business equates to increased bottom line profits – which in the end; helps to accomplish your fiscal goals.
The Right Mode for the Right Service
Shippers have more flexibility than ever with selecting a shipping mode for the movement of freight. By setting up a shipping plan of activation, a company can complete the research needed to determine which mode is best suited for individual shipments. For example, if you have smaller commodities that can be shipped via parcel mode, creating a system of reliable carriers and service commitment levels that meet the needs of your customer – without breaking the bank, is just as impactful as consolidating freight. This method works for all modes – including LTL, FTL, Intermodal, Multimodal, and Parcel. The important thing to remember is that it’s a waste of resources to ship products via quicker modes, especially when the customer will not be available to receive them.
Strengthen Carrier Relationships
If there is a constant theme in business, it’s that volume cures all. Whether it’s purchasing full truck load of supplies or working with the same carriers frequently or a regular basis, building positive relationships with your carrier network is an exceptional route optimization best practice. Shippers and carriers who build solid relationships based on constant or repeat business help each other by creating shipping rates that are fair for each party. If your business needs to send shipments on a weekly basis, set up a weekly shipment contract with a specific carrier. You’ll quickly discover that if a carrier visits your business frequently, and you work with them constantly, your rates can be reduced – if you know how to ask or them.
Work with an Experienced 3PL
The ultimate goal of route optimization is reducing resources and expenses involved in shipping. While there are several steps and best practices that any shipper can follow to accomplish this task, working with an experienced professional who understands the ins-and-outs of supply chain optimization is a home run. The best resource for reducing your shipping costs across the board is by working with an experienced 3PL. A third-party logistics provider like Redwood Logistics has years of experience working with companies like retailers, manufacturers, distribution networks and all parties within the supply chain.
Chicago-based Redwood Logistics is a next generation, strategically integrated logistics provider that believes every company’s needs are unique. For more than 15 years, the company has been providing solutions for moving and managing freight and sharing its knowledge across North America. Redwood Logistics is focused on making its customers more successful in their end markets by applying talented and motivated people, proven processes and cutting-edge technologies to optimize their supply chain management efforts.
If you’re a shipper in any industry looking to save money and improve supply chain movement efficiency, give us a call today!